Anderson, Roy Arnold

(b. 15 December 1920 in Ripon, California; d. 18 October 2003 in La Canada, California), senior vice president of the Lockheed Corporation who brought back the company from near insolvency in the early 1970s and then as chief executive officer helped the company weather an international scandal at the end of the decade.

Anderson was born and raised in a small farming community in the San Joaquin Valley, the son of Carl Gustav Anderson and Esther (Johnson) Anderson, both farmers. He was one of six children and the youngest of four boys. In later years he would remember how he “spent the summer months picking grapes and fruit, and harvesting hay and sunflowers.... There is no equivalent to developing an instinct and respect for a good day’s work.” It was a lesson that stayed with him: as chief executive officer (CEO) of Lockheed, he would think nothing of putting in twelve-hour days and would routinely hold his staff meetings on Saturdays.

When Anderson graduated from Ripon High School in 1938, he was able to study accounting at Stockton Business College (now Humphreys College) for a time, but money was tight for farming families during the Depression, and Anderson had to drop out and go to work for an oil company. He joined the navy during World War II, becoming a naval supply officer. The navy sent him first to Kansas State Teachers College, then to Tulane, and finally to Harvard. When World War II ended, Anderson applied to Stanford’s business school and was accepted with the proviso that he complete an undergraduate senior year there first. In 1947 he obtained his BA in economics and accounting, gaining election to Phi Beta Kappa, the prestigious undergraduate honor society. He obtained his MBA in 1949 and also became a certified public accountant.

The outbreak of the Korean War restored Anderson to active duty, delaying his first job with Westinghouse Electric until 1952. He then worked for a short time with Ampex Instrumentation before joining Lockheed Missiles and Space Company as an accountant in 1956. He worked his way swiftly through the ranks, becoming assistant director of financial operations, then director of financial and management controls, in the Space Systems Division. In 1965 Anderson transferred to the Lockheed-Georgia Company, where he served as director of finance; three years later he was promoted to the parent company, being named treasurer of the Lockheed Aircraft Corporation. He was named a vice president in 1969 and senior vice president for finance in 1971.

At the time, Lockheed was going through economic turmoil. Lockheed’s major military project, the C-5A transport, had gone way over budget, forcing the company to write off $200 million in cost overruns. Then in February 1971 Rolls-Royce Ltd., the company that was to supply Lockheed the engines it needed for its major commercial project, the L-1011 Tristar passenger jet, declared bankruptcy. To stave off Lockheed’s own impending bankruptcy, Congress was persuaded to pass the Emergency Loan Guarantee Act, guaranteeing up to $250 million to the company’s creditors. The sole proviso was that someone of proven integrity and ability be found to administer Lockheed’s climb back to solvency; that person was Anderson.

Imposing strict financial controls—and laying the groundwork for air force acceptance of all future cost overruns on the C-5A—Anderson was later able to boast that the government bailout “didn’t cost the taxpayers a penny.” Lockheed’s sales remained stagnant over the next five years, however, so the company’s leaders secretly diverted nearly $40 million into a bribery scheme that eventually reached into the defense administrations of fifteen nations. When the scheme was uncovered, the scandal toppled not only Lockheed’s chairman and president but also Kakuei Tanaka, prime minister of Japan. A 1976 report on the bribery scandal called Anderson, at the time vice chairman for finance and administration, one of the few innocent people in senior management; it judged him “to a certain extent the victim... through the circumvention of the company’s normal organizational channels.” After more than a year and analysis of nearly one hundred candidates for the position, Lockheed elected Anderson chairman of the board and CEO.

Working tirelessly, Anderson succeeded in restoring Lockheed to a state of financial and ethical respectability. The loan guarantee expired just after Anderson’s elevation, and within a year he had obtained commercial lines of credit to replace the loans. Anderson declared that Lockheed was “on a normal financial basis after a decade of financial crisis.” But the company was still in trouble; although sales had grown by 25 percent since Anderson’s elevation to Lockheed’s board in 1971, shareholder equity had actually declined by more than a third. The major remaining problem was the L-1011, which had never reached parity with the Boeing 747 or the McDonnell Douglas DC-10; in fact, by 1981 accumulated losses on the L-1011 had reached an astounding $2.5 billion. But canceling production of the passenger jet would signal the end of Lockheed’s commitment to the commercial aviation market. It was a difficult decision, but Anderson made it, halting Tristar production in December 1981.

