Timothy’s mounting rage began to focus on Greg Evans. From his perspective, the quiet, numbers-focused executive had ushered in a “reign of terror” at Mondavi. Timothy empathized with employees who were girding themselves for the edicts concerning cost-saving and job cuts coming out of Evans’s Latour Court office. The prospect of even more layoffs hung over Mondavi like a layer of smog on a warm California day. Timothy sensed the paralysis settling into some of his longtime friends and colleagues: Few employees seemed willing to speak out, lest they be marked in Evans’s next round of firings.
It was during a planning meeting in the spring of 2003 that Timothy finally took his stand. Evans had summoned Mondavi’s vice presidents and managers to what he called a “Come to Jesus” gathering, hoping to shake up his lieutenants and force them to confront the severity of Mondavi’s problems. In the midst of intense competition and falling profits, he wanted them to start thinking more radically about ways to save the business. He did not invite Michael, Timothy, or even Robert, reasoning that since none of them held day-to-day operational roles anymore, it wasn’t their place to participate in these planning meetings. Yet Evans also admitted to himself he was worried they might try to undermine his efforts. As the business situation worsened, the Mondavi family had become a burden for him.
Among the two dozen or so executives gathered in the Carneros Room of the Latour Court offices were Clay Gregory, the general manager of Mondavi’s Oakville winery; Valerie Dietrich, the new head of human relations who had replaced the controversial Alan Schnur; and Brad Alderson, who was in charge of Woodbridge. To Evans’s consternation, Timothy had also turned up—tipped off by a family loyalist that the session was taking place. Battle lines were drawn between Latour Court, which had been directing the job cuts, and Oakville, which was at the receiving end of many of them. Timothy and some of the staffers who’d worked for the family for years felt Oakville had been disproportionately targeted during the layoffs, while the Latour group thought that spending at those operations had been out of control for years.
The tension in the room was palpable. Evans, who lacked Robert’s charisma and Michael’s speaking skills, possessed an equanimity that the passionate Mondavis lacked. Although he sought to engage his executives, many sat uncomfortably mute in their chairs. Evans tossed out ideas meant to provoke his team, including one that Timothy agreed with. He turned to Alderson. “Brad,” Evans suddenly asked, “what if you decided Woodbridge wines didn’t need barrel aging in the future? Would that allow us to cut costs?” The question met with stunned silence. The very idea was sacrilege to executives brought up believing that Woodbridge had been the quality leader in its category precisely because of its barrel aging. However the company’s recent marketing research had shown that some former Woodbridge drinkers were turning to fruitier wines not aged in barrels, including some from Australia. Timothy, too, had suggested to Alderson and Evans that Woodbridge move away from a heavy use of oak to a fresher taste. Alderson, a conservative man who had worked with the Mondavi family for more than three decades, said almost nothing, since to his mind Evans was proposing a complete about-face in Woodbridge’s wine style.
Timothy then asked the question of why Gallo, a name long associated with bottom-shelf wines, was doing so well in the marketplace. Evans suggested that Gallo’s large size gave it a cost advantage—a suggestion that provoked Timothy, who believed Gallo’s resurgence had more to do with its new strategy of brand differentiation. He was dismayed by what he considered Evans’s superficial understanding of the market. Evans, whom he had helped promote to CEO, seemed to him to have blinders on. Shaking with anger, he retorted to Evans, “You’ve got to be kidding me. It’s not just about scale!” His face reddening as he spoke, Timothy asked how truly innovative Mondavi was being in its sales and marketing, an area outside his expertise. “Let’s get creative,” Timothy implored, making a heartfelt pitch for launching new, fresher wines from the coastal regions, including a shelved red wine he’d championed a few years earlier called Red Square. To Alderson, Timothy’s proposal was futile: Other wineries had already jumped on the opportunity that Mondavi had missed with Red Square.
In the midst of his outpouring, Timothy felt like the sole brave knight willing to battle for what was right. From his perspective, Evans had created an environment of fear at the company that suffocated dialogue. Evans, in turn, felt Timothy’s pitch for his pet project came at a time when Mondavi was in a crisis caused, in large part, by the company’s and the family’s mistake of trying to do too many things all at once.
