“OK, but as I said before, he’s asked you to cancel vacations.”
“I know. But here’s the rub. After that I got a call from Glen in finance about one of the nonqualified plans. Anyway, he mentioned that it didn’t look like it was going to be the normal quiet August at Easton, since so many of the execs were canceling their vacations, including the CEO.”
“Huh. So Elkins is staying in town and so are his executives,” Matt reviewed.
“I figure it has to be something big, and it doesn’t appear to be an acquisition. Yet it looks like acquisition activity. Except we’ve put so many projects on hold over the past few weeks, which has never happened before.”
“So you really think they’re selling?” Matt asked Kate in a voice that now almost sounded convinced.
“I know. It just seems too incredible to be true. And now that I’ve said it out loud, I sense I’m going to look foolish in the near future when this turns out to be nothing exceptional.”
“It’s an interesting speculation, I have to admit.”
“Promise you won’t repeat this to anyone, OK? I don’t want this coming back to bite me,” Kate said to her husband.
“I think this calls for another lap around the lake.”
Security Matters – Tuesday
As Brad walked down the hall to the training room Tuesday morning with the Fed Ex package of security tapes under his arm, he felt like he was sneaking off to watch X-rated movies. Bill was waiting for him at the training room door.
The training room was a relatively new addition to the Easton headquarters building. It included all the latest sight and sound technology for high quality corporate presentations. The room had no windows and was sound insulated so well that when the electronically controlled doors slid closed some attendees experienced a brief moment of claustrophobia. The room was nearly square and relatively small, built to comfortably accommodate only a dozen people at one time. Labeled the training room, it was actually designed to provide an intimate setting free from outside distractions where Easton executives could sell investors on the wonders of the company’s projects. Although no one would actually admit it, the walls, floor and ceiling were engineered to block cell phone calls and PDA reception.
Once inside the room, Bill pushed the button in the conference table console that closed the doors with an airtight whoosh. Then he loaded the first of the tapes into the VCR and hit play.
Forty-five minutes later the two men sat rubbing their faces as the last tape ended and the lights came up.
“I need coffee,” Brad said.
“Screw that,” Bill replied. “I need Scotch.”
Between them they had more than thirty-four years of property management experience. Each had dealt with episodes of odd, absurd and sometimes frightening behavior by employees. Yet neither of them had ever witnessed anything quite like this. Seeing the actual footage of the two naked security guards splashing around in a mall fountain was even worse than they had imagined. Brad had a creepy feeling that with the addition of a sound track he might have been watching the musical romp from one of those old Monkees TV shows.
“Do you think we’ve covered all the bases?” Brad asked. “Is there anything we haven’t done that we should? Maybe we need to get on a plane and go out there.” “Maybe,” Bill replied. “Although I’m not sure there’s anything more we could do by being there other than quarantine everyone involved. Watching this has convinced me of one thing though. We’d best cover our asses and report this to Elkins. Better to take a little heat now and pray it all stays under wraps. Can you imagine if this were to leak out and get to the CEO through other sources?” Bill turned and picked up the receiver on the conference room phone. “I’ll put us on speaker just as soon as I’m sure he’s in.”
“So much for this year’s bonus,” Brad mumbled.
“Trust me on this one. We control the story as long as we’re doing the telling. That wasn’t you and me romping around in that fountain.”
Jeffrey Elkins was in his office when Bill’s call came through. Except for his intense breathing into the phone, he listened quietly as Bill carefully summarized the situation.
Bill concluded with, “In any event, we believe we’ve taken the appropriate measures to contain the situation and avoid any press. However, we want to be certain there isn’t any other action you want us to take at this time.” Elkins was still quiet on the other end of the line, prompting Bill to offer, “Would you like to see the tapes sir?”
The gruff forcefulness of the CEO’s answer made both men jump.
“Christ, no! Absolutely not.”
“OK sir.”
“I want those tapes destroyed now – within the hour. And not another person is to see or hear about any piece of this, do you understand me?”
“Yes sir,” Bill crisply responded. So much for his brief fantasy about using an excerpt from the tapes in a future security management training film.
Security Matters – Friday
Three days after Brad Mather and Bill Briggs watched the security tapes in the training room, the sale of the company was announced. Late that morning, Bill walked down to Brad’s office and leaned in his doorway.
