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From the Vault: Spoiled Fruit

Fruit of the Loom’s boss had a big personality. In the end, the backlash against him proved even greater.

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Photo: DS Shin

Marc Spiegler’s October 1998 profile of William Farley, “The Remarkable Mr. Farley,” came at a transitional moment for the Fruit of the Loom CEO and Gold Coast resident. He had acquired the company in 1985 and taken it public in 1987, and share values had increased sevenfold by 1992. His success allowed him to behave flamboyantly without consequence, from his 1988 run for U.S. president to his questionable work attire:

Farley’s ferocious discipline extends to the gym. A star athlete as a young man, he has long played up his physique, sometimes flaunting it. Former employees say it was not uncommon for him to strip down to his underwear in front of staff or wander around the office in nothing but workout shorts. For an interview in 1989 by New Yorker writer Connie Bruck, he sported red briefs and a sweatshirt.

He was quirky with finances, too: Not only did he rank as the highest-paid executive in Chicago, he also secured tens of millions of dollars in personal loans from the company board. But by the late ’90s, the company was bleeding money, and Farley was feeling the ramifications. In 1999, the year after the Chicago article was published, Fruit of the Loom lost $576 million, filed for bankruptcy protection, and fired Farley. His troubles didn’t end there: In 2005, he and other upper managers agreed to pay out $42 million to settle two shareholder class actions accusing them of fraud and insider trading.

Farley’s entrepreneurial spirit didn’t die, though. He’s currently CEO at Zrii, a Utah-based health and beauty company he founded in 2008.

Read the full story below.

 

The Remarkable Mr. Farley

Last year, Bill Farley was the highest-paid CEO in Chicago even though his company, underwear maker Fruit of the Loom, lost nearly half a billion dollars. But financial derring is just part of the high-wire act for this oft-married fitness fanatic, political gadabout, and flamboyant tycoon.

As a rule, Mr. William Farley has never shrunk from the spotlight. Thus, after work got around that Bill Clinton would come to Chicago for a Democratic fundraiser this past May, Farley happily consented when organizers asked to hold it at his apartment at 209 East Lake Shore Drive, arguably the city’s most prestigious residential building. After all, many people go to dinner at the White House, but how many have the President over for dinner? Next to actually becoming president — a goal that Farley, head of the underwear company Fruit of the Loom, once vainly spent millions trying to achieve — that’s about as close as a private-sector citizen can get to the glamour of 1600 Pennsylvania Avenue. Farley presided over the event like a major-domo, welcoming a crowd that had paid $5,000 a head to attend. The guest list included Farley friends such as Eppie “Anne Landers” Lederer and Board of Trade chairman Pat Arbor, plus such notables as Playboy chairman Christie Hefner, former Bears lineman Chris Zorich, Mayor Richard M. Daley, and his brother Bill, the U.S. Commerce Secretary. The guests of honor were U.S. Senators Carol Moseley-Braun, a candidate for reelection in November, and Dick Durbin. Farley’s visitors that evening were not just the usual political types, though, says one guest who attends many such events. “It was much more the Beautiful People crowd,” he says. “There were a lot of high rollers, trophy wives, and implants.” Whatever the composition of the crowd, though, their checks apparently cleared — the event raised $800,000.

By all accounts they got their money’s worth. Working the act he first rolled out on The Arsenio Hall Show, Clinton played three songs on his saxophone and turned his considerable charm on the guests. Rising from the head table, Farley implored his wife, Shelley, to perform. Briefly, she demurred. Then, graciously, she acquiesced. (“They were rehearsing the dialogue throughout the dinner,” says one guest. “It was totally scripted.”) She stepped to the microphone and warbled “I’ve Got a Crush on You” to the President. That marked a rare public singing appearance for Shelley, who had shelved her career as a chanteuse after she married Farley.

Between presidential moments, guests took in one of Chicago’s more stunning views. Fourteen floors below, Lake Michigan lapped at Oak Street Beach, and the headlights of less fortunate folk illuminated serpentine Lake Shore Drive. If they leaned up against the glass and looked straight down, the swells could see the TV vans lining the driveway.

