Jannard, James H.

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Jannard, James H.

(1949-)
Oakley Inc.

Overview

Media–shunning Jim Jannard founded Oakley Inc. in 1975 and created a monopoly in the sunglasses and goggles market that has remained virtually unapproachable by would–be competitors. Celebrities from Michael Jordan to Tom Cruise have sported trendy Oakley sunglasses—often without any endorsement fees being paid—and the company has expanded its product line to include athletic shoes and apparel. More is known about his company than about the reclusive Jannard, who flies a skull–and–crossbones banner above Oakley's headquarters, but one thing is sure: Oakley has made Jannard a billionaire and still counting.

Personal Life

Jannard rarely appears before the media and rarely grants interviews. Much of what is known about him is no more than a collage of informational bits and pieces gathered from various sources over the years. When Oakley first went public in 1995, Jannard refused interviews, and Forbes magazine was forced to seek information about him from his ex–wife, Pamela. Although he softened his stance in later years, any granted interviews usually came with strict conditions: no photographs and no printing of any comments made by him that were not in direct response to questions posed.

What is known about him, for starters, is that he was born in Los Angeles in 1949 and grew up in Alhambra. There is a conspicuous gap of information about his childhood and adolescence. According to Forbes' 1995 interview with his ex–wife, Pamela, Jannard was a long–haired freshman at the University of Southern California's School of Pharmacy in the early 1970s, who enjoyed taking his dog with him to classes. Following frequent clashes with his professors over the class attendance of his favorite Irish setter, Jannard left college. Footloose and free, he bought a motorcycle and traveled around the Southwest until he ran out of money a year later and returned to Los Angeles. Jannard traded in his motorcycle for a used Honda and began selling motorcycle parts out of its trunk to Southern California shops that serviced cycles. He also liked to tinker with motorcycles and parts in his garage. In 1975 he designed a rubber grip for off–road motor–cross handlebars and started marketing them, along with his other cycle parts, from his car trunk. He officially formed his company that year and named it "Oakley" after his favorite dog.

In 2001, Jannard still owned 61 percent of Oakley, worth approximately $805 million, and continued serving as its president, chairman, and chief executive officer (CEO). Although he had not taken a salary or bonus from the company for several years, his remuneration in the year the company went public (1995) included a $9.3 million bonus on top of his $380,697 salary.

He runs Oakley's Foothill Ranch headquarters like a college campus; employees move about in shorts or jeans and T–shirts—and so does Jannard. At the company's annual meeting, Jannard showed up wearing a black trench coat, orange Oakley shoes, a beret, and, of course, sunglasses. During one of his rare public appearances outside the company, he gave a store opening speech wearing a gas mask and talking through a megaphone. The May 7, 2001, issue of the Orange County Business Journal quoted Jannard as saying that the "Oakley brand stands for mind–blasting creativity and gutsy, even at times deviant, behavior."

The six–foot evasive CEO is considered intense, headstrong, and aggressive but likes to refer to himself as a "mad scientist" or as absent–minded. The atmosphere at company headquarters implies a youthful, laid–back corporate culture, albeit a contrived "cool" image. Jannard once told Orange County Business Journal interviewer Melinda Fulmer that Oakley was a "fun, flippin' place to work." The Journal has referred to him as "a hippie turned corporate executive," and even the $35 million Foothill Ranch headquarters of Oakley, built in 1997, reflects his nonconforming taste. It is 400,000 square feet of "oversize girders, rivets and valves," according to Forbes. "It creates an atmosphere of invention, art and a little bit of mad science," Jannard told the magazine's interviewer. He admitted to being inspired by dark science fiction movies like Blade Runner and Judge Dredd.

In January 1998, a black and white skull–and–crossbones flag appeared atop Oakley's company fortress on the hill. The company had paid $2000 to obtain county zoning approval for the banner but made no public statement as to its significance. Greg Hardesty of the Orange County Business Journal speculated two likely explanations: one involved a planet Mars line of sunglasses—the magazine advertisements that contained a skull and crossbones on an image of Earth; the other related to an acrimonious relationship with fierce arch–rival Nike, which opened up a subsidiary directly across the street from Oakley. Ongoing litigation between Jannard and former Nike friend, Phil Knight, continued well into 2001, mostly over alleged patent infringements. In any event, the ominous flag was noticed by neighbors, one remarking that it fit the company's "weird image."

Chronology: James H. Jannard

1949: Born in Los Angeles, CA.

1975: Sold motorcycle parts from the trunk of his car.

1975: Oakley formed, named after Jannard's dog.

1980: Oakley first marketed goggles.

1983: Oakley expanded its products to sunglasses, called "Eye Shades."

1995: Oakley went public.

1999: Jannard returned to Oakley as CEO after stock plummeted.

1999: Oakley branched out into watches and wearing apparel.

But the secretive Jannard could laugh all the way to the bank. Forbes magazine rated his 2001 personal fortune at $1.2 billion. His company stock was worth an estimated $805 million in 2001. A cigar aficionado, he is remarried to "Bobbie" and has seven children. He also raises and shows English setter dogs. Little is known about how he spends his money, but he owns a $7 million home on Newport Coast, and in 1997 he paid $22 million for an island off Puget Sound, once known as "Safari Island" for big–game hunters. He has stopped all hunting and has worked to save the rare Ryuku sika deer found on the island. Additionally, Kimberly Brown Seely of Town and Country noted in the magazine's July 2001 issue that Jannard may have "quietly bought up" several adjacent multi–million–dollar coastal properties on Crane Island's western shore—part of Washington State's San Juan Islands. Jannard's floatplane, bearing the same skull–and–crossbones flag, has been seen in waters nearby.

