Omaha World Herald article on Walter Scott:
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>>A Working Retirement Kiewit Chief Stays Close After Stepping Down
ROBERT DORR MELINDA NORRIS
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07/10/98
Omaha World-Herald
Metro
Page 1
(Copyright 1998 Omaha World-Herald Company)
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While splitting Peter Kiewit Sons' Inc. into two companies, Walter Scott Jr. decided one
position wasn't needed: the top one. His position.
Scott had been the head of Kiewit during the time it was the corporate parent of the two
businesses that now were going separate directions. A parent wasn't needed any longer. And
each new company had a chief executive: Ken Stinson at Kiewit Construction Group and
James Crowe at Level 3 Communications.
So Scott did what he saw as obvious.
"My job was eliminated," he said.
After nearly two decades as Peter Kiewit's successor, Scott stepped aside in March as chief
executive officer of Omaha-based Peter Kiewit Sons'.
Peter Kiewit had built a small, family company into an international construction
powerhouse, while also becoming Omaha's most influential businessman. After Kiewit died
in 1979, Scott kept the company among the nation's largest contractors. He used the cash
generated from construction to diversify, financing the buildup of an alternative phone
company for businesses, MFS Communications. And Scott followed his mentor in becoming
the area's most influential businessman.
Scott, 67, sat recently in his spacious office on Kiewit Plaza's top floor and talked about the
changes at Kiewit and about the origins of the new Level 3 spinoff company, an account that
involves Warren Buffett, Bill Gates and a mansion in Dublin, Ireland. Scott also talked
candidly about a potentially life-threatening episode a year ago when he passed out from a
blood clot that lodged in his lung.
In many respects, Scott said, he is not retiring. He remains board chairman of Level 3 and is
a board member and chairman emeritus of Kiewit. He is as interested as ever in Kiewit's
business activities and will remain involved. He plans to keep traveling to Kiewit building
sites to check on the progress of work.
Walter Scott and his wife, Suzanne, will stay in Omaha, living in their suite at Kiewit
Plaza, 36th and Farnam Streets. Scott gets up at 5 a.m., exercises for 90 minutes and is at his
desk by 7:30 a.m. for a day of back-to-back meetings.
That's the way his life has been, and that's the way it is likely to stay, he says.
In addition to Kiewit and Level 3, he serves on eight corporate boards, is the chairman of
five nonprofit boards, president of one and a member of four others.
Scott is among the business leaders backing a petition drive intended to constitutionally limit
state and local tax collections.
"I really enjoy what I do," he said. "I like to work."
"I don't see Walter fading away into the wilderness," said retired Omaha businessman
Charles M. "Mike" Harper, former head of ConAgra and RJR Nabisco and a former Kiewit
director.
Stinson and Crowe "will continue to bounce things off Walter and seek his advice, not
because they have to, but because they value the advice," Harper said.
Scott might take more time for his community and charitable activities and for vacation trips.
Walter and Sue Scott returned Monday from a two-week African sightseeing trip with 17
Nebraska friends. They traveled across South Africa on a chartered train, riding in
refurbished turn-of-the- century passenger cars.
In Botswana and Zimbabwe, the group viewed animals and their habitat from Land Rover
sport utility vehicles. The travelers stayed overnight in tent camps, and they hunted game
birds.
"We saw elephants, lions and leopards in the wild," Scott said. "To me that's really
impressive. I think everybody had a great time."
Stepping down as chief executive is the logical end to a series of events that have restructured
Kiewit, Scott said. The company, with annual revenues totaling $3.1 billion last year, split
into two independent concerns to better focus each company on its central mission and to
give Level 3 more freedom to attract employees and capital.
The traditional Kiewit construction and coal-mining activities will carry the Kiewit banner.
Kiewit Construction Group's chief executive, Ken Stinson, becomes Peter Kiewit Sons'
chief executive - essentially a new title for the same job Stinson has been doing. Kiewit, the
nation's seventh-largest construction company, will keep its base in Omaha.
The new high-tech Level 3 Communications, the successor to Kiewit Diversified Group, will
develop a new campus and work force in the Denver area, with James Crowe as chief
executive.
Scott's hospitalization in May 1997 played no part in his decision to step down, "although
maybe it should have," he said. He and Suzanne had flown to their log vacation home
overlooking a Snake River tributary near Jackson Hole, Wyo. They spent a pleasant
weekend there and helped plan an educational event involving high school students that was
held this year in Jackson Hole.