The next morning, Shelley Farley personally called the major Chicago gossip columnists, doling out little scoops that would ignite an afterglow of media coverage. It worked splendidly, scoring multiple hits in the Tribune and the Sun-Times. “I thought the event was great,” Farley says. “Shelley and I were pleased, because it rose above the traditional fundraising event. I was really taken by Clinton’s energy and his efforts to be gracious. After the event he even stuck around to take some pictures with my house staff.”

For Bill Farley, 56, playing host to the President merely capped a series of public-image coups in the past year. In December he slapped down $6.7 million for Hammersmith Farm, the 50-acre estate in Newport, Rhode Island, where Jacqueline Bouvier had both her coming out party and the reception following her marriage to John F. Kennedy. And in January he gave Boston College Law School, his alma mater, a $1.5-million gift endowing the William F. Farley chair. That’s quite a string of public triumphs for any businessman — particularly one from Chicago, where the corporate style tends toward gray.

Despite having spent three decades here, Farley is too much of a paradox to fit that staid mode. The son of a Pawtucket, Rhode Island, postman, he embraces his working-class Irish roots even as his strategies at Fruit of the Loom have cost thousands of blue-collar Americans their jobs. He commonly poses for photos in a casual shirt with no tie. Yet butlers answer the door at 209 East Lake Shore Drive.

Farley’s charm is legendary. Attorney Philip Corboy, who has long sparred with him over tort reform, calls Farley “a hail-fellow-well-met type, extremely pleasant to be around.” And Cindy Pritzker, his neighbor, says Farley is “fun, musical, generous, and a true bon vivant.” But among Chicago’s smart set, he is seen as something of a loner, and as a man with rather curious passions. Last year, he and his wife invited the cream Chicago’s corporate crop to a dinner with Deepak Chopra, the New Age healer. (Farley’s most recent ex-wife, Jackie, was known to tell people that she was the reincarnation of an Egyptian princess and that Farley had been a pharaoh in a past life. “I’m not sure Bill ever believed that,” says one friend. “He just seem be playing along with it.”)

In politics, he bounces between the two major parties. Less than two months after hosting the Democratic fund that starred the President and the two Illinois senators, Farley sent a letter to Chicago Republicans inviting them to join him at a Comiskey Park outing for Republican congressman Jim Bunning of Kentucky, a Hall of Fame pitcher running for the Senate. “I am asking you to consider becoming a Hall of Fame supporter with a contribution of $1,000,” said Farley. “Your help is key to maintaining our republican majority in the Senate.”

But the most puzzling area of Farley’s world is his business life. Starting with nothing, he amassed a billion-dollar empire. “You have to give Bill credit,” Lederer says. “He came from noplace, and nobody gave him any presents. I remember travelling to a White House dinner with him; he brought four briefcases on the plane, just in case there was some spare time to work.” But his industriousness has not spared him from some spectacular failures, the last of which left him with enormous debts. Just last November, Fruit of the Loom’s board had to save Farley from losing control of the company by guaranteeing a $26-million personal loan. After Fruit of the Loom’s earnings faltered last year, his business peers were heard to wonder out loud how he kept it all together. Nonetheless, in May he earned another distinction. In the Crain’s Chicago Business “Fortunate 100,” an annual ranking of Chicago’s highest-paid executives, Farley notched the top spot. His estimated take: stock options valued at $22.5 million, during a year in which his company lost $488 million.

The big bucks come in handy, for even by the standards of the super rich Farley spends lavishly — and publicly. “There’s a tremendous ‘Look at me!’ aspect with Bill Farley,” says one family friend. “He’s concerned with building the myth of the man.” Not content with one apartment on East Lake Shore Drive, he bought the second half of the same floor and combined them into a spacious modernist living space. He also owns a big house at the end of a promontory in Kennebunkport, the Maine resort town where George Bush spent summers away from the White House. Thus, his purchase of Hammersmith Farm in Newport earned Farley the distinction of owning two large waterfront homes within a half-hour’s flight of each other on the East Coast.

One of Farley’s social peers says his purchase of Hammersmith Farm “seemed almost Gatsbyesque.” But Farley has a simpler explanation. “I grew up in Rhode Island and I used to lifeguard along the Rhode Island coast, so Newport was part of my history as a kid,” he says. “I saw it for sale in a magazine, and I remembered it as a wonderful property.” Twenty years after he had last seen Hammersmith, he jetted down to visit it and found it as marvelous as he remembered. He also learned that the only others interested in it were developers. “It seemed that to me in terms of Rhode Island and Hammersmith’s heritage, it would be wrong for it to end up as a group of homes or a spa,” he says. For now it will stay a museum devoted to the early years of Jacqueline Bouvier, though Farley does not rule out making it his private residence.

