HOW I FLUNKED RETIREMENT LEE IACOCCA SAYS HIS THREE YEARS OF RETIREMENT HAVE BEEN MORE STRESSFUL THAN HIS 47 YEARS IN THE AUTO BUSINESS. THE FORMER CHRYSLER CEO EXPLAINS WHY TO FORTUNE'S ALEX TAYLOR III.
By ALEX TAYLOR III; LEE IACOCCA

(FORTUNE Magazine) – FORTUNE: You say you've flunked retirement. Why is that?

IACOCCA: I wasn't ready for it. Most people aren't, especially CEOs. Your life is so structured that you really become insulated. When you're a CEO, you never rub shoulders with the people who make your cars, or buy them, or service them. When I flew corporate, I was alone most of the time. If there was a guy with me, he wanted to talk business. If a limo picked me up, I got to know the back of the driver's head. It was worse at Ford. They really treated you like a king, because Henry Ford II wanted it that way.

FORTUNE: What's been hardest for you?

IACOCCA: For me, pulling up roots was the hardest part. Moving from Michigan to California would have been difficult under any circumstances. Coming right at the moment when I used to run a company and then had to find something to do with my life, it was a double whammy. Nothing is familiar anymore, including the streets. I get lost out here, I really do. Get me off the freeways and I'm dead. Then I look at my friends and they're all new. Which is good because I like new friends, but I miss so many of my old friends. If I were to give somebody advice, it would be to hang on to something familiar: at least your house and your wife. Don't do too much at one time--you might go nuts.

My wife was a California girl and I was in love, so we said, "We don't want to live in Detroit, let's move to California." I never thought I'd live in Lala Land, but here I am. I bought this house in Bel Air from the U.S. government, of all people, in the fall of 1993. It was originally listed for $12 million, but I was able to get it for $5 million after both the builder and the bank that loaned him the money went bankrupt. I probably got a good deal, but it took six months to close, with lots of red tape. I was so dumb I thought I could save my marriage by buying a great house in a nice section of California. The adage about how you can't buy happiness is true. Darrien and I moved here in January 1994 and got divorced in the fall of 1994. We were married 3 1/2 years. I wish I knew what went wrong. I think it began when I was a consultant to Chrysler in 1993. I traveled and I wanted her in Detroit; she wanted to be in California. I don't want to blame it all on geography. But it festered.

FORTUNE: Do you miss the perks?

IACOCCA: I don't. I can buy all my own perks anyway now. When I grab a cab, the cabbie, if he recognizes me, will tell me what's wrong with his car in a minute. If I take a commercial flight, people come up to me and we talk. I enjoy the camaraderie. Actually, I don't want to fly much anymore, private or commercial. I'm debating as I sit here whether I want to go to my house in Italy. I haven't been in 14 months. But flying from Los Angeles to Milan--I don't need that. I go there for what? It's nice here in California; why am I going to the sun in Italy?

FORTUNE: Why, after all you've done, did you support Kirk Kerkorian in his attempted buyout of Chrysler?

IACOCCA: Because he's a good stockholder for Chrysler and an honest, honorable guy. Kerkorian never did anything wrong to the company or to me personally. He talked to me in 1994 and said, "Chrysler is undervalued and I think they're trying to pretend they're a bank. They've got $7 billion in cash and they're headed for $10 billion. What are they going to do with it? They are a cash machine. Somebody's going to come after them. Why not me?" In shorthand, that's about what he said. And I replied, "Well, I guess you're not a raider." After all, he'd been a stockholder for years and hadn't sold a share. I had determined that he was in for the long haul.

The financials that Kerkorian used were put together by Gary Wilson of Northwest Airlines, who was introduced to Kerkorian by Robert Day, chairman of Trust Co. of the West. This was the third time Day had proposed a Chrysler buyout. He came to me for the first time in 1981 when the stock was $6 a share and again in 1990 when the stock was at $10. Kerkorian made his move the third time, when the stock was $39 a share. Wilson and Day worked him into a pretty big lather. They said it would be duck soup to finance.

FORTUNE: Why weren't you more involved in the deal?

IACOCCA: That's where I made my mistake. I didn't want to go back to run the company, so all I really did was check out Chrysler's numbers. Looking back on it, I should have gone in all the way to help get the deal done, or not gone in at all. Because Kerkorian used my name. I said to him, "Kirk, you put my name in play."

