Forbes USA 07 october 2013 (e magazine full)

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THE RICHEST PEOPLE IN AMERICA

Five years after the f nancial crisis sent fortunes spiraling, the wealthiest Americans

have gained back all they lost and then some The Forbes 400 are worth a record

$2.02 trillion, double the sum of a decade ago—and the equivalent of the economic

output of Russia This year a billion-dollar fortune wasn’t enough to make the cut

Some 61 billionaires didn’t qualify The minimum? A personal fortune of $1.3 billion.

wealth editors

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The superrich by the numbers

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At the rate they’re rising, these moguls and shakers are headed into The Forbes 400 someday

From The Forbes 400, new and old

on the covers:

warren buffett cover

PhotograPh by michael Prince

alice walton cover

PhotograPh by tim Pannell

michael rubin cover

PhotograPh by bill miles

sam Zell cover

PhotograPh by john scortino

stewart rahr cover

PhotograPh by john koZowyk

The new kids on The Forbes 400

138 | newsstand standouts

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OCTOBER 7, 2013 — vOlumE 192 NumBER 5

The Message

On Our Covers

by lEWIs D’vORkIn

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L U C C H R O N O O N E

E x p l o r e t h e c o l l e c t i o n a t U S C H O P A R D C O M

Poland has Pulled a

destruc-tive stunt worthy of Argentina It is

seizing half of the Polish people’s

private retirement funds All

govern-ment bonds in these pension-plan

portfolios are being forcibly

trans-ferred to the government Since the

bonds are no longer held by

inves-tors, the government is declaring that

the national debt has been reduced

by the face value of those securities

Neat trick, including the spin on this

Soviet-style seizure: The government is calling

the nationalization a “pension overhaul.” The

ghosts of Stalin and Lenin must be smiling.

Barack Obama must be wondering why he

hadn’t thought of something like this and may be

tempted to try such a scheme here It’s so delicious

to a socialist: Seize Treasury bonds and declare

them null and void Some Washington socialists,

a.k.a Democrats, have already made noises about

getting their hands on a portion of the assets held by

individuals in IRAs and 401(k)s The

Administra-tion foated such an idea earlier this year, suggesting

that the size of these retirement plans be restricted.

The Polish fasco has its origins in a very

sen-sible move Warsaw made in 1999, when it

creat-ed a hybrid national pension system Under that

arrangement half of a worker’s social security tax

went into a private pension plan The employee

chose from a menu of mutual funds, which were

owned and managed by local units of 14 eminent

fnancial frms, such as ING, Pimco parent

Al-lianz, AXA, Generali, MetLife and Aegon.

The funds grew and today have $86 billion in

assets The Polish government is seizing the

por-tion invested in government bonds, $37 billion

The equity part? That will be confscated over

time: The government will start helping itself to

OCTOBER 7, 2013 FORBES | 27

FACT & COMMENT — STEVE FORBES

FORBES

POland’S PiggiSh POlS—

ThEy’RE nOT alOnE

BY STEVE FORBES, EDITOR-IN-CHIEF

“With all thy getting, get understanding”

the equity assets of an individual’s pension fund ten years before he

or she hits retirement age With straight faces government ofcials said that what they were doing—

stealing the bonds up front and gradually pilfering the stocks—was a responsible and moderate approach

After all, they reasoned, they could have taken everything now.

Believers in free markets and the rule of law in Poland are reeling

“This is the largest nationalization in Poland since 1946 [when a Soviet-installed Communist puppet regime seized large swaths of the Polish economy],” rightly exclaimed one fund manager

This thievery violates Poland’s constitutional guarantee of property rights But who pays at- tention to constitutions these days? Certainly not the Obama Administration and much of our federal judiciary Poland’s rationale: Even though the money for the private pensions was deduct-

ed from workers’ paychecks, it really didn’t belong to them, because if the private plans hadn’t existed, the government would have taken the money for the government plan; ipso facto, the workers would never have had it anyway.