In Chicago, where socialites judge each other as much on local philanthropic endeavors as on displays of wealth, one prominent attorney and arts patron calls Farley “a pizzazz kind of guy, wrapped up in the social whirl, but not really a civic leader.” Another VIP concedes that Farley can charm the socks off people — especially women — by walking into a room. “But when you think of the most involved citizens from the corporate world, it’s not Farley,” he continues. “It’s CEOs like [Sara Lee Corporation’s] John Bryan and [William Blair & Company’s] Ned Jannotta.”

Also, in a town where even new money tends to move quietly, Farley has basked in his notoriety. Soon after buying Fruit of the Loom, he starred as a muscular mascot in its TV commercials — pumping iron, doing chin-ups, and jogging while decked out in the company’s gear. (Farley’s stepson Hayes McArthur took on the mantle recently; his torso stars in the current “Everybody Loves Fruit” campaign.) More recently, Farley appeared in a Paul Stuart ad sporting a magenta pique polo shirt and a sweater knotted across his taut chest.

Over the years, Farley’s romantic entanglements have also raised eyebrows. He fathered an illegitimate child in college, then married another woman at age 23. The union rapidly ended in annulment. In 1972 he married Susan Stanford; after their divorce in 1976, she wrote a scathing fictionalization of the relationship that portrayed its Farley-like character as a workaholic megalomaniac. The next to join him at the altar was New Ager Jackie Merrill, a fitness fanatic who would lead Farley’s workers in group calisthenics before this marriage, too, ended in a harsh divorce in 1989. While separated, he escorted the reigning Miss America to President George Bush’s 1989 inaugural ball. (Farley had met her while judging the pageant.)

During his bachelor days after divorcing Jackie, Farley’s upstairs neighbor Eppie Lederer was often invited to his apartment. “Back when he was dating Miss South Carolina, Miss North Dakota, Miss America, he would call me up and ask me to come downstairs and screen his girlfriends,” Lederer says. “I would often say, ‘Bill, she’s beautiful, but she’s brainless.’ With Shelley, I said, ‘That’s the girl for you.’ ” A former model, Shelley McArthur, now 47, was raising two sons and keeping busy as a cabaret singer after the breakup of her marriage to Bruce McArthur, an heir to the Wirtz family real estate fortune. Blond, fit, and upbeat, she cut a whirlwind path through Chicago’s social scene. When Farley married Shelley McArthur in 1992, the exchange of vows took place before a tight circle of intimates. The guest list for the reception in The Casino’s ballroom, however, read like a roster of Chicago’s power elite, including politicos Mayor Daley and Alderman Ed Burke, media stars Iry Kupcinet and Bill Kurtis, and business titans Lester Crown and Ron Gidwitz.

Pat Arbor, who once dated Shelley, describes a wondrous reception. “That room was opulent,” he says. “Shelley sang ‘Unforgettable’ to Bill. And I was amazed at the breadth of city and civic leaders there.” (Yet one guest found the crowd a curious constellation of bold faced names. “Some of the people were almost perfect strangers to him, people he’d met only two or three times,” says the woman, who herself fit that description. “It seemed the list had been drawn up based on who they felt ‘should’ be at their wedding.”)

By all accounts, Farley’s fourth marriage remains strong. Former Oak Street boutique owner Terri D’Ancona — who made Shelley Farley the godmother to both of her children — says, “Bill had a reputation when he was a bachelor, but he’s devoted to Shelley, to her sons, and to their son, Liam. With him you have the feeling that he can make anything happen. Bill’s one of the most capable, disciplined men I’ve ever met.”

Farley’s ferocious discipline extends to the gym. A star athlete as a young man, he has long played up his physique, sometimes flaunting it. Former employees say it was not uncommon for him to strip down to his underwear in front of staff or wander around the office in nothing but workout shorts. For an interview in 1989 by New Yorker writer Connie Bruck, he sported red briefs and a sweatshirt.