While packing to return to Omaha, Scott passed out in the bedroom and fell on his face. A
rescue squad took him to a Jackson Hole hospital, where he spent four days. A blood clot
had lodged in his lung. Doctors worried that a second clot, in Scott's leg, would move
toward the lungs.
A blood clot in the lung can be fatal within the first hour. "Either you die or you don't die,
and I didn't," Scott says.
Scott says he feels fine. When he travels, he exercises his legs every 30 minutes to improve
blood circulation and prevent clotting. "Life goes on. I will take care of myself the best I can.
I'm not going to change the way I live or what I do," he said.
While Kiewit built his family's company into an international construction empire, Scott
made his biggest mark by using the money generated by construction to make investments
that have turned out spectacularly successful.
Hundreds of Kiewit stockholders - the company's employees and retirees - have become
millionaires. Scott became a billionaire, with a net worth of $2 billion.
"I've tried to be a good steward of what (Kiewit) left," Scott said.
MFS Communications, started from scratch by a Crowe-headed team with Kiewit money,
built a communications network to compete for corporate business. In 1995, Kiewit spun off
MFS as a separate company so it could take advantage of a rising stock market. And then in
1996, MFS merged with WorldCom Inc. of Jackson, Miss., in a $12 billion stock swap that
left WorldCom in charge.
Meanwhile, in the summer of 1995, something happened that got Scott thinking in a different
way about communications. Scott was among 30 billionaires and top corporate executives
who gathered in a mansion near Dublin, Ireland, for a multiday retreat with host Omaha
investment wizard Warren Buffett, a friend of Scott.
Buffett organizes similar gatherings every other year. The Dublin session included
presentations on the Internet by Microsoft chief executive Bill Gates and his wife, Melinda
French. Gates told the group that the way people and businesses will communicate in the
future will involve Internet technology, and that change will threaten the traditional phone
companies.
Scott was jolted into realizing that MFS might be hurt. He talked individually with Gates.
"That solidified it in my mind, not just understanding it, but deciding to go out and do
something about it," Scott said. "This was nothing brilliant on my part. We have a lot of
smart, able people. I'm not sure others wouldn't have come up with the same thing."
Shortly thereafter, Scott and Crowe met in the lobby of a New York hotel. Scott talked about
the Dublin retreat and what he had heard.
Before then, Crowe said, he had virtually ignored the Internet's potential value.
"I logged onto the Internet. I played around with it," he said. "But I thought it was too messy
... too undisciplined, not suitable for serious business communications. And when and if it
amounted to something, what the heck, we'll worry about it then."
After hearing Scott's report on what Gates had said, Crowe quickly launched MFS into a
study of the Internet's capabilities.
"We devoted about 30 people to nothing else," he said. "The more we looked, the more we
said, 'Wait a minute, this is something serious and it's going to affect the way all of us
communicate for the next 100 years.'"
The fastest way to catch up was to buy an existing Internet service provider. In April 1996,
MFS bought UUNet Technologies Inc. for $2 billion. Several months later, WorldCom
bought MFS.
Crowe left WorldCom in mid-1997 and accepted Scott's offer to rejoin Kiewit as the head of
its diversified group.
For the second time, the first being MFS, Crowe jumped into a new start in communications.
He explored developing a network primarily for businesses based on Internet technology.
Scott and Crowe decided they must build the company in a place that could attract 2,000 or
3,000 highly skilled people who have a lot of job options. A polling firm helped pinpoint the
place: Denver.
"I was disappointed," Scott said. "I'd prefer to have it in Omaha. But I wouldn't do anything
to hurt the business."
Several years from now, Omaha might have a big enough base of computer specialists and
engineers so that the next Level 3 could develop its business here, he said. Scott was a key
mover in raising private money that is helping develop the Peter Kiewit Institute of
Information Science, Technology and Engineering at Ak-Sar-Ben.
All the Kiewit diversified resources, $3 billion in cash and other assets, will go into Level 3,
which plans to build a 60-city fiber- optic communications network.
Despite the huge investment, Level 3 carries less investment risk than many ordinary
construction projects, Scott says. Once Level 3 gets its communications network in place,
rising demand will make that network valuable, he said.
"The worldwide telecommunications market is huge, approaching $1 trillion a year," Scott
said. "You don't have to have a huge share to have a very large company. I don't mean to
say it's a sure thing, but I'm confident." << |