“Hey, Brad. Can you believe it? And we thought the beginning of this week was a doozie.”
Brad was in the process of extracting books from the shelf behind his desk and piling them into a large cardboard box. He turned and grinned at Bill.
“No wonder Elkins was seething through the phone. Can you imagine how a news story about Easton security guards dancing naked in a fountain might have affected the negotiations with Pratt-Miles?”
“Dancing naked, inebriated and on XTC while on the clock,” Bill added.
“Good point.”
“Elkins would have had us drawn, quartered and served for dinner,” Bill concluded. Brad dropped another book into the box on his desk.
“You’re not packing already are you?” Bill asked.
“Indeed I am. Packin’ for the pink slip,” Brad replied almost gleefully. “Pratt-Miles already has a corporate property manager, so my days here are numbered.”
“That’s not what I’m hearing,” Bill answered with one eyebrow raised. “The way I hear it, you’re not going anywhere.”
Brad looked puzzled.
“Your rep precedes you, man. I got a call this morning. They may want you to go back into mall management. Word is out that you’re the best around. Looks like you can kiss that severance check goodbye.”
Brad’s stomach churned. “Severance check or not I’m out of here,” he said without missing a beat in placing another book in the box. “My work here is done.”
Bill laughed out loud. “You’ve got to be kidding. They’re sure to offer you a great salary and give you some prime location. San Diego, or maybe Vegas. You may even get to choose. Come on Brad. Get real. What the hell else would you rather be doing?”
Smiling again, Brad stopped packing and looked up at Bill. Then he glanced at the volume he was holding in his hand.
“Actually Bill, I think I’d rather write a book.”
PART FOUR
IN THE WEEKS AFTER THE ANNOUNCEMENT
In the News
August 17
CORNERSTONE LOST
WASHINGTON (USAMedia) – County Executive Norris McMannis was still in high school when Ed Easton began developing what was then referred to as the “New American City,” a grand experiment in community living that became a catalyst for the Washington area’s suburban growth.
More than thirty years later, when told of the impending sale of The Easton Company to a Denver corporation, McMannis froze. Imagine Silicon Valley without Apple or Florida without Disney.
“I just sat there and looked at the message handed to me, saying; ‘Is this real?’” said McMannis. “I was just shocked.”
Within hours, shock among the region’s political and civic leaders gave way to unease as they tried to fathom the likelihood of losing th
e Easton headquarters and some or all of the nearly 400 jobs housed there. This is an institution revered for decades as one of America’s most innovative corporations.
By yesterday afternoon, financial analysts described the deal as good for shareholders, but not good for northern Virginia.
While Pratt-Miles will no doubt carefully sift through the Easton portfolio, closer to home many will be wondering about the fate of Easton’s contemporary office building, set on a beautiful man-made lakefront and designed by the renowned architect David Sinclair.
Stewart Fitzgerald, a long-time resident of the area, said he, like almost everyone he knows in the community, was surprised by the news. And yet there was a sense of inevitability about the company’s departure from the area, he said.
“I think we knew that one day this was going to happen. We just didn’t think it would be so soon,” Fitzgerald said.
Short Ride on the Gravy Train
On the Monday after announcement day in Easton’s employment department, Terry Kagan walked into the office of his fellow recruiter Sean Maxwell and said, “OK. Now I get it. The veil has been lifted. The cataracts removed from my eyes, the clouds have cleared. I am enlightened.”
“Now we finally know why the vice presidents were hiring their cronies for high paying, apparently non-existent jobs,” Sean replied.
“Hate to say it, but I wonder what the VPs were getting in return.”
“Hey, keep your voice down. You don’t want Larry to hear us.”
Terry laughed. “You’re kidding, right? What’s he going to do? Fire us? Oh, snap. I wouldn’t want that to happen. We’re about to be placed at the front of the layoff list my friend. One thing a new owner doesn’t need or want is the other company’s employment staff. We’re about to be as un-busy as the three guys we were just discussing.”
“Yeah, but the difference is no one’s going to hand us a severance check anywhere near the size of the ones for those three invisible newbies.”
Terry sighed. “What I wouldn’t give for a ticket to ride on that lucrative gravy train.”