As the meeting broke up, Evans confronted Timothy in the hallway outside the conference room. His bald pate was glistening and his face was flushed. His eyes flashed behind his wire-rimmed glasses. Furious, he drew closer to his former mentor. “That was out of bounds. Totally unacceptable,” Evans sputtered, a few inches from Timothy’s face.
“Well, that’s your opinion and I have mine,” spit back Timothy.
That night, at around dinnertime, Evans called Timothy on his cell phone from outside his home, so he wouldn’t disturb his wife. He’d already prepared a short memo to Mondavi’s directors about Timothy’s behavior at the meeting, laying out what had happened and telling the board that Timothy had been disruptive and undercut his authority. The memo was certain to undermine Timothy’s already wobbly standing among the outside directors. Greener, in particular, was certain to grasp how wrong it had been for Timothy, as a business owner and shareholder, to tell off the CEO of a publicly traded company in front of his own troops. The political damage to Timothy’s career was likely to be irreparable once Greener and the other directors heard about it.
But Evans didn’t tell Timothy he was planning to send the memo: instead, he spoke his mind about Timothy’s crusade to protect the company’s high-end wines. “Tim, you are a one-note fanatic,” he told him. Timothy, who was also pacing outside his home on his cell phone during the call, replied furiously, “I’m going to get you.”
It was no secret that Timothy was under tremendous strain that spring. He was struggling through the final stages of his divorce from Holly. The business was in trouble. As Mondavi’s stock sank, his paper wealth was shrinking every day. To complicate matters, his father had taken a bad fall. Shortly before the planning meeting, Robert had risen from his bed at his Wappo Hill home in the night and slipped, bumping his head. Margrit got him back into bed, but the next morning, he had seemed confused and suffered from vertigo. Fearing he may have suffered a stroke, she arranged for Robert to check into a local hospital, where he underwent a battery of tests.
Robert’s mental confusion also alarmed Michael, who wondered if it was due strictly to his hearing loss, or if he was exhibiting early signs of dementia. Around the time of the fall, he suggested to his father that he fly to the Mayo Clinic and get a full workup on both his body and his mind. Robert spent four days at the clinic without getting a clear diagnosis of his problem. Margrit then took him to a neurologist at the University of California at San Francisco, who eventually put him on Namenda, a drug prescribed for the treatment of moderate to severe dementia associated with Alzheimer’s disease. He had days when he was mostly lucid and others when he seemed confused. Robert’s health problems meant that Timothy effectively lost an ally for championing quality at the company.
Amid these problems, Evans pounced. After Timothy threatened to “get” him, he e-mailed his memo to Mondavi’s directors. The next day, he arranged a conference call with Michael, Greer, and Greener. The two outside directors were members of the board’s “transition committee,” which had been formed after Evans became CEO to mediate any problems that might arise between the Mondavi family and its first nonfamily chief executive. On the call, Evans complained that Timothy’s behavior had been out of line. By contradicting him and becoming emotional, he had disrupted the meeting and made it dysfunctional. Threatening to quit unless Timothy took a sabbatical, he asked Greener, “Am I running the place or not?”
Marcia, who was also a director, then heard from Greener of what by then was being characterized as Timothy’s emotional outburst, and called the human relations head, Valerie Dietrich, to get her version of events. Dietrich relayed her concerns that Timothy had been deeply upset at the meeting and that he had been shaking as he spoke and his fair skin had flushed with emotion. Dietrich painted a picture of a man on the verge of an emotional breakdown. With Robert temporarily out of the picture, Marcia and Michael decided to talk with their brother themselves, hoping to convince him to take a six-month sabbatical that would help him regain his balance.
As they rode together in the back of one of the company’s limousines on their way to meet with the psychologist Jerry Shapiro at a hotel near the San Francisco Airport, Michael and Marcia confronted their younger brother. In the two-hour car ride, they said they were worried about him. Marcia, in particular, poured out her concerns. Her younger brother seemed to be under a tremendous amount of stress and she was alarmed. Michael reminded Timothy that he hadn’t taken a vacation in two years. They suggested he might need a rest.
They reached the hotel and met with Shapiro. By the end of their session, Timothy had agreed to take a six-month sabbatical and had been effectively ousted from the company by his own family, at least temporarily, for the second time in his career. The long drive back to Napa Valley was excruciatingly painful for Timothy as he mulled over the similarities between his own forced exile at the hands of his siblings and Robert’s forced exile from Charles Krug in 1965. Both he and his father were in their mid-fifties when they’d gotten the boot.