This move really hurts the impressive ress Poland had been making Several years ago

prog-it undertook a massive privatization program that successfully and skillfully disgorged hun- dreds of government-owned entities, raising billions of dollars The process was done in such

a way that it helped make Warsaw the fnancial hub of central and eastern Europe and the War- saw Stock Exchange the largest in the region

The private pension funds provided a steady source of equity capital that boded well for growth, as new companies could get money for

pean Union, i.e., the Germans—decided that deposits of less than 100,000 euros would not be molested Deposits above that level got walloped—unless you were politically connected, whereby you were given preferential treatment

All monies belonging to related entities were spared entirely

government-Now that this precedent has been set, whenever there’s a whif of fnancial trouble people will scramble to pull their money out of the banks, exacer- bating the crisis The Germans short- sightedly promoted this kind of bailout

in an election year because it wouldn’t leave them open to being accused of helping Russian oligarchs, who were big customers of Cypriot banks.

The U.S is no innocent party to this idiocy, as our fscal mess and the Fed- eral Reserve’s destructive acts attest

Look at our Social Security trust funds, which supposedly have $2.7 trillion in reserves, enough to cover three years of payments Polish-style, those cofers are empty The money was spent by politi- cians as soon as the cash came in The trust funds are stufed with “nonmar- ketable” Treasury IOUs This means more money will have to be raised to pay these benefts when they come due.

The situation in Poland is tive of a virus that’s infecting many governments and that will make the next fnancial crisis much worse than

indica-it would otherwise be.

In the 1950s Japan created a genre

of monster movies, exemplifed by

expansion by listing on the exchange.

Keep in mind that by destroying

a reliable pool of domestic funding

for government bonds Poland will be

much more reliant on the kindness of

foreign investors, who won’t always

be so indulgent of reckless

govern-ment behavior as to buy its paper.

So why did the current regime in

Warsaw do something so blatantly

self-destructive and immoral? Simple:

politics The incumbents are

un-popular, and the economy has slowed

down (no surprise, given Europe’s

general condition) Duped by the

false Keynesian dogma that

govern-ment spending stimulates growth

and goaded by the age-old instinct

to shovel out money and goodies to

buy votes, the Polish pols in power

succumbed to short-term temptation

Polish law bars the national debt from

going above 55% of GDP By seizing

the bonds and declaring them null and

void—voilà!—the pols have suddenly

made the restrictions on spending

and the resultant defcits

disap-pear, and the spending spigot has

reopened The government thought

this thievery would be less unpopular

than trying to raise the debt limit.

Poland’s stupidity is not unique;

Hungary abolished a similar private

pension program three years ago.

We all know what happened in

Cyprus earlier this year At the urging

of the Germans (of all people) and as

the price of a bailout, the government

seized a chunk of everyone’s bank

ac-count To put a lid on the ensuing

up-roar, Cyprus’ paymasters—the IMF, the

European Central Bank and the

Euro-Godzilla Strikes Again

F

Edible enlightenment from our eatery experts and colleagues Richard Nalley, Monie Begley, Randall Lane and Chef Jef Lamperti,

as well as brothers Bob, Kip and Tim.

l lafayette

380 Lafayette St (Tel.: 212-533-3000)

sleek, airy bistro serving fabulous fare Favorite

appetizers: beef tartare with watercress and a quail

egg; local butter lettuce with roquefort, country

ham and herb vinaigrette; and carrot soup with

Ha-waiian prawn and ginger the steak frites is of killer

quality For a scrumptious dessert try the

profter-oles with chocolate ice cream and salted cashews

l Mr K’s

570 Lexington Ave (Tel.: 212-583-1668)

this quietly plush, pink art Deco emporium of Chinese food continues to deliver the goods the three-course prix fxe lunch is a bargain, with plenty

of dishes from which to choose try the crispy beef, the lemon chicken or the chicken and stir-fried veg- etables and fnish with a bowl of good ol’ vanilla ice cream and you’ll be set for the day.

l The Beatrice inn

285 West 12th St (Tel.: 917-566-7400)

not a beat is missed in this cozy basement space, from the specialty cocktails through to the perfect desserts raves: diced white asparagus in vinai- grette; dollops of feta with halved grape tomatoes; slivers of rich game sausage You can’t go wrong with any of the fsh main courses, the new York strip

or the veal each dessert is better than the next.

Godzilla One has to wonder whether

these creatures, science-fction-like, made themselves look human back

in the 1980s and took over Japan’s fnance ministry without anyone noticing, fguring this was a better, more sophisticated and enduring way of wreaking havoc than their tra- ditional modus operandi of smashing buildings How else to explain this agency’s unending stream of growth- killing tax increases since then?

