Pink Slips and Parting Gifts

by Deb Hosey White

  PINK SLIPS AND PARTING GIFTS

  Deb Hosey White

  © 2010 by White & Associates

  All rights reserved

  Second edition

  ISBN: 978-0-9829179-0-9

  www.pinkslipsandpartinggifts.com

  cover photograph by Taylor Teodosio

  For David

  and

  For the generations of American retirees and workers who have

  unfairly lost employer-sponsored health care benefits

  It was a merger in name alone.

  Introduction

  We live in an age of business mergers and acquisitions.

  In 1934, the game of Monopoly made its first appearance in U.S. stores. Based on the wheeling and dealing of big business, Monopoly captured the essence of American commerce and capitalism. Within eighteen months it was the most popular game in the country with over 2 million copies sold to a nation struggling to emerge from the Great Depression. Since its introduction, an estimated 500 million people around the world have collectively spent billions of hours playing this game. Did all those hours of buying and selling prime real estate, collecting rents, passing GO, going bankrupt, borrowing from the bank and going to jail actually influence the American business psyche? We may never know for certain, but clearly somewhere along the way the Monopoly mentality was born.

  Once upon a time the merger of two major U.S. corporations could prompt shockwaves in the business community and trigger lengthy court cases. But times change. In the infancy of the twenty-first century, mergers and acquisitions are commonplace.

  Being one of the little people in a merger-acquisition should be a once-in-a-lifetime experience, but that’s hardly true. Many mid-career workers have already survived several acquisitions. Some were hired by the right employer at the wrong time on multiple occasions; others have remained at the same desks as bigger and bigger conglomerates swallowed up their employers.

  Mergers and acquisitions are messy business and they change the lives of everyday people. Everyday people, however, don’t headline the business news. The newsmakers are those individuals lucky enough to be among the merger’s change in control group. These are the power players on the seller’s side of the negotiation table – senior executives who are likely to walk away from the mess they’ve just made with cash and benefits beyond their wildest childhood dreams. For some, getting to walk away is almost as valuable as the cash.

  Only the employees left behind to be assimilated understand the true meaning of a merger. In the initial years, post-merger organizations are never happy places, rarely productive places, and often very difficult places to work. The new employer generally views acquired employees as rogue players, testy and uncooperative; while the acquired employees often feel like outsiders, underappreciated and abandoned.

  In the analysis of a merger, the official merger date is clearly determined. The origins of a merger, however, are more difficult to discern. Assuming the CEO doesn’t hold controlling interest in the company, there are others who must be convinced that it’s the right time to sell: major stockholders, the board of directors, the founder’s widow.

  When is the first time the CEO dares to say out loud, “It’s time to sell the company”? Does he practice first in front of a mirror? Does he quietly float the idea to his most trusted colleague over a weeknight dinner? Does he first seek legal counsel? SEC guidance? Financial advice? Or possibly he moves straight to crafting a convincing report to the board of directors. If the CEO is gutsy enough, “selling the company” might quietly pass his lips for the first time during a clandestine meeting with the CEO of a potential buyer – setting the bait for a bid that will electrify the decision-makers back home.

  Once a company is sold, most people only see the news headline, hear the sound bite, or watch the ninety-second report on TV network news. Those affected most directly by the sale of a company include shareholders, executives, employees and their families, competitors, communities, and retirees. The impact can be so significant to these groups that the facts of the sale are only part of the story. Speculation, opinion, and half-true tales are weighed and considered as details of the deal unfold.

  As two companies merge, so many personal stories transpire that it would take a character like The Stage Manager in Thornton Wilder’s Our Town to know all the parts. Pink Slips and Parting Gifts is the story of one merger that changed the lives of thousands of people in three short months. It is a peek behind the curtain at the events and emotions affecting a handful of these individuals – the joys, the pains, the absurdities, the excesses, the disbelief, and the rejection. Most of all, this is the story about fortunes made and lives disrupted. Remember that phrase the next time you hear a company has been sold. It replays itself every time another corporation changes hands and disappears from the big board on Wall Street.

  PART ONE

  ANNOUNCEMENT DAY

  The End

  “Mike! Stay awake!” In the back seat of the black luxury sedan, Jeffrey W. Elkins gripped his briefcase with his left hand and the edge of the seat with his right. The driver’s head snapped up swiftly as he realigned the drifting car within the lines on the pavement. Elkins looked at his watch: 2:55 a.m. An hour outside Manhattan and at least three more hours to Washington. He planned to grab a quick shower, shave, change clothes, and then break the news to key employees before the 7 a.m. press release from the merger law firm in New York.

  “So how old are your kids now?” Elkins asked the driver. Anything to keep this guy from falling asleep at the wheel, Jeffrey thought. As Mike began to answer, Elkins refocused on his own concerns. Good Lord, he contemplated, I’ve just inked a $13 billion deal to sell my company and I may not live to make it back to the office.