About two months later, Timothy boarded a jet and flew to the Hawaiian island of Kauai for an extended vacation with his family. They stayed on the island’s North Shore, known for its hippie colony and wild rainstorms. His son Dominic, then in his early twenties, urged his father to “live a little” by changing the way he looked. Taking his son’s advice and striking a blow for unconventionality, Timothy shaved his head during his stay on the islands, as did Dominic. When he returned to the mainland to attend, out of a sense of obligation, his father’s ninetieth birthday celebration in June, his shorn head startled the rest of his family, particularly his conservative sister Marcia. He toured Sonoma vineyard properties with the idea of quitting the family business and starting over on his own. But with his finances strained by his divorces and five children in various stages of schooling, he decided to return to his job at Mondavi, still hairless on top.
Evans imposed strict conditions on his continued employment: Timothy had to agree to start reliably showing up for scheduled appointments and adhere to a set of performance goals, just like other Mondavi executives. Timothy agreed to the conditions but fully intended to follow up on his threat to “get” Evans.
The outside directors grew alarmed not only by Timothy’s erratic behavior but also by Robert’s philanthropic bind. Farella had quietly alerted Mondavi’s other directors about the situation and the news increased their urgency to find a way to lift the company’s stock price. There remained several potential ways out, including Robert’s backing out of his pledges or Marcia’s stepping in to help, but if Mondavi’s stock kept dropping Robert could be in dire financial straits. Boosting the stock price seemed the best course of action, but to make a dramatic change by selling off a division or merging with another company, they’d have to break the tight grip the Mondavi family held on the company through its supervoting shares. To shift the balance more in their favor, the outside directors decided to bring on one more of their own.
“I know this chap Ted, and he’d be great,” suggested Adrian Bellamy, referring to a recently retired McKinsey and Company partner named Ted Hall, who seemed to fit the bill perfectly. Not only was he an expert in fixing broken companies from his days as a management consultant, but he was also a Napa Valley vintner who owned the 650-acre Long Meadow Ranch where he, his wife, Laddie, and their son, Christopher, grew organic grapes and raised grass-fed cattle in the Mayacamas Mountains, eight hundred feet above the valley floor. To look him over, the Mondavi family invited Hall to lunch on a patio outside the Vineyard Room in the fall of 2003. Robert, Michael, Timothy, Marcia, and Frank Farella were there and the conversation ranged from vineyard management to brand building, and Hall impressed his hosts with his knowledge of both farming and business.
“What do you think are the biggest challenges facing the company?” Timothy asked. Hall spoke knowledgeably about the problems, but when he touched on Mondavi’s confused brand identity, Timothy perked up. At the end of the meal, Marcia and Robert’s younger son felt they’d found a champion on the board, someone who cared about improving the quality of Mondavi wines and would be strong enough to stand up to Evans.
A few days later, Timothy took up Hall’s invitation to visit Long Meadow Ranch. Hall showed him around in an open-sided Land Rover, and took obvious pride in the land and displayed a deep knowledge of organic farming—principles Timothy embraced and, in fact, was pushing for at the Oakville winery. Hall’s winery, designed by the architect William Turnbull and built of the earth excavated from the ranch, impressed Timothy in its simplicity. Hall knew every head of cattle by name and spoke eloquently about the geology of the area, as well as the ranch’s nineteenth-century history. Timothy believed that he’d found not only a powerful ally in Hall but someone who shared his values and sensibilities.
The rest of the board was also impressed with Hall and they invited him to observe the September meeting at the Oakville winery, even though he was not yet officially a director. By then, Hall knew about Robert’s brush with insolvency earlier that year. It was there, in the course of a normal five-year business review, that Hall made a critical comment when Greg Evans and his team finished their presentation. He summarized it as a “do more better” plan—meaning that, if only Mondavi could manage to sell more wine, it would work its way out of its problems. But the problem with this sort of plan, Hall explained to the group, was that no matter how much you “do more better,” it wouldn’t solve the basic structural problems Mondavi faced, including the post–9/11 decline in luxury goods consumption and rapid consolidation of distributors. Mondavi’s management was only taking baby steps. He implied their plan wasn’t radical enough to fix the problems.