In seemingly superhuman ways fnance ministry bureaucrats have persuaded one prime minister after another to commit political suicide by adopting highly unpopular, economy- killing tax hikes Between the early 1950s to the mid-1980s Japan was

a tax-cutting paradise, racking up China-like growth rates and becoming the world’s second-largest economy Then, at the behest of the fnance min- istry, it reversed direction, enacting

an endless array of new and higher exactions Japan has, in essence, been stalled in the water for two decades The latest to fall victim to the ma- lignant magic of this monster ministry

is Prime Minister Shinzo Abe Fresh from leading his party to a landslide victory in the upper house of the national legislature on a platform

of revving up Japan’s long-sluggish economy, Abe has declared that in April Japan will boost the national sales tax by 60% Compounding this folly, Abe is readying a stimu- lus package, which must be Japan’s 150th since 1990, to compensate for the higher tax.

Godzilla is grinning.

living

large

trophy homes

Where would you

live if you could live

absolutely anywhere?

Urban aeries in New

York City, bucolic

spreads in Montana

and a fantasy castle in

Ireland are the picks of

America’s very richest

At right, eight places

bought by members of

The Forbes 400 over

the last 18 months—

and what they paid.

DAVID DUFFIELD LAKE TAHOE

$25.5 MIL (DEC ’12) Just down the road from an 8-acre estate he bought in 1999, this new Incline Village, Nev home gives the PeopleSoft cofounder 8 acres of lakefront with a guest house, private beach and conference center.

STEVEN A COHEN THE HAMPTONS

$62.5 MIL (MAY ’13) This 7-acre oceanfront spread, with a 10,000-square-foot home, is the hedge fund manager’s second place on East Hampton’s Further Lane It was once owned by the late investment banker Robert McKeon.

OCTOBER 7, 2013 FORBES | 31

RUPERT MURDOCH LOS ANGELES

$28.8 MIL (AUG ’13)

Gone With the Wind

director Victor Fleming built this 13-acre Bel Air winemaking estate

in the 1930s It has

a 7,500-square-foot main house.

STAN KROENKE MONTANA EST $132.5 MIL (NOV ’12)

A 124,000-acre ranch for the owner of the Denver Nuggets, with a 10,000-square- foot main house and 4,500 head of cattle.

JOHN MALONE

HUMEWOOD CASTLE, IRELAND ABOUT $10 MIL (NOV ’12)

The chairman of Liberty Global is said to have picked up this

427-acre “sporting estate” because it caught his wife’s fancy Its 1860s

Victorian main house has 12 bedroom suites.

JOHN PAULSON ASPEN

$49 MIL (JUNE ’12) The hedge fund manager picked

up two adjacent spreads—one from a Saudi prince—that cover

128 acres The main house has a beauty parlor and a barbershop.

STEVE WYNN NEW YORK CITY

$70 MIL (JUNE ’12) The casino mogul chose a 10,900-square-foot duplex penthouse, formerly the Ritz- Carlton’s ballroom, with an art gallery and Central Park views

DAVID GEFFEN NEW YORK CITY $54 MIL (NOV ’12) Gefen already owned another home in the Parc Cinq, which faces Central Park, when he bought this one from late billionaire Marc Rich’s ex-wife, Denise It sprawls over 12,000 square feet.

Number of fortunes on The Forbes

400 that declined Twenty-two held

steady; the rest gained or were new

Sheldon Adelson

+$8 billion Net worth:

$28.5 billioN U.S and Macau gaming has been great for his las Vegas Sands Corp

he has big expansion plans for Asia, South America and europe

Christy Walton

+$7.5 billion Net worth:

$35.4 billioN the world’s richest woman is one of four wal-Mart heirs whose fortunes grew at least

$7 billion as the stores’

sales climbed

Michael Bloomberg

+$6 billion Net worth:

$31 billioN the mayor gives up running New York City at the end of the year but not his bloomberg lP terminal empire, now at

$7.9 billion in revenue

Bill Gates

+$6 billion Net worth:

$72 billioN

on top of the 400 for the 20th straight year, Gates has diversifed out of Microsoft and into tractors, trains and Coke bottlers

he’s a huge gainer even

after giving $2 billion to

the Gates Foundation

berkshire hathaway stock

the cofounder and

co-Ceo of workday has

seen his enterprise cloud

software company’s stock

nearly triple since its iPo

in october 2012

Elon Musk

+179%

Net worth:

