Mahoney's New Line

David J. Mahoney, the ebullient, $350,000-a-year chief executive of Norton Simon Inc., looks like a movie hero, talks like a salesman in a hurry and is willing to go out on a limb. At the start of each of the past three years, Mahoney predicted that the earnings of the widely diversified food, drink and publishing company would increase by at least 15%. He has hit the mark every time. Now, bent on building N.S.I, into a consumer-products giant that would equal Procter & Gamble and Unilever, Mahoney has begun a major drive for acquisitions.

N.S.I. is set to pay $480 million in stock next month for Hollywood-based Max Factor, the nation's fourth largest cosmetics firm, which has annual sales of about $200 million. The acquisition will give N.S.I. its first big footing in the nation's drug stores and in foreign markets. Max Factor's 23 international branches generate roughly half of the company's earnings. Mahoney, who believes that the firm has been run too cautiously under the control of the related Factor and Firestein families, plans to quickly extend the product line.

Out to Win. The acquisition is Mahoney's latest effort to shake up the corporation that he was chosen to run in 1969 with the strong support of Norton Simon, who put it together. Soon after, Simon sold out his interest to devote himself to art collecting. Mahoney, now 49, took charge of a loose group of enterprises--Hunt-Wesson Foods, Canada Dry soft drinks, Johnnie Walker Scotch and other liquors, Redbook and McCall's magazines, David Susskind's television-production firm (Talent Associates) and even companies that manufacture tin cans.

Mahoney is a tough, demanding boss. Says Senior Vice President E. Garrett Bewkes: "We have put on 25% sales gains in some cases, but Dave will press for even greater improvement if he thinks the potential is there." Executives are ousted if they do not keep on pushing up sales and earnings. Mahoney has fired or otherwise replaced 60% of N.S.I.'s top management, and put in his own hand-picked people.

He has also boosted profits by splitting N.S.I.'s main branches into separate companies, as he says, "in order to identify the losers better." McCall's was divided into four profit centers--printing, magazine and book publishing, home-sewing patterns and data processing--and the manager of each was made responsible for its success. The profitable liquor distributorships were taken from Canada Dry and put under a new company, Somerset Importers, Ltd. Mahoney sold off most of the uneconomical bottling plants to franchisers; turning around from a loss four years ago, Canada Dry had pretax profits of more than $9,000,000 in fiscal 1972.

Hunt-Wesson's line was also enriched with profitable new convenience brands. One big seller is the Snackpack pudding, concocted of such ingredients as food starch, artificial color, artificial flavor and preservatives BHT and BHA. In all, N.S.I.'s sales in the past four years went from $940 million to $1.2 billion, and its earnings climbed by 85%, to $50.5 million. Says Mahoney: "Most companies are satisfied if they do not lose, but I was always out to win."

Good Humor. Mahoney, who calls himself a "conservative swinger," grew up in The Bronx, the son of a crane operator. He won a basketball scholarship to Pennsylvania's Wharton School of Finance and Commerce, but his studies were interrupted by World War II. He entered the Army, served in the Pacific and Japan, and was discharged a captain. Of all the items he has promoted since then, Mahoney has been most successful in selling himself.

Starting as a mail boy at New York's Ruthrauff & Ryan advertising agency shortly after the war, he quickly advanced to account executive, working days and commuting to Philadelphia nightly to get his degree from Wharton. A few years later, Mahoney founded his own small agency; he often haunted the bar at "21," nursing his drinks while looking for prospective clients. The agency's success brought him an offer to manage the Good Humor ice cream company, and in 1961, when Good Humor was sold, Mahoney made $700,000 on his stock after only five years on the job. He spent the next five years at Colgate-Palmolive, helping direct expansion. Then Norton Simon, attracted by Mahoney's charm and ability, hired him to head Canada Dry.

Mahoney is a firm supporter and friend of Richard Nixon, who two years ago appointed him to direct the preparations for the American Revolution Bicentennial in 1976. The unpaid job has made Mahoney the target of critics in Congress and out, all of whom have differing notions on how the celebrations should be held. To keep up with his expanding empire, Mahoney travels 120,000 miles a year. Last month he was in China to buy ginger for his soft drinks and discuss the possibility of importing hot mao-tai liquor. Yet Mahoney, who is worth about $14 million, is already looking ahead five or six years, when he plans to hand the job over to a younger man. "Today I'm having a ball," he says, "but when the time comes, I hope I will be as smart as Norton Simon himself and pull out all the way."

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