The outside directors quickly grasped Hall’s larger point: Another round of layoffs or another spate of restructurings wouldn’t reverse the company’s slide. It needed a more radical shake-up—an idea that Timothy embraced, particularly if it meant defying his brother and Evans. Michael, in turn, seemed to lay the blame for Mondavi’s problems on Evans and the other professional managers, telling the outsiders “everything would be perfectly all right if management had only done what I told them to do.” Regretting that he’d ever given up the title of CEO, Michael even suggested he take back the job from Evans. Yet, to Hall and Greener, the heart of the problem was not Evans or his team: It was the quarter of a billion dollars or so of virtually unproductive capital investments made under Michael’s watch during the late 1990s and early 2000s. And they weren’t about to give the helm to Michael or to any other Mondavi.
One small pebble in that mountain of unproductive assets was the company’s guesthouse, which sat on 2.7 acres of land adjacent to Michael and Isabel’s new home. Michael wanted to buy the property for his son, Rob, and his daughter-in-law, Lydia, and, earlier that year, had pitched the sale to the board as a way of chipping away at that mountain. But what should have been a relatively simple matter dragged on for months and became increasingly adversarial. Greer, who was the chairman of Mondavi’s audit committee, as well as Frank Farella got involved in what, in monetary terms, was a minor business transaction. If all had gone according to plan, the sale would have ended up happening quietly and been buried in a footnote in one of the company’s SEC filings.
To make sure there was no hint of a sweetheart deal, the company hired three independent appraisers to submit estimates of the property’s value. But even with these appraisals, Michael and the two directors ended up haggling over the price, including Michael’s insistence that he should get a discount because his father used it as a massage parlor. Exasperated by the amount of time and energy he had wasted at a time when Mondavi was in trouble, Greer finally ended up giving Michael an ultimatum: “Take it or leave it: This is the appraised value and this is the value we’re going to use. If you and Rob don’t want to buy it: fine. We’ll sell it to someone else,” he warned. “It’s not preordained that we sell it to a family member.” Greer was fed up with the issue: “We’ve talked about this ad nauseam,” he said. Michael finally agreed to a price of $2.1 million—$100,000 more than averaged appraisals, less adjustments for needed repairs in the amount of $100,000—resulting in a price of $2.0 million. He bought the property from the company in September 2003.
At a time when the company was faced with far more pressing problems, Michael’s actions burned up some of his goodwill with the board. But before that, his standing with the outside directors had begun to erode as a result of his long campaign to promote Rob at Mondavi. His efforts began in the late 1990s, after Rob’s Napa Cigar Company began losing money and was sold to a rival. “Rob, I need you to come join us,” Michael told him. Rob started at the troubled La Famiglia Winery, scrubbing tanks and hauling hoses. On his last day of work there, toward the end of harvest, some of his fellow cellar-workers asked him to climb into a large fermenting tank and give it a scrub. Rob did what he was told. His colleagues shut the door behind him and stuck a two-inch hose into the tank, spraying the Mondavi heir with the “lees”—the sludgy residue of dead yeast and sediment left behind after fermentation. When they let him out, they told him “You’re now blessed as a true winemaker.”
Well-liked by employees, Rob soon moved to Atlanta to work as a Mondavi sales representative handling its Chilean and Italian imports. But in June of 2000, to the surprise of some Mondavi executives, who had heard Michael talk about the importance of Rob proving himself in various low-level jobs before moving up the corporate ladder, Michael’s son was named to the newly created job of director of marketing for the Robert Mondavi Winery. Based in Oakville, the job was a marketer’s dream—representing the company’s crucially important halo brand—and heading up hospitality and public relations for the winery.
Rob worked hard in his new position, but even so, to give that job to anyone without any substantial corporate marketing experience or a graduate degree was foolhardy, at best—even if his last name was Mondavi. At worst, it was another instance of the company’s corrosive nepotism. The creation of that new job for Rob was the result of hard negotiating on Michael’s part, stopping into Evans’s office and calling him on the phone repeatedly over a period of months to insist that Rob come back from Atlanta and land in a high-level post. Evans finally told Michael he felt it wasn’t appropriate for him to act as his son’s ombudsman. Michael, in turn, worried that Rob might become a sacrificial lamb; that Rob’s career might suffer because of his own increasingly fractious run-ins with Evans and the board.