Though it’s hard to imagine, say, Sara Lee’s John Bryan showing off his company’s Hanes briefs in quite that manner, Farley unquestionably cuts a finer figure than most executives. He works out virtually every day, almost regardless of the crisis du jour. Philip Corboy recalls that Farley once pumped iron while being deposed by a phalanx of lawyers. “If you wanted to know whether Bill was going to be around that day, you just checked his personal trainer schedule,” recounts one former Fruit of the Loom executive. Even on vacation Farley holds to a vigorous regime. “Last summer, we took a trip on his yacht, L’Aquasition, which has a gym built into it,” recalls Pat Arbor. “And every day we would work out there, or go run stairs on shore.”

Farley says the exercise bug isn’t about vanity. “It helps me deal with stress and tension,” he explains. “I enjoy it. I played three sports in college and I just never stopped.” Thus, over four marriages and countless undulations in his business fortunes, Farley has maintained the same athletic form that made him a letterman at Bowdoin College — which now boasts the William Farley Field House, toward which he gave $3.6 million.

A proselytizer for fitness, Farley built workout facilities for employees and banned smoking on Fruit of the Loom premises. But not all his workers embraced his fitness mania. Former employees grumble that he showed a particular affection for “workout guys,” men who shared his devotion to muscle — and say that Farley favored them over flabbier colleagues.

Farley’s rise from humble roots to the top of Fruit of the Loom reads like a propaganda pamphlet for the American free enterprise system. After attending Bowdoin College and Boston College Law School, he gravitated to Wall Street and New York’s high-finance milieu. Within a few years, he relocated to Chicago, heading the Midwest office for NL Industries’ metals division. Next, he moved over to the local Lehman Brothers office, where he worked on mergers and acquisitions. Then, at 34 and with only $25,000 in savings, he started acquiring companies for himself. He took on massive bank loans to buy Anaheim Citrus in 1976 for $1.7 million. Over the next decade, a pattern developed: Farley would target a company, borrow heavily to buy it, then use it as collateral for an even bigger play. He established a holding company, Farley, Inc., which oversaw the various operations he had bought, and took office space in the Sears Tower.

In 1984, after Farley bought the foundering defense contractor Condec, junk bonds czar Michael Milken helped him raise $150 million to cover his losses. At the time, Milken and his firm, Drexel Burnham Lambert, had raised large sums of “hunting capital” and were actively seeking men like Farley — aggressive corporate raiders with ice in their veins — who needed financing for takeovers and acquisitions.

Thus, when the Chicago conglomerate Northwest Industries, which owned the Fruit of the Loom brand, came up for sale in 1985, Milken raised $500 million in capital for Farley. Through a complex leveraging strategy, Farley raised the rest of $1.3 billion he paid for Northwest. Until that point, Farley had owned only obscure companies. But after the Northwest Industries deal, he was the man behind the first stitch of clothing put on each morning by almost half the men in America. Established just before the Civil War, the Fruit of the Loom brand had bounced, between several owners over the years. 1968 the brand’s producer, Union Underwear, was bought by Northwest Industries. Although during the seventies Union Underwear expanded into kidswear with Underoos, and bought BVD brand, the company and its owner Benjamin Heineman, seemed generally content with plodding along profitably. “Before Farley, Fruit of the Loom was an old-fashioned, never-changing company,” says Leo Isotalo, who worked for Northwest and Levi-Strauss before becoming a consultant. “They were happy figuring out how to take an eighth of a cent off the price of production. But they were very good at what they did.”

After years as a corporate raider Farley had become an accidental CEO but one who owned the largest undergarment maker in the United States. Insiders say Farley never envisioned himself as underwear mogul, but today he denies it. “I always thought Fruit was the jewel of that company,” he says. “I knew we’d somehow figure out a way to build it up.” Thus, he sold off nearly everything else. Northwest Industries had owned, and pumped cash into promoting the underwear, especially its nascent efforts at launching a line of underwear for women.

In 1987, Farley changed the company’s name from Northwest Industries to Fruit of the Loom and took it public, keeping control of the company the huge block of shares owned by Farley, Inc. As the stock price rose from $7 to in 1988 to almost $50 in 1992, his net worth skyrocketed.

Riding high with Fruit of the Loom Farley stumbled badly in 1989 when he mounted a hostile bid to buy West Point-Pepperell, a Georgia-based maker of sheets and towels with huge market shares. Despite major efforts by West Point-Pepperell’s owners to stop the acquisition — including a heavily publicized lawsuit — Farley wrested control of the company, poising Farley, Inc., to become a broader-based textile empire.