  Elkins released his grip on the briefcase containing a set of documents that proved he was about to become one of the richest men in commercial real estate. Both sides had spent the past sixteen hours working out the financials of this historic agreement. Elkins was exhausted and had planned to sleep for a few hours on the way back to D.C. Instead he was engaging the driver in conversation to keep him from smashing into the Jersey barriers. Having just become a member of the platinum parachute club, it would be a sick joke indeed to die heading home on the New Jersey Turnpike without ever enjoying a penny of his new wealth.

  Mike let off the gas. The car’s deceleration made Elkins look out the window.

  “Bad news Mr. Elkins. Looks like there’s overnight road construction on the Turnpike tonight. Only one lane on this side for the next forty miles.”

  “Shit,” Jeffrey seethed. First a drowsy driver, now construction delays. At this rate it looked unlikely he would make it back to the office before news of the merger reached the press. The deal had been held closely and moved quickly. Both companies managed to keep the circle of key players very small and very quiet. There were high-level executives as well as long-service employees who were about to get blindsided by this news, including Jeffrey Elkins’ communications staff.

  Elkins snapped open his cell and tapped the home number for his communications director. Three swift beeps sounded and Elkins looked at the Low Battery message on the small screen. Then the phone shut off.

  “Mike, do you have a cell phone?”

  “Sure Mr. Elkins, it’s right here on the dash. But right now there’s no signal where we are. This is always a bad area to get service. I’ll let you know just as soon as we’re back in range.”

  Elkins felt triumphant just hours ago as he left the Manhattan law firm and slid into the back of this sedan. The adrenaline rush hadn’t lasted long. He was starting to feel a bit cheated. Why hadn’t he stayed in New York with the attorneys for
a celebratory drink? Certainly the announcement could have waited one more day. Yet he was the one who had pushed to move fast to assure no advance leaks to the press. Elkins was pragmatic – a financial guy to the bone with a degree from the Wharton School and a reputation for being a savvy negotiator. It was his wife who was the touchy-feely type, not him. Still, he began to wonder if the mild queasiness in his stomach together with this series of Turnpike dilemmas was some kind of a sign. Merciful heavens, Jeffrey thought. I must be exhausted to be thinking like this.

  The traffic slowed to a crawl as it funneled through the flashing yellow lights and orange plastic barrels. Elkins rested his hand on the handle of his briefcase. Bright work lights washed over the road crew wielding jackhammers and road patch equipment. It was a steamy August night outside the comfortable temperature-controlled sedan but the noise and the smell of tar managed to penetrate the car. As the traffic rolled slowly, he watched the men with their rakes, shovels and smeared faces sweating in the night heat under the glaring lights. For a fleeting moment Jeffrey Elkins had the visual impression he was entering Hell.

  The Beginning

  Kate Cooper hit the snooze button again just as the phone on the nightstand rang. Her husband Matt had left for work fifteen minutes earlier, and now he was calling from the car – something he rarely did unless it was urgent. No good morning greeting, no hello. Matt was yelling.

  “Those bastards! I can’t believe they sold the company! I can’t believe they sold the company and didn’t even tell the employees!”

  Kate sat up fast. “Where did you hear…?” Before she could finish her question, Matt was answering, still yelling, still angry.

  “On the radio. They just announced on WTOP that Pratt-Miles is buying The Easton Company for $13 billion! Those f…”

  Kate cut Matt off. “Calm down Matt. I know you’re upset. So am I.” She wanted to say, this is my employer who’s selling out, but she knew better. The Easton Company had been a fixture in the community for nearly forty years. Hell, they’d built the community, and it wasn’t only her husband who would be upset about this sale. Residents, local politicians, area businesses, and nonprofit organizations would all be impacted. Beyond her own situation, Kate thought about her fellow employees. The shock was sure to be far-reaching, and as human resources director, her phone would be ringing nonstop.

  “Look, I need to get to work and find out what’s going on. I promise I’ll call you later. Thanks for letting me know. I’m glad I got the news from you.”

  Because she enjoyed her privacy, Kate really disliked cell phones. Although she thought they were great emergency devices, she hated the tether they provided at all hours, blurring the remains of any division between work and private time. Kate never left her cell phone on overnight, but if she had, she would have gotten the news from her division VP who had phoned and left a message at 6 a.m. There were only a half dozen executives in the deal’s inner circle, and her boss had been one of them. But before Kate got to that message, her home phone rang again – almost as soon as she’d hung up with Matt.

  “Yes?” Kate answered pointedly, anticipating Matt calling back with some follow-up thoughts. It was barely 7:30 in the morning and she couldn’t imagine who else would be calling on her home phone at that hour, even with this early morning breaking news. The distinct gravely voice on the other end of the line delivered what would be the most memorable pronouncement of Kate’s day.