Once Evans gave in, he and Michael finally settled on a job title and salary for Rob. Michael’s aggressive lobbying on his son’s behalf extended to his company-reimbursed moving expenses. Around the time he moved to Atlanta, Rob had bought a modest home in the hills north of Napa’s Atlas Peak for around $800,000. Three years later, and a year after he moved back to Napa, he sold it for $1.5 million, almost twice as much as he had paid for it. Rob asked the company to reimburse him for some of the costs relating to the sale of the home. To Evans, the transaction looked murky and didn’t fit within the company’s reimbursement policy, so he balked at approving the request.
On the face of it, Rob, with his father’s support, seemed to be trying to “game” Mondavi’s policy. And considering the Mondavi family’s wealth, the amount of money involved was a relatively meager $30,000. Nonetheless, Evans refused to agree to the reimbursement. Evans and the outside directors that fall were growing increasingly sensitive to the new, tougher corporate governance rules imposed on publicly traded companies under the Sarbanes-Oxley Act of 2002. These new standards were signed into federal law after the scandals involving Enron, Tyco International, and other companies. Requiring much fuller disclosure of executive pay and insider transactions, one of the act’s goals was to prevent self-dealing on the part of corporate insiders.
Michael’s actions seemed that of a chairman who was more concerned about his son than about the company or its shareholders. They were consistent with his desire to groom Rob as the fourth-generation leader of the Mondavi business and provide him with all the dynastic privileges. Michael’s aggressive pursuit of his and Rob’s interests didn’t sit well with Evans or the outside directors. And within the Mondavi family, both Michael and his son were increasingly at odds with Robert and Margrit.
One source of tension was the carriage house. Robert had long enjoyed using it for his massages, but when Michael purchased the property for Rob and Lydia, it became a divisive issue. Rob wrote a letter to his grandfather in the late spring of 2004 offering him the opportunity to continue using the carriage house, but insisting they would have to come to some financial arrangement if Robert wished to do so. Years before Rob and Lydia moved onto the property, Robert had spent tens of thousands of dollars to refurbish it, adding a bathroom, deck, and a massage table. But Rob thought his grandfather should pay the utility bills for the carriage house if he wanted to keep using it as, what Rob called, “his massage parlor,” rather than having them in what he describes as his grandfather’s own “colossal” home. Dismayed by the ungrateful tone of the letter, Robert showed it to Ted Hall, who empathized with the old man’s anguish. Michael and Rob’s seemingly arrogant handling of the issues surrounding the purchase of the guesthouse property also dismayed and angered their fellow family shareholders.
Rob’s behavior on the job was another flashpoint. One weekend during his short tenure at Oakville, Rob had decided that it would be a good idea to freshen up the winery’s Mission Room, an odd, rhomboid-shaped office on the ground floor that had been his grandfather’s original office, hoping to make it into a more businesslike venue for VIP guests to taste wine. Margrit had commissioned the Italian-born muralist Carlo Marchiori to paint it. Marchiori charged $180 to $250 per square foot for his playful and classically inspired work. When Margrit discovered that Rob had ordered the room to be whitewashed, painting over the expansive mural without discussing it with her first, she was shocked and dismayed.
Rather than risk a blow-up if she spoke to Rob about it in person, she wrote him a note expressing her unhappiness over it. She couldn’t understand why Rob wouldn’t have checked with her first, rather than just going ahead and destroying the mural. “Just because it’s a little gray, you don’t paint over Leonardo da Vinci’s Last Supper,” she maintained. Rob’s reply, as she recalls, was brief and flippant. He felt he was doing what was best for the business. As well, the hospitality center hadn’t been profitable for many years and Rob considered certain aspects of its style, such as the muraled Mission Room, “antiquated.” The incident festered and Margrit shared her anger with Robert. “He needs to learn humility,” Margrit recalls her husband saying about his grandson.
Rob, in turn, felt that he was one of the few people willing to challenge the powerful Margrit. He questioned the business logic of Annie and Margrit, a cookbook by Margrit and her daughter, Annie Roberts, published in 2003, which was originally funded largely by the winery. As well, just three months or so into his new job at Oakville, Rob decided that expenses were out of control at the winery’s kitchen, and began interviewing candidates for a new executive chef position above Roberts. “Everywhere I turned, I just kept stepping in things,” says Rob.