But the empire was not to be. Though Farley had originally tendered $48 a share for West Point-Pepperell, he ended up paying $58 — a price that would prove disastrous. “We kept saying, ‘Don’t Bill; let it slide. That price is too much,’ ” one Fruit of the Loom executives remembers. Farley would not relent and laid out $3 billion to buy 95 percent of the company. Unfortunately for him, much of that was borrowed from banks, which would not let him tap into West Point-Pepperell’s cash flow to service the debt, as he had planned to do.

Farley fought hard to make payments in the would-be behemoth. But cash was scarce. In a case of exquisitely bad timing, his trusty pool of junk bond capital had dried up when Drexel Burnham Lambert collapsed; Michael Milken was fighting 98 counts of securities fraud. In 1992, Farley was forced to give up control of West Point-Pepperell; Farley, Inc., had fallen so far behind in debt payments that it had to be saved from its creditors by Leon Black, the former Drexel partner had helped set up the acquisition. In the process, Black got his hooks heavily into Farley, Inc., exacting a 13-percent stake of the holding company and first call on any Fruit of the Loom shares that Farley might sell down the road. Asked today about the deal, Farley flinches, then says, “Gone, done, over; that topic’s ten years old.” One Farley friend, requesting anonymity, says the West Point-Pepperell blowout — a death rattle really, of the junk bond era — left Farley chastened, sapped of some of his relentless financial optimism.

As that debacle unfolded, a funny thing was happening in the stodgy world of men’s underwear. Specifically, it was getting sexy. During the nineties, sales of designer underwear soared on the allure the flashy, sometimes erotic ad campaigns of Calvin Klein, Joe Boxer, and, more recently, Tommy Hilfiger. The problem for Fruit of the Loom, says apparel marketing strategist Harry Bernard, comes down to this: We live in designer-brand world, and you can buy high-status underwear for under $15.

When a man puts on Calvins, he steps into the world of Antonio Sabato, Jr. and Kate Moss. With Fruit of the Loom, says Bernard, “it’s more like Joe Six-Pack — there’s no glamour or prestige.”

Farley admits Fruit of the Loom at first failed to grasp the changing market. “But now we’ve hired new designers, and we have new product moving through the pipeline,” he says. “You might look at them and say, ‘Gee, that looks like Tommy,’ or ‘Gee, that looks like Ralph.’ They’re selling very, very well.” He cites Banana Republic and Abercrombie & Fitch as examples of brands that have gone from staid to hip, and hopes to take Fruit of the Loom in the same direction through its own sexy ad campaigns.

Diversifying the company, he has also expanded the range of products in the Fruit of the Loom basket. Over 1993 and 1994, the company bought several clothing companies, including the licensed-sportswear maker Pro Player and the Gitano clothing line. With more products to sell, Fruit of the Loom’s revenues surged, from $1.9 billion in 1993 to a high of $2.4 billion in 1996. But those acquisitions also contributed to the company’s $1.2-billion long-term debt. Last year, the company doled out $85 million in interest payments, and it lost a gut-wrenching $488 million as sales slid 13 percent, to $2.1 billion; two years earlier, the company had lost $233 million. Although Fruit of the Loom is again turning a profit, Farley admits his company’s fortunes have fluctuated widely. “But long-term the apparel industry as a whole is going flat or even downward,” he says. “In that kind of environment you need to really execute, or you’ll be part of that trend.”

Fighting to trim his manufacturing expenses, Farley has pushed to move most Fruit of the Loom factory work overseas. By the end of this year, the company hopes to have shifted 95 percent of its production toward cheaper offshore labor; since 1994, Fruit of the Loom’s U.S. workforce has dropped from more than 29,000 people to fewer than 16,500. Not surprisingly, the U.S. plant closures have devastated some small towns.

Jamestown, Kentucky, got lucky; over the years, the Fruit of the Loom plant there has been merely downsized from its 3,000-employee heyday to fewer than 1,000. “The average worker here feels betrayed,” says Jamestown’s mayor, Donnie Wilkerson. “And there was some bad sentiment when it got around that Farley bought that [Bouvier] mansion. Farley’s not a name you’d want to drop around as being your buddy.” Initially Wall Street applauded the plant closings for their cost-cutting potential, but that enthusiasm waned when the company’s new foreign factories suffered a series of over-production problems, drops in quality, and inventory-control snags.