I said I would support him if he raised the money and did two things: Give 5% of the company's shares to management and another 20% to the workers. I said that if he gave those constituents 25% of the pie, he would have something to build on. With a market cap of $24 billion, their stake would be worth $6 billion today. He also had put together a board of directors for the future company: some good women and some CEOs who would have been terrific.

But the plan to give away 25% got lost in the shuffle. All the public relations were handled by Tracinda, Kerkorian's company, and those people were in another world. They were pretty insular, and they reported to one guy--Kirk. I could have handled the public relations for them. I got requests for interviews from hundreds of people, and I never returned a single call. Kerkorian complained that he got bad press. But he wouldn't talk to anybody. I told him, "You're not accessible; you're Howard Hughes reincarnated. You've become a mythical character, and the world wants to know who you are." If you insist, like he did, that, "I'm not giving up my personal life," then you've got to take some knocks.

The whole thing was done wrong, pure and simple. Tracinda was playing in the big leagues. Kerkorian had a couple of young CPAs working on it who didn't have a real game plan. They gave it the college try but came up short. He wasn't involved hands-on. And I didn't want to get involved because it wasn't my job to raise the money. Kerkorian probably had access to $12 billion, but he wasn't organized for the whole $25 billion. He didn't have his investment banker, Ace Greenberg of Bear Stearns, lined up. When I found that out, I said, "Who's going to give you the money?" Tracinda said, "We've got Bank of America lined up, and they're good for $5 or $10 billion." I said, "You need a big East Coast investment bank and some European or Asian money." What they didn't figure on was the big economic clout of Chrysler, which does billions of dollars in business with those banks.

I think maybe Kerkorian was in it for the chase. He's almost 80 and has $4 billion. He never said it this way because he's so private and quiet, but getting a blue-chip name like Chrysler would give him legitimacy in his life. It is nice to say, "I made a ton on MGM Grand and movies and gambling." But this would be different. I asked him if he wanted to be a Henry Kravis, and he said, "No."

All he did was go to the entrenched management--which I was once part of--and an entrenched board, and say, "Here's an offer to buy the company. Take a look at it." They said, "No, we don't trust you." That's because some of Kerkorian's transactions were reported in the press as greenmail. He resented it when I even suggested that. I said, "Well, that was your reputation, Kirk, and you did nothing to change it. Because you weren't talking to anyone."

Is Kirk that bad? If he'd had control of Chrysler, what would he have done? People say he doesn't understand the auto business, that he'd sell off assets, that he'd cannibalize it. Now, why would he do that and put his $3 billion investment in jeopardy? I wouldn't be a party to that. So what did he want? I guess he wanted to take his $3 billion and make $13 billion instead.

If you asked Kerkorian today, he'd say he wasn't making a hostile bid because he and [Chrysler Chairman Robert] Eaton had a deal. But they never sat down with each other long enough. I didn't go to see Eaton, either. I was Mr. Bigfoot. Everybody was scared that I might be coming back, but there was no way. I didn't want to go back on the board, and I didn't want to run the company. I was 70 then; I wasn't 68 anymore.

FORTUNE: Chrysler charged you in a lawsuit with disparaging the company. Any truth to that?

IACOCCA: People think that somehow I was a turncoat by lending my name to Chrysler's biggest shareholder to give him credibility. That's what they're mad at, I guess. I didn't think I was ruining my reputation. I built the company to where it is, I installed the management team, and I still own a lot of stock. Why would I disparage them? I thought, Why not let the management and the employees own 25% of it? Why must the company be in the hands of pension funds?

I was stunned. It was hurtful. And I must confess to you, it shortened my life a little bit.

FORTUNE: Lots of people read that you were forced into retirement by Chrysler. True?

IACOCCA: This story that I went out of Chrysler kicking and screaming, that's pure myth. That's absolutely wrong. I read something the other day. Somebody was writing about the 100th anniversary of the U.S. auto industry. At one point the article said, "He was forced out of Chrysler in 1992. He wanted to go back in 1995 but failed." Now the "forced out in 1992," that's the kind of thing you live with and never get over. They were saying it during a period when Chrysler's market cap had gone up $17 billion. You're known by your record. I'm a bottom-line guy.

I really wanted to retire. I had turned 68, and I was getting tired. I'd done everything. I had redone the minivan. Of the $1 billion in profits Chrysler made last quarter, I'll bet most of it was from minivans. And by the way, I was working under a contract the board had given me when I turned 65 so that I would stay around.