$6.7 billioN Dreams do pay of: tesla turned its frst proft, and its stock races ahead, while SpaceX regularly supplies the international Space Station

Herbert Kohler Jr

+146%

Net worth:

$6.4 billioN toilets and faucets are big money with housing recovering: his namesake company had

an estimated $5 billion in sales this year

Mark Zuckerberg

+102%

Net worth:

$19 billioN Strong mobile ad growth helped Facebook’s shares more than double in the past year, erasing the sting of the company’s botched iPo

Abigail Johnson

+46%

Net worth:

$17.2 billioN Fidelity’s president and heiress owns 24% of the mutual fund giant; its total assets under management rose to

$4.15 trillion this year by brian s

FiGUreS reFleCt the ChANGe iN VAlUe oF PUbliClY trADeD holDiNGS FroM AUG 24, 2012 to AUG 23, 2013

the year’s biggest winners

scorecard: annual forbes 400 edition

These plutocrats made the most money in 2013,

both in absolute terms (top) and in percentage increase (bottom).

A S P O R T

I N G L I F

E !

1-800-441-4488 Hermes.com

The Forbes 400’s most common

astrological sign, representing 11% of the

total The least common, at 6%, is Scorpio  

siLvEr spOOns

The superrich by the numbers.

How old were you when you made your frst million?

Four didn’t graduate

who are self-made.

Three of them started

with-out a husband’s help

10

Divorced three times or more.

3

Average number of kids.

Most fecund:

Farris Wilks with 11

Top home states.

Oldest and youngest.

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It started with an 18-month series

of facilitated group discussions with

travelers around the world “This

listening exercise—the largest we’ve

ever undertaken—gave us a better

sense of how people felt about the

overall travel experience,” says Sara

Kearney, senior vice president, brands

“We wanted to understand what

takes place before guests get to the

hotel and after they leave.”

One of the most signifcant insights

from this listening exercise was that

the travel experience is not always

well designed for women, who are a

critical segment of travelers for the

company “That led us to focus on

addressing the needs of women

across our entire portfolio of brands,”

Kearney says “Stepping outside

the usual approach to guest

feed-back gave us more clarity on why we

needed to do some things differently.”

As a result, Hyatt has already

upgraded its bath amenities for all

guests with dermatologically sound

products from Dr Barney Kenet and

June Jacobs “Women told us they

always had to check a bag with their

own bath products, because they

couldn’t trust a hotel’s products,” says

Kearney “Now they can rely on our

hotels having high-quality brands they

trust and they can avoid checking a bag

have just saved them 40 minutes in the travel experience.” Research also revealed that women want hotels to better understand their preferences, and that they don’t like to ask for things Hyatt

is using these insights to design changes across all of its hotels and brands “We want all travelers, and especially women,

to feel comfortable, confident, and secure,” says Kearney “For example,

we can create intimate spaces in

the lobby where women can feel comfortable sitting alone, instead of feeling awkward sitting at the bar We now offer Hyatt Has It, which has essentials like power cords, phone chargers, straightening irons, steamers and yoga mats, which you can borrow or buy and have delivered discreetly to the room We have healthier food selections

As we become a better brand for women, we remove some of the issues that create moments of discomfort throughout the travel experience, and this benefits men, too.”

K e a r n e y s a y s h e r p e r s o n a l perspective and extensive travel schedule give her added credibility in rolling ou t a n e nha nc e d gue s t experience “As a mother of two, I can speak with authority on some

of the challenges women with children have when they travel I think of all the things that happen before I leave the house I worry about maintaining my momentum when I arrive at a hotel Will I be able to get Skype so I can help my son with his homework? Other parents are thinking those

s a m e thin g s By li s te nin g a n d responding, we are making the entire travel experience better.”

Innovation Insights

Creating a Conversation Helps Enhance the Guest Experience

guests and learn more about their entire travel experience,

not just their hotel stay, its management team gained

valuable insights that inspired new services and amenities.

“Stepping outside the usual approach to guest feedback gave us more clarity on why we needed to do some things diferently.”

—Sara Kearney, Senior Vice President, Brands