Michael, meanwhile, had become convinced that Evans and the outside directors had adopted toward him and his son an aggressively “ABM” stance: “Anyone But Mondavi.” From his perspective, he and his family had been forced to abide by even stricter rules than other executives and suffer financial penalties as a result, citing the $30,000 in relocation expenses that the company refused to reimburse Rob for. To Michael, it became a matter of principle.
Greener mulled over the September board meeting during a ten-hour flight from San Francisco to London. Seated in the first-class cabin, he jotted down his thoughts on a pad of paper. At various times over the past few months, Greener, Greer, and Farella had helped mediate an array of minor issues involving Michael, and they had begun losing confidence that he was the right person to serve as Mondavi’s chairman. Greener, especially, became convinced that Michael was simply not up to the task of steering the company through the storm. He felt that the only thing that would save Mondavi’s stock from sinking lower was strong intervention on the part of the board. That meant that Michael had to go.
Upon his return to Britain, Greener shared his thoughts with Adrian Bellamy, who agreed that they needed to oust Michael as chairman. During a late evening meeting in December after a shareholder meeting in a Yountville motel room, Greener and Bellamy won the other outside directors to their side. The next morning, Greener brought up the subject with Marcia, who was on the board and was the company’s single largest shareholder by that time. Marcia agreed with Greener but did not relish her role in her brother’s firing. She felt that her family and the company were facing a desperate situation and after years of watching the battles between her brothers from the relatively safe distance of New York, Marcia threw her weight in with the outsiders, rather than try once again to play peacemaker with her family. Keenly aware of the possible humiliation facing her father if he was forced to renege on his philanthropic promises, she decided Hall was more likely to resolve the problem than her older brother, who was starting petty fights motivated by self-interest rather than focusing on the greater good of the company or the family. But even though she’d lost confidence in Michael’s leadership, she still hoped he’d stay on at the company in an ambassadorial role.
The outside directors chose not to tell Timothy of the decision, a reflection of how much respect Robert’s younger son had lost in their eyes since the showdown with Evans. They felt he was too emotional and did not trust him to keep the information to himself. In the meantime, Hall agreed to become chairman. Not only did he live in Napa Valley, but since retiring from McKinsey he had the time to take on the job. With the holidays approaching, the outside directors decided to wait until early in the New Year to break the news to Michael.
On Tuesday, January 6, after taking a break over the New Year’s holiday, Farella and Greer drove up the two-laned Oakville Grade Road to Marcia’s home. Sitting in her sunny breakfast nook, the men and Marcia were joined by Robert, who was still glowing from his trip over the New Year’s holiday to the Big Island of Hawaii with Margrit, Timothy, and Timothy’s children. Because Robert was having trouble hearing what was said, Farella wrote down the news for him on paper: Michael was being removed that day as chairman. Robert wasn’t happy to learn that the directors were about to fire his son, but he did not try to stop them.
Although Marcia had known over the holidays what was about to happen to her brother, she later explained to Timothy that she didn’t call because she was reluctant to upset them on their vacation. In fact, the outside directors had warned Marcia to keep the decision a secret from them.
Michael also returned to work on January 6 after the holiday break. Sitting in his Latour Court office that morning, he got a call at about ten-thirty A.M. from Timothy, who himself had just heard the news from Frank Farella. Setting aside decades of differences, Timothy decided to pick up the phone and give Michael a warning beforehand.
“Heads up,” Timothy told him. “You’re about to get your ass handed to you in a sling.”
Michael was scheduled to have lunch that day with Philip Greer and Frank Farella at the Oakville winery. Before Timothy’s phone call, he had hoped to use that meeting to lobby Greer and Farella to rein in Evans as CEO. But his bravado faded as he passed through the winery’s arch and made his way at around eleven-thirty to the Cliff May Room, which was tucked on the ground floor behind the Vineyard Room. Feeling an ache in his chest, he sat down, facing Greer and Farella. A hospitality staffer waited on them, filling their wineglasses with the company’s finest Fumé Blanc, then a Pinot Noir. After some small talk, they told him that they thought it best if he’d step aside into the role of vice chairman, allowing Ted Hall to take his place. Michael asked them what his job would be as vice chairman and then raised the subject of his compensation. “We’ll figure it out,” they told him.