It’s not just factories that are moving offshore. In a canny maneuver, Fruit of the Loom USA is slated soon to become the subsidiary of Fruit of the Loom, Inc., a holding company based in the Cayman Islands. The strategy will cut the company’s U.S. taxes from 28 percent to 10 percent. It has also sparked talk that Fruit of the Loom is going on the auction block because its lower taxes, job cuts, and cheaper labor costs make it a more attractive target. In late August, speculation heated up that Farley was ready to sell. Although at press time no suitor had emerged, the names mentioned most frequently as potential buyers have included apparel industry giants Warnaco, which owns the licensed brands Calvin Klein, Olga, Valentino Intimo, Warner’s, and Chaps by Ralph Lauren, and VF Corporation, which owns brands such as Lee, Wrangler, and Jantzen. Recent rumors suggest a bid might come from tobacco giant Philip Morris, which already owns all-American name brands such as Marlboro, Velveeta, and Miller Lite.

Farley is not ruling out a sale. But, ever intent on growing the empire, he spins the story the other way. “Actually, some analysts say we now have a tremendous vehicle for acquiring companies,” he says. “If we buy someone, their tax rate drops from 40 percent to 10 percent.”

Even if he doesn’t sell out. Farley stands to profit handsomely on the Caymans move. Under a new format tied to that restructuring, Farley’s supervoting “B class” shares — which he granted himself when Fruit of the Loom went public — would become preferred stock. That preferred stock — and only that stock — would pay dividends, something Fruit of the Loom common stock has never done for investors. Farley’s estimated take would be more than $5 million per year. And, like the B shares he currently owns, each of Farley’s new preferred shares would continue to have five times the voting power of any other investor’s stocks. That means Farley has a big say in the selection of Fruit of the Loom’s board of directors, a power that has paid off magnificently for him. Asked by Business Week to assess Farley’s performance, Donald Yacktman of Chicago’s Yacktman Asset Management said, “Most CEOs who accumulate the number of errors he has are not in the position he’s in now.”

The huge stack of stock options he was awarded by the board meant that on paper he made $22.5 million in 1997, according to the Crain’s estimate. (Using a different valuation method, Fruit of the Loom estimated that the options were worth $16.2 million.) Asked to defend the enormous figure, Farley says, “In some respects $22 million sounds like a lot; in some respects it doesn’t sound like that much. Look at Michael Eisner making $500 million at Disney; that sounds like a lot. It depends where you’re coming from. And I’ve never cashed an option in my life. It’s just a theoretical value.”

Farley does have a point; if Fruit of the Loom flounders, his take shrinks. (Intended to spur performance, stock options can be “exercised” at a profit if the stock price rises above a preset “strike price.” The higher Fruit of the Loom rises above the strike price, the more money Farley stands to make. At press time in early September, however, the stock was trading at $22.50, well below Farley’s $41 strike price, making his options worthless if he exercised them at present.) Still, unless the company goes bankrupt, at some point down the road he will cash out — and cash out big. But he refuses to categorize himself among the class of CEOs who grow rich while their companies go south, saying, “Do I believe in stock options? Yes. Do I believe in making serious money in stock options? Yes. Should a CEO make a lot of money when the company is not doing well? The answer is no, plain and simple.”

Yet corporate compensation expert Graef Crystal says that until recently “Farley was a serious finalist for my porker of the year award. He tended to overpay himself, and Fruit of the Loom’s performance sucked.” Between mid-1993 and mid-1998, Crystal points out, the company’s stock rose just 9 percent while the Standard & Poor’s 500-stock index rocketed 180 percent. But Crystal approves of Farley’s decision last year to forgo salary for three years in exchange for almost one million Fruit of the Loom stock options.

Although Farley risks making no money if the share price fails to climb above $41 before 2007, precedent suggests that the risk may be less than it appears: In 1996, Farley and other Fruit of the Loom executives came under sharp fire when the board reduced the price at which they could exercise some other options, from $28 to $17.25 per share.