In the early 1990s, the board said to me, "You've got to tell us when you are leaving. We've got to start looking for a successor because you're going to be tough to replace." I said, "I'll stay until I'm 68. And then I'll stay as chairman until I'm 70. That's the deal. When I'm chairman, you give me half the pay under my contract. I'll be an active working chairman, but I don't want to be CEO."

I had had plenty of offers to leave before then. Tex Colbert [chairman of Chrysler in the early 1960s] asked me if I wanted to be president of Harvard. It was an informal offer, it never went much further than that, but I appreciated it. Then when Senator John Heinz was killed in an airplane crash in 1991, Robert Casey, the governor of Pennsylvania, came to see me and said, "Why don't I appoint you Senator?" [Iacocca grew up in Allentown, Pennsylvania.] And Congressman John Murtha said he would get me two committee memberships so I wouldn't be just another bump on the log with no seniority. The only problem was that I would have to run for reelection six months after I was appointed. Then I got a call from the ragin' Cajun, James Carville, who said the Democrats wouldn't support me when I ran in the fall unless I did certain things. He told me what I had to think and do because of the polls. I said, "The hell with you guys." So I turned the governor down.

Then I thought a lot about being baseball commissioner. George Steinbrenner, owner of the Yankees and an old friend, and Bill Bartholomay of the Atlanta Braves, head of the commissioner selection process, came to see me. But I gave that up to stay at Chrysler.

By 1992, the stock was starting to soar; it was already at $25. I said, "Gee, everything is in place." I had gone through the pain of integrating American Motors, which had taken three years--two years longer than I expected. Minivans were hot, and Iacocca's folly, the Chrysler Technology Center, was done. Jerry York [Chrysler's former chief financial officer who went to work for Kerkorian after a short stint at IBM] and I had cut $4 billion out of our operating costs. I said to myself, "What am I doing here?" And because my wife was in California, I said, "I'm 68. It's time to smell the roses with her." Little did I know.

FORTUNE: Are you smelling any roses now?

IACOCCA: I have too much going on. I'm bogged down in paper. I get a packet from Chrysler every week or so and a packet from my home in Detroit, which I just sold. It's got to stop. I told my assistant Irene the other day that we have to make a rule. No more autographs, no more celebrity stuff. I said to her, "You are just going to have to say he doesn't live here anymore. Or he died."

I want to simplify my life. That's almost a full-time job. I have a network of friends who mean well, but sometimes they need help, and God, it gets complicated.

FORTUNE: Will you marry again?

IACOCCA: Some people love being single, and they say, "You'll love all this time to yourself." I don't want to eat by myself, I don't want to sleep by myself. It's okay to have some private moments, but if your whole life is a private moment, you'd better go see somebody because you'll go crazy. When you're alone, you're alone. Period.

I'm alone too much. It's difficult. You can't go out looking for partners, you've got to go out looking for friends. If you happen to run into somebody you want to get romantic with or spend time with, it's tough. I'll take some girl out for dinner, and she'll ask, "People coming up to the table and all that stuff, you have to put up with this all the time?" It is not conducive to a nice atmosphere. But you make your own bed: You write a book, you go on TV, you turn around a company, your privacy goes to hell.

In Detroit you couldn't get a conversation going on religion or politics. Everyone wanted to talk cars. Out here, it's worse: You can only talk movies--the fantasy business. If you get away from movies, you might as well be a dunce.

The social life out here isn't much, either. If you go to somebody's house for dinner, everybody looks at each other's clothes. Then you sit down. No, you don't sit down, you have a buffet; you eat standing up. There are a lot of guys you never heard of with these young girls, and it's showtime. After you eat, you go in to see a movie. All these houses have private theaters that seat 20 or 30 people. Instantly, when the movie is over, everybody gets up to shake hands, trade a little gossip, get in their cars, and go home. Why not just go to the movies?

FORTUNE: What sorts of projects are you involved in?

IACOCCA: I'm still in demand as a public speaker because I'm good at it. When you've talked for 45 years you get the hang of it. And I have 616 speeches to draw from on various subjects. But I still put a lot of work into them. I figure if I'm getting $60,000 for 30 minutes, I should sing for my supper. I give five or six speeches a year.