Michael picked at his chicken breast, which normally he would have consumed with gusto. He was being fired from the only company where he’d ever worked. In the space of an hour-long lunch, the legacy he’d spent a lifetime building for his children and grandchildren had crumbled. Waves of anguish and disbelief washed over him. He grew pale from the shock.
Farella, too, felt pained by the news he had to deliver to Robert’s namesake, however long overdue it might have been. And for Greer, whose friendship with Michael had lasted for nearly two decades and whose wife, Nancy Greer, was friendly with Isabel Mondavi, the luncheon was agonizing. Over the holidays, Nancy Greer had urged her husband to quit Mondavi’s board. But as much as he’d have preferred to avoid delivering this crushing blow to their friends, Greer felt he had a responsibility to see it through. Still, in the weeks leading up to that lunch date, Greer had found himself dreading it.
Both Farella and Greer were gentle, choosing their words carefully so as to inflict the least damage. One of the most delicate pieces of information they conveyed was that Marcia had thrown her support behind his ouster. Marcia’s betrayal was one of the most disappointing events of Michael’s life. Finding it impossible to stomach the idea of staying for dessert and espresso, he left.
Michael went home rather than returning to the office. His siblings and father, meanwhile, had cut across the valley on the Oakville Grade Road to an impromptu gathering at Marcia’s house to talk with Ted Hall. Sitting on a stone wall bordering Marcia’s drive, the avuncular former McKinsey man laid out his plans in a reassuring tone, explaining how he would look out for the best interests of the company and its shareholders. He used an analogy he had used many times before, describing his role as that of an emergency room doctor who’d dealt with all sorts of corporate traumas over the years. Although Hall had joined the board by that point and been offered as a candidate to replace Michael, he had not yet formally been voted in as chairman. Winning the confidence of these family members, who together controlled the largest bloc of voting shares, was crucial to Hall’s appointment and he did so handily that afternoon. Faced with Robert’s philanthropic problem, they hoped Hall could reverse the stock slide and avert potential embarrassment, if not disaster.
Michael returned to Latour Court early the next morning. By midday, word of the event had spread quickly through the Mondavi empire. That day, Michael had an uncomfortable meeting with Hall, followed by a videotaped message to employees from Michael, Timothy, and Hall. The rumor mill was whirring: Some staffers reported that Michael had stormed around Latour Court that afternoon, furious at what had happened. Michael recalls feeling depressed and embarrassed; how, he wondered, would he tell people he’d worked with for decades that he’d been fired? Timothy, meanwhile, made a last-minute attempt to install his sister, rather than Hall, as chairman. His gambit failed, though, and two days later, on January 9, Hall’s appointment as chairman was formally announced. Timothy, worried about how Michael was coping, felt protective toward him. Reverting to the pattern that stretched back to the Krug days, Timothy suggested during another family meeting at Marcia’s that Michael take a sabbatical.
That spring, Mondavi once again retained McKinsey and Company to help it better understand its branding issues and distribution challenges. It also hired a prominent New York–based public relations firm best known for its mergers and acquisition work, Kekst and Company; the Wall Street law firm Davis, Polk & Wardwell; and investment bankers from Citibank. The hiring of such a large team of advisors in itself suggested a breakup might be in the works.
Another recurring pattern was the expulsion of the erring family member: Michael was ousted by his own family, just as Robert had been in the 1960s. Yet, now there was no member of the Mondavi family at the company. At Charles Krug, Peter junior had assumed the position of head of the family business. But Timothy, whose credibility with the board had continued to erode, had no realistic hope of convincing the board to give him additional responsibility, particularly as the company’s financial performance worsened.
And it did. Less than two weeks after Michael’s ouster, on January 22, Mondavi downgraded its second-quarter earnings guidance. Despite the Mondavi’s splashy black-tie fete in Santiago, its Chilean wine had failed to make a lasting impression in the crowded export market. The company announced it would sell its disappointing Chilean Caliterra brand and assets to its partner Viña Errazuriz, taking a $3.9 million charge. Meanwhile, Michael’s school friend, Fred Franzia, picked up the phone and gave him a call.
“How ya doing?” Franzia asked.
“Been better,” Michael replied, “considering I’ve never been fired before.”
“Ah, hell,” said Franzia. “Don’t let the bastards get you down.”