  “Good morning, Kate. I’m calling to offer you my condolences, and a job.” Kate had known Ross Winston for nearly twenty years. A longtime business friend and a Washington insider, he always kept up with Kate’s career. His greeting made Kate chuckle.

  “Thanks Ross. You’re a prince among men.”

  “Make me King. I’m certainly old enough to be King. So what the hell’s going on over there? How the heck did this happen?”

  “I’m about to go in and find out, Ross. I sensed something was up the past few days. I even wondered if we might be selling, but the reality of that idea seemed so far-fetched. Can I call you later?”

  “What about my job offer?”

  “Let me get back to you on that. I consider it the highest compliment.”

  “OK, but remember my offer came first – I may not be the highest bidder, but promise you’ll remember I was first.”

  “I promise, Ross. Bye.”

  Kate headed for the bathroom and stepped into the shower before the phone could catch her again. The water pulsing on her tense shoulders did nothing to relieve the unreal feeling of literally waking up to the fact that the company was being sold and her corporate job was doomed. There would be no need for the services of two corporate offices. Feelings of excitement to learn the details of the deal mixed with her apprehension over the uncertainty and anxiety to come. Kate’s stomach lurched and there was a rushing noise in her ears.

  “One thing at a time,” she exhaled as she dried her hair and dressed. Her short commute to work through the suburban landscape Easton had built would not give her time to ponder all the what-happens-next? scenarios. The phone rang again but Kate ignored it and the caller did not leave a message.

  SEC INFORMATION

  UNITED STATES

  SECURITIES AND EXCHANGE COMMISSION

  WASHINGTON, D.C.

  SCHEDULE 14A INFORMATION

  Following is an email communication dated August 14 from Jeffrey W. Elkins, Chief Executive Officer of The Easton Company, to all Easton employees regarding the company's merger with Pratt-Miles Inc.

  FROM: Elkins, Jeffrey

  SENT: August 14 8:22 AM

  TO: All Easton Employees

  SUBJECT: Announcement

  IMPORTANCE: High

  I have some important news to convey to you about the future of The Easton Company. Earlier today, we agreed to merge our operations with those of Pratt-Miles Inc. Our board of directors and the board of Pratt-Miles have approved the transaction. Below is the press release that was issued at 7 a.m. this morning.

  We know you will have many questions about this development. Next week you will be meeting with your department heads and division managers where you will be informed about the details of the agreement, how it will change the company and how it may affect our employees. After these meetings, if you have additional questions we encourage you to contact Human Resources.

  We are committed to a continued open dialogue with you concerning this process and will further update you as we move forward in completing the merger.

  PRESS RELEASE

  Dow Jones & Company, Inc. August 14 (BUSINESS WIRE)

  Pratt-Miles Inc. (NYSE: PMI) today announced the execution of a definitive merger agreement with The Easton Company (TEC). Under the terms of the agreement, which has been approved by each company's board of directors, shareholders of The Easton Company will receive $65 per share in cash. The total consideration will be approximately $13.4 billion including the assumption of approximately $3.8 billion of existing debt. The transaction is expected to close in the fourth quarter, and is subject to the approval of Easton shareholders, as well as customary closing conditions.

  NOTE: This document includes forward-looking statements, which reflect our current view with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from historical or anticipated results. The words "will," "plan," "believe," "expect," "anticipate," "should," "target," "intend" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

  For Easton employees, it was the first time the disclaimer in a company press release seemed more poignant than the content. Somewhere between leaving work the day before and opening this email from Jeffrey Elkins the following morning, a serious development had occurred. Each individual's anticipated plans, beliefs, expectations, and intentions regarding the future of their
employment had fallen away.

  On the Couch

  What is it that makes a CEO decide to sell a company? What exactly goes into the mental process? What event sparks that first thought? What turns the thought into a consideration, a possibility? What makes him take the first step toward the final action – the signature on the deal?

  Ah, to be a fly on the wall when the CEO spills his guts to his psychologist. To discover the truth behind the sound bite: “It wasn’t any one thing, but a set of circumstances that made us sell.”

  Is it greed? Just too much money to be made to leave the fruit on the tree any longer.

  Is it ego? Can’t stomach the idea of someone taking your place at the top.

  Is it jealously? Everyone likes your handpicked heir apparent better than you.

  Fear? Succession planning gone awry – the next in line has newly discovered flaws and there’s no alternative replacement in sight.

  Financial worry? Concern that the competition is getting stronger, so better to sell out than be taken over.

  Is it boredom? After a twenty-five-year career, rising from division head to CEO, you’ve lost interest. Fail to see the challenge. Don’t want to do it any longer.

  Could it be pure paranoia? (Certainly a good reason to be on the psychologist’s couch.) Too long in the workplace at the highest level. Over the years, made too many enemies.