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By Root 3512 0

offers from other firms. Soon they populated Salomon’s competitors. Gutfreund ratcheted the pay upward to stem the tide. But he did not crack down on departments like equity trading and investment banking when they failed to produce, then came in with new five-year plans to fix their failures. His intimidating personality covered a soft underbelly: He shrank from hard decisions and substantive confrontations. As time passed, he spent less time in The Room and presided with a somewhat distracted air over a kingdom in which the threat of poison hung in the air. “My problem is that I am too deliberate on people issues,”65 he would later say. Somewhat unfairly, observers blamed not him but his wife, Susan.

Tied to her husband by a long, long leash, all through the 1980s Susan Gutfreund had raced headlong up Fifth Avenue, dragging the once-retiring, silver-haired CEO of Salomon behind her into international society. Gutfreund came to tolerate and even enjoy it because, he said, she expanded his horizons. With Susan blowing with the force of a nor’easter, he turned his rudder and ran into the wind. Modesty and thrift were the first to go overboard.

“It’s so expensive to be rich,” the former flight attendant complained—perhaps facetiously but nonetheless famously—to Malcolm Forbes.66 Susan’s party guests received chauffeur-delivered invitations tied with yellow roses for events that featured four types of caviar. She chilled her perfume in a refrigerator next to her bathtub. She yanked up her Chicago roots to become such a Francophile that her butler answered the phone in French. She greeted First Lady Nancy Reagan, at their first meeting, “Bonsoir, Madame.” At the couple’s River House living room in New York City, millions of dollars’ worth of French antiques sat atop a million-dollar rug. She redid Salomon’s executive meeting room, drenching it with so much passementerie and ormolu that it “looked like a French bordello.”67 She wore the collection of designer Hubert de Givenchy, who lived across the courtyard from the Gutfreunds’ eighteenth-century Paris pied-à-terre. In New York, their righteously indignant neighbors sued them when an allegedly unauthorized crane appeared on their penthouse terrace to hoist a twenty-two-foot, five-hundred-pound Christmas tree into the Gutfreunds’ living room.68 Thus did Susan Gutfreund become 1980s Nouvelle Society’s most beloved object of parody. The Gutfreunds graced magazine covers and Susan earned a role in Tom Wolfe’s roman à clef, The Bonfire of the Vanities.69 Susan’s friends defended her, but however overdone the satire might be, nobody, not even her husband, questioned that this outpouring of opulence had diverted his attention, at least a little bit.70

A corporate history published around this time included a telling remark. Instead of making a decision and expecting others to follow, it said Gutfreund “liked to involve the people who would be affected” and “would bend over backward to make them comfortable with what was to be done.” Nevertheless, wrote the author, protesting a bit too heartily, Gutfreund “is in ultimate control” and “his decisions after consultations are final.”71 In fact, some of Gutfreund’s former partners, now retitled “managing directors,” were mounting a major challenge to his authority. Having kept their commitment to grow, they now blamed him for the bloated costs and vied with one another for territory.

By the end of 1986, when earnings had begun to sink from the burden of the newly swollen payroll—Salomon had increased its staff by forty percent that year—the managing directors nearly dethroned Gutfreund in a coup. The firm’s largest shareholder, the South African company Minorco, grew impatient and told Gutfreund it wanted to sell its block of stock. But when “nothing happened,” according to several of the managing directors, and Salomon’s stock languished as the Dow rose forty-four percent, Minorco found its own buyer: Ron Perelman, the feared corporate raider who had taken over Revlon.

The executive team did not want to work for Perelman and whomever