It isn't easy making money, but giving it away is a bitch. But what the hell am I gonna do with it? My books and my syndicated column together generated $15 million. I put that with another $15 million of my own and dedicated all of it to diabetic research. [Iacocca's first wife, Mary, to whom he was married for 27 years, died of diabetes in 1983.]

I've also collected $40 million for the Iacocca Institute for Competitiveness at Lehigh University, my alma mater, to pioneer new manufacturing processes. A lot of it was government money--$23 million from the Defense Department--and $15 million was raised by me and others. Lehigh's programs for engineers are so successful that I complain they are training guys from GM and Ford with my money.

Publishers want to give me a million dollars to write a third book. Well, with the settlement of the Kerkorian deal, I just got out of the clutches of three law firms: one in L.A., another in Detroit, and some white-shoe guys in New York. The last thing I need is more lawsuits. Before I retired, I never sued anybody, and I was never sued myself.

I'm still interested in politics. I got involved with Nafta because I thought it was right. Chrysler was probably the biggest employer in Mexico, and I spent a lot of time there. After we won the vote in Congress, President Clinton let me spend the night in the Lincoln bedroom.

I was going to run for President in 1987. I thought about it for ten minutes and got the hell out. Five million dollars was raised for me, and I had to tell the Federal Election Commission that I wasn't going to run. I knew I could get along with Congress because I was used to compromising with labor unions. And I've always known I could handle the press. But what couldn't I handle? The bureaucracy. I would have died quick. Everything is in slow motion down there in Washington. And you would go nuts.

I'm glad Bob Dole resigned from the Senate to campaign for President full time. I've got some advice I want to give him. I hate to think that you have to be great on TV to become President. But it's true. He's bad and looks uncomfortable. I want to tell him to look right at the camera and to end his speeches differently. He gives the crowd this funny thumbs-up sign, lets his voice trail off, and says, "God bless America." Patriotic, yes, but not very effective.

I spent five days in Cuba in 1994 as a guest of Fidel Castro. I told him I wanted to see him before he died, and he told me the same thing. I've got bad news for the State Department: Fidel is strong as an ox. He gave me hundreds of Cuban cigars, which I could legally bring back to this country as a gift. I only smoke one a day now--doctor's orders--so I gave some of them away.

I opened an office in Los Angeles in the fall of 1994. Ronald Perelman, whose New World Communications board I sit on, built me a fantastic office. I've invested in a couple of businesses. One was started by a next-door neighbor--a chain of fast-food restaurants called Koo Koo Roo with healthy food like skinless chicken. He's rolling it out nationwide, and I think it will be a smash.

FORTUNE: What gives you the most pleasure these days?

IACOCCA: My children and grandchildren. The other day I went East for my granddaughter's first communion, even though Kerkorian got mad at me for skipping the MGM Grand annual meeting. I worry a lot about how much money I should leave the kids. I was at Shadow Creek, Steve Wynn's private golf course in Las Vegas, and Warren Buffett was there. I told Buffett I'd read in Fortune (September 29, 1986) that he was leaving his children and his grandchildren zippo. Nothing. I said, "I don't believe it. If you're worth $10 billion, you don't let the kids fend for themselves, do you?" He equivocated quickly. He said he wants to take care of their educational and health needs, and give them one good roof over their heads.

If you left your children a billion dollars, they wouldn't be able to handle it. People say I've left my two daughters too much. They do have trust funds, but not big ones. They won't be worrying like the Ford family about which hunting lodge or English castle to buy next. When I'm dead, they may screw up, but they'll still be able to lead a good life.

I'm thinking about selling the house in Bel Air and moving East. I'll keep the place in Palm Springs, though four months a year it's so hot you can hardly go near it. I'll probably keep an apartment in New York and live in Boston. My daughter Kathi and her three children are there. I love Boston. It's vibrant: young people, good schools, great food if you like seafood, great hospitals.

What do guys like me do who've had the world by the string? I got some notoriety, a little more than I deserved, and made some money in the car business. I made some mistakes, but it averaged out pretty good. Now that chapter has closed, and I don't think much about cars anymore.

You can plan everything in life, and then the roof caves in on you because you haven't done enough thinking about who you are and what you should do with the rest of your life. Those guys who retire at 53 with early buyouts have a hell of a problem. Actuarially, I've got ten years left. I hope to beat it and do 20. I'm here by myself now, but still optimistic. People ask me why I'm still working so hard. I tell them that without that, and without my kids and grandkids, I'd lose it--I'd have nothing.