Over the years, Fruit of the Loom’s board has aided Farley in other ways. Last November, when banks were leaning on Farley to come up with personal-debt repayments, Fruit of the Loom’s board helped Farley avoid losing control of the company. Among his major creditors was Leon Black, who would automatically amass shares if Farley missed payments on his debt. In order to save Farley from his erstwhile savior, the board voted to guarantee a $26-million bank loan to Farley. Asked about the deal, Farley told Business Week it was the board’s idea. Board member A. Lorne Weil added, “We wouldn’t have done it if we hadn’t thought it was appropriate.”

Odd as it might seem for a company to guarantee such a large personal loan, this was not a first for Farley, who had gotten $12 million in exactly the same way in 1994. “Clearly he’s made many mistakes, yet Farley keeps taking a huge chunk out of that corporation,” points out one analyst. “And that money supports his high-living lifestyle.” Not all analysts knock Farley, though. Credit Suisse First Boston analyst Dennis Rosenberg, one of his staunchest defenders, says Farley has done a good job at Fruit of the Loom by cutting overhead and expanding its product line.

In early July, another shot came across Fruit of the Loom’s bow, in the form of a class action lawsuit, filed by a New England–based health care employees pension fund, alleging insider trading. Such lawsuits are common after stocks experience severe drops; in 1997 Fruit of the Loom’s share price had tumbled from $44 in March to less than $25 in September, as the company reported its heavy losses, plant closures, and job cuts. The suit charges, essentially, that last year Farley and other company executives misled both investors and analysts by painting a falsely rosy picture of the company and its prospects.

In the wake of  those bullish comments, as the stock price rose above $44, seven top company executives sold huge parts of their personal portfolios. Farley himself sold out as the price started dropping — ultimately unloading 96 percent of his common stock and reaping $39.3 million. Given that such insider selloffs tend to reflect internal problems and therefore serve as red flags for investors, Farley’s actions may in fact have accelerated the stock’s free fall. By the time he was finished selling, the share price had eroded to less than $25.

The plaintiffs’ lawyer, Bill Lerach of San Diego, calls his case solid. “There’s a strong inference of fraud for three sons,” he explains. “There was massive insider selling, including nearly all Farley’s common stock. There was a huge disparity between their results and the comments they made to the public analysts. And the losses were huge.”

Lerach also points out that in November of 1996 the company announced it would spend up to $200 million over the following months to buy back shares on the open market — such stock repurchases tend to drive up value, because they are taken as signals of confidence in the company. “It’s inherently illogical,” Lerach says, “that Fruit of the Loom would buy back its stock as its executives were selling off their own personal stock.”

Nonetheless, Farley dismisses the lawsuit as “just part of the cost of doing business,” lumping Lerach in with the group of lawyers who make an industry out of filing lawsuits whenever there are major drops in a stock’s price.

But even if the suit goes nowhere, the discrepancy between the executive statements and the disastrous news that later emerged has hurt the company’s credibility. “I won’t track them anymore,” says one analyst who scoped Fruit of the Loom for years. “I just don’t feel they were upfront with us, and who needs that? I’ve lost faith in Farley. The underlying business there is solid: but the stock would get a huge boost if Farley was bought out.”

Aside from the acquisition spree that took Fruit of the Loom beyond underwear, running the corporation has represented an entirely new breed of challenge for Farley, who had overhauled small companies but never risen through the ranks at a large one. “Before they bought Fruit, Farley had five plants,” says one long-term Fruit of the Loom executive. “But Fruit is a worldwide operation: you can’t just jump in a jet and check up on everything. You have to rely on people and their judgment.”

Yet company insiders say Farley relinquishes power reluctantly. In February, for example, when president and chief operating officer Richard Lappin resigned after only a year in that position, Farley simply took on both additional titles and has named no replacements. “I looked over my right shoulder, I looked over left shoulder, and I said, ‘Who’s going to do this?’ ” he recalls. “It takes intense focus and conviction about the company, I stepped up.”

Some industry observers suggest that Fruit of the Loom needs less Farley, not more. “I think if Fruit of the Loom was run by a company like VF they’d make a hell of a lot more money,” says marketing strategist Harry Bernard. “When Farley came in at Fruit, the company was the measuring stick against which others judged themselves; since they’ve treaded water while others surpassed them.” Indeed, some industry sources say, in the underwear segment Fruit of the Loom’s market shares have dropped sharply since 1990.