Anderson’s risky move, narrowing Lockheed’s focus to military aviation and space, paid off handsomely. That same year, President Ronald W. Reagan committed the United States to the military buildup that before the end of the decade would drive the Soviet Union into bankruptcy and end the rule of European communism. In the new climate of free military spending, Lockheed thrived: C-130 cargo planes, ballistic missiles for the Trident submarine fleet, Stealth technology, and an improved C-5B transport jet tripled Lockheed’s income to $8 billion and increased shareholder equity tenfold, to $1.15 billion, by 1985. As one observer concluded, “Lockheed is still very much in business [and] the credit belongs largely to one man, Roy A. Anderson.”

One ingredient to Anderson’s success in business was his sensitivity to others, both within the company and without. An avid golfer, he gave up the sport for tennis, his wife’s game, so that they could spend more time together. He put off telling his family that he had been elected CEO of Lockheed because his son had been elected president of his school class that same day, and Anderson wanted to let the young man enjoy undiluted praise for at least twenty-four hours. Informed of Anderson’s death in 2003, the chairman of Lockheed Martin summed him up as “a magnificent individual.”

After reaching mandatory retirement age in 1985, Anderson turned his powers of persuasion to fund-raising. An active fund-raiser for Stanford beginning in 1961, he served as national chair of the annual giving program from 1973 to 1975 and as convening cochair of its Centennial Campaign, which raised $1.27 billion, from 1987 to 1992. Other charitable causes included the Los Angeles Music Center, the Republican Party, and the Salvation Army. He became chairman of the Weingart Foundation in 1994, establishing scholarship programs at colleges throughout California, including Pepperdine, Pitzer, University of Southern California, and Stanford.

During the 1990s Anderson was also called on repeatedly to exert his efforts on behalf of ethical integrity. He was a leading member of the Christopher Commission, which investigated the Los Angeles Police Department after corruption and brutality scandals had soiled its reputation, and he ultimately condemned the department as “an organization that emphasizes crime control over crime prevention and that isolates the police from the communities and the people they serve.” As chair of the California Electricity Oversight Board he worked successfully—during his own tenure, at least—to prevent the kind of bad business practices that would lead to Enron’s collapse several years later.

Anderson, who had married Betty Leona Boehme on 10 June 1948, had four children. The Andersons also served as foster parents. An athletic six-footer, Anderson was known in later years for his white hair. He died at his home after several years of declining health.

Anderson was one of the last of a breed: the self-made man. Born the youngest boy on a farm in the San Joaquin valley and growing up during the Depression, he nevertheless rose to head one of America’s aviation giants. His honesty, sincerity, and affability made him the perfect man to lead Lockheed through the scandals and economic crises that plagued the company throughout the 1970s and 1980s. When he reached mandatory retirement age in 1985, he was praised as “the one guy you could believe throughout all of the messes” that had marked the period. Under Anderson’s leadership, sales rose from $3.5 billion to more than $5 billion (not including effects of inflation), net earnings increased nearly tenfold, and most important, a company that needed a federal loan guarantee in 1971 (and obtained it only because Anderson was chief financial officer at the time) had become one of the Defense Department’s most trusted suppliers of aircraft, missiles, and laser weapons systems.

Anderson authored a brief, privately printed introduction to the company he served for more than three decades, A Look at Lockheed (1983). In it he glosses over the bribery scandal, which is the subject of David Boulton, The Grease Machine(1978). A good midcareer profile can be found in “Can Roy Anderson Make People Forget Lockheed’s Problems?” Business Week (10 Oct. 1977). An obituary is in the New York Times (23 Oct. 2003).

Hartley S. Spatt