Career Details

Jannard does not like to discuss how he built up the Oakley company, preferring instead to discuss his present role in it. But it is known that back in 1979, when he was thirty years old, Jannard designed his first protective eyewear product: high–impact plastic motorcycle goggles that were lighter and more shatter–resistant than their common glass counterparts of that time. Jannard and his salesmen handed out sample goggles at motor–cross competitions and sold them through Oakley's motorcycle parts accounts. The goggles became a hot item, and Jannard advanced to designing hybrid sunglasses–goggles for bicyclists and skiers. In the mid–1980s when champion bicyclist Greg LeMond sported a pair on his way to becoming the first American ever to win the Tour de France, demand for Jannard's new product received a hefty boost. More sunglasses models soon followed, including the trademark Blades model: an interchangeable wraparound lens that slips into a simple carbon–fiber frame.

Coupled with Jannard's unique sunglasses design was his flair for promotion. He and his sales staff had given away many pairs to top athletes during the late 1980s and early 1990s. At a golf tournament, a pair was given to a young golfer/basketball player named Michael Jordan. He has been wearing them ever since, and he now sits on Oakley's board. Jannard's personal friend, tennis's top–ranked Andre Agassi, promotes Oakley sunglasses at no charge. When Nike's Phil Knight was still on friendly terms with Jannard, he was rarely photographed without his Oakleys. Baseball hero Cal Ripken Jr. became another "free" promoter merely by being seen wearing Oakleys. At the 1996 Olympic Games in Atlanta, Oakley placed its sunglasses on 350 competing athletes from around the world—more than half of them unpaid—although Oakley offered cash bonuses if they won events wearing Oakley shades. But Oakley's most high–profile and prolific endorser has been bad boy Dennis Rodman, who originally received neither compensation nor stock for wearing Oakley shades in most of his photo opportunities, from network television to MTV to the cover of Business Journal.

At the time of going public in 1995, Oakley had 320 patents issued or pending worldwide, plus 249 registered trademarks. Its sunglasses were selling from $40 to $225 per pair, and availability was limited to specialty shops and sporting goods stores (about 9,500 nationally at the time). Jannard's company posted sales of $124 million for the preceding year (1994) with a net income of $27 million.

Concurrent with the smart marketing and rapid growth, Oakley Inc. developed a reputation as an aggressive litigator, even using it as a marketing tool. In 1995 Oakley's chief financial officer (CFO) told a Forbes interviewer, "One of the benefits of being as aggressive as we are is that it deters people from getting into our turf. We work very hard to bust a few chops, make a few examples of people. It makes it easier [for competitors] to copy somebody besides Oakley." Most of the suits involved alleged patent violations.

But Oakley itself soon became the defendant in a series of lawsuits. The company's initial public offering (IPO) in 1995 brought in $69 million for the company and $139 million for Jannard. A few days later, Jannard sold $29 million of his stock, and a few months later (in early 1996) he cashed in on another $214 million of his shares. Stocks plummeted. Thereafter, three shareholders filed a class–action suit alleging that Jannard and his CEO Mike Parnell artificially inflated Oakley's stock price from $17 a share to more than $27 and pocketed more than $200 million through insider trading. In 2000, Oakley agreed to a $17.5 million settlement that would resolve the flurry of shareholder suits filed in 1997, alleging that Jannard and other top executives made material misstatements and omissions about Oakley products and retail distribution practices to induce investment. Notwithstanding the settlement, Oakley denied any wrongdoing.

In 2001 Jannard remained embroiled in federal litigation with Nike that had begun in 1998 when Oakley filed a patent infringement lawsuit against Nike over sunglasses technology. Just before the start of the scheduled February 2001 trial, Nike admitted that it violated the patents but countered by attempting to have Oakley's patents invalidated. The battle had taken its toll on both sides. Jannard initially tried to get even by starting his own line of athletic footwear shortly after he filed suit against Nike. He boldly proclaimed that he would manufacture the shoes in the U.S.—a blatant attempt to cash in on Nike's politically incorrect overseas manufacturing. But by late 1999, Oakley stock had tumbled to $5.50 a share, mostly from its failed footwear, and Jannard started manufacturing them in Asia. He also took over as CEO and bought back 1.2 million shares of company stock. One year later, in 2000, earnings had soared back up to $49 million on a 36 percent sales increase of $350 million. Actor Tom Cruise had sported Oakley's shades in the year's hit movie, Mission: Impossible 2, and Oakley glasses had also shown up in the movie X–men. In 2001 Oakley lost its largest customer, Sunglass Hut, to competitor Luxottica Group, the maker of Ray–Ban sunglasses. Jannard began signing deals with Champs Sports, Finish Line, and Foot Locker retailers to offset the loss.

Social and Economic Impact

Prior to Jim Jannard, sunglasses were essentially a safety item—and not always so safe at that. Most had glass lenses and often were ill fit for the purpose intended. Jannard's innovative products helped revolutionize the market by customizing the design to fit the intended use, be it motorcycling at high speeds, facing sun glare in downhill skiing, or holding up in changing weather during bicycle marathons. Moreover, Jannard had taken something practical and functional and turned it into an art form, a fashion statement referred to as "eye shades." Instead of spending the least amount of money possible on a pair of functional sunglasses that would reasonably match the contour of one's nose, people were now shelling out unthinkable amounts of money just to be able to look as "cool" as Jordan or Agassi or Rodman. Jannard had cleverly cashed in on one of the greatest consumer trends of the time: an out–of–shape general public trying to look athletic. The limited availability of his sunglasses and goggles and their trendy prices only added to the appeal. And in the end, everyone benefited: the consumer and end–user, the investor, and, ultimately, the man who made it all happen: Jim Jannard.