Under any circumstances, consultant Leo Isotalo says, “apparel is a tough industry, even if you know the business. And Fruit of the Loom’s condition is a reflection of Farley’s not knowing the business. He’s seen as being more oriented to the finance game than to brand marketing.”

The beating Farley’s image has taken of late in the business world hardly compares to the abuse he suffered during his 1988 Presidential run. Though the effort may have been prompted in part by his lifelong admiration of John F. Kennedy, Farley had never campaigned for political office. What spurred this political push? “Everybody owes a debt to this country they can never repay,” Farley told Fortune. “If you have the ability you should go for it.” But insiders say Farley had met a few Democrats considering a primary run, sized them up, and decided they had nothing on him — in terms of either professional achievement or raw brainpower. Soon he was actively touring Iowa, building name recognition for the state’s crucial caucuses.

For Fruit of the Loom employees — and for Farley’s social set — the run seemed a sudden madness. Predictably, the national press ate Farley for breakfast. Rarely had they been offered a candidate with such a ripe romantic history, including a festering divorce from his third wife, Jackie, then under way. When he failed to articulate any strong policy initiatives, he quickly got tagged as an egomaniac CEO. Accentuating that issue, Farley insisted on traveling in high style. “We never had to worry about transportation or lodging,” says one of his political staffers. “It was first class all the way, from planes to the hotels.” In the end, though, Farley never formally announced his candidacy and gave up before the primaries, having spent $2.5 million on commercials, most of it from the coffers of Farley, Inc. “When push came to shove, he just didn’t have that fire in the belly,” says the staffer. “I don’t think he wanted to withstand the invasion of privacy.” Though Farley would hint at political runs for years thereafter, he has never again been considered a likely candidate.

One of the Farley campaign’s underlying problems was the widespread suspicion that he was running as a Democrat out of opportunism, rather than any particular affinity for the party’s ideals. It hardly helped that he had made no secret of considering running as a Republican in 1986 to unseat U.S. Senator Alan Dixon, a Democrat.

An avid fan of Mayor Daley’s political style, Farley today describes himself as a moderate Republican, ascribing his willingness to host May’s fundraiser to a personal loyalty toward both Clinton and Carol Moseley-Braun. In fact, Farley’s own political donation pattern during the past two election cycles shows a strongly GOP tilt. The recipients of Farley’s contributions include high-profile GOP senators Alfonse D’Amato and Jesse Helms, both of whom have at times made President Clinton’s life miserable. But when the dinner at 209 East Lake Shore Drive made more than three-quarters of a million bucks for the Democratic Senatorial Campaign Committee, local Republicans had some hard feelings toward Farley. “After things like this, it’s hard to take him seriously as a political player,” says one GOP insider. “He’s always seemed more interested in promoting himself than any party or candidate.”

Though the view from Farley’s apartment is grand, his corner office in the Sears Tower trumps it. Early on an August morning, the sunlight comes in low and hard off the lake, its brightness almost blinding. On the windowsill, the light glances off a glass model of L’Aquasition, the yacht he recently sold to a friend. “He agreed to still let me use it four weeks a year, which is all I have time for now,” explains Farley. “I need to focus seven days a week on Fruit.”

After effectively taking the helm from Lappin early this year, Farley says, “I’d come home drained. It wasn’t going well and I was hearing it from customers. I started to take it very, very personally.” Touting record-high earnings in the second quarter, though, he’s growing optimistic. This morning, Farley sports the full power-player uniform: crisp white shirt, silver-and-gold cufflinks, soft blue suit, and an intricately patterned tie. He’s dressed for battle, in the form of a series of meetings, during which he plans to refinance up to $400 million in Fruit of the Loom capital. Getting the company back on course, he confesses, is eating all his time. “Do I want to do that all my life, when I have a lot of different interests?” he muses. “The answer to me is no. But I see no alternative. I have a unique opportunity to rebuild Fruit. I’m very focused, very intense about it.”

But he’s most animated when talking about his newer investments. They include some obvious picks: biotech companies and a large stake in 21st Century Cable, which hopes to offer Chicagoans a menu of Internet, TV, and telephone services via fiber-optic cable. His eyes gleam brightest, though, when he discusses his partnership deal in the former Soviet Union’s TV3. “It’s going to be the biggest independent network in Russia,” he says. “It’s like buying into NBC 30 years ago.” Debt or no debt, Farley is not dreaming any smaller.

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