Only the Dogs
What is it like to be a public figure with a shy and private personality? Jeffrey Elkins relished his privacy, but after the announcement of the sale of the company, he felt exposed. He knew the announcement would be a major business news story. But Jeffrey hadn’t anticipated his name splashed about the city paper’s editorial page and featured in the national news with that $90 million figure attached to it. With all the coverage, Jeffrey Elkins cringed to think that so many people whose names he did not know and did not want to know were thinking and talking about him.
The local news virtually deified the deceased Easton Company founder and the inevitable comparison made Jeffery’s $90 million haul seem grubby. He felt vilified by the undertone of the local newspaper’s editorials, casting him as a miserly Ebenezer Scrooge counting his coin. That certainly wasn’t him. He saw himself as a Renaissance man, lover of art, theater, fashion and history, not the anti-hero in what was simply a business decision.
Once the announcement was made Jeffrey’s phones rang nonstop; he eventually unplugged the home lines to get some peace from the stream of friends, colleagues and family who were calling to get the details about the deal directly from him. He was tired of talking about it. Forty-eight hours following the announcement, Jeffrey walked outside his house and dropped his cell phone into the trash bin.
While his wife escaped to her art council meetings, Jeffrey took refuge in their home gym lifting weights. He had never been the athletic type nor cared much for sports beyond the requisite corporate golf outing; although when his own boys were growing up playing lacrosse and soccer, Jeffrey enjoyed attending their games and celebrating their sports accomplishments. Then in the past few years, as he started experiencing more intense stress in his life, he began paying attention to his own health. This introspection resulted in a number of changes to his routine, including the addition of an extensive home workout facility and triweekly visits by a personal trainer.
Like so many others, Elkins had been forever changed by the events of 9/11. His youngest son, a trader on Wall Street, was at work in lower Manhattan that morning. It had taken several hours to reach him and confirm his safety. During those same hours Jeffrey was dealing with devastating news concerning one of Easton’s landmark properties adjacent to the World Trade Center. Two employees died in the collapse and several others were seriously injured. The fear and stress he experienced that day triggered an entirely new set of worries to add to an already extensive list.
In the weeks after 9/11 Jeffrey was distracted, out of sync, and found it difficult to concentrate. Seemingly overnight, he had a new crop of gray hair. He cancelled his weekly hair trim, and disregarded his general appearance. Some days he forgot to shave. People began to worry and then to talk.
It was his wife, Anne, who eventually took charge and guided Jeffrey back into focus. In late October she hired a personal trainer for him. Then she sent him away for a long weekend at a very private, exclusive men’s resort and spa for a regimen of massage, tanning, hair treatment, and more. He had come home from that experience feeling reenergized and renewed. Anne announced that if exercise and spa treatments didn’t do the trick, she would schedule an appointment for him to see a female psychologist friend of hers – a fate Jeffrey would avoid even if it meant faking part of his recovery. By Thanksgiving, when the children came home, he was back to his old self emotionally, and in better shape physically than he had been in years.
In the days following the announcement that Easton was being sold, Jeffrey’s life changed again. Associates, friends and family – even his wife – began treating him differently. In addition to his impending graduation to a new level of wealth, the demonstrated power to change the future of a Fortune 500 corporation was affecting how people thought about him. It was disturbing and he didn’t like it.
Jeffrey Elkins had always been somewhat aloof, even with his closest friends. He was not one to share intimacies, personal stories, or life experiences. Now that the company’s sale was news, he felt his personal life invaded as others were obviously reassessing him and passing judgment. It occurred to Jeffrey that Anderson & Sheppard, his Rhodesian Ridgebacks, were the only living creatures in his life unaware of his newfound power and wealth. At least the dogs still greeted him the same as ever.
In the News
August 19
Op Ed – Washington Chronicle
Big Payday
Last week brought us one more reminder about the power of the privileged few with the announcement of yet another colossal corporate merger. Americans have never particularly liked corporate giant-making. A century ago, Americans outraged by the excesses of industry robber barons actually wrote into law a wide range of antitrust rules designed to prevent corporate concentration. Over the past quarter-century, these rules have essentially become obsolete. The latest evidence: Friday’s unveiling of a new multibillion-dollar mega-merger between Pratt-Miles and The Easton Company.
Mergers these days, in whatever sector they take place, invariably come with corporate news releases celebrating the “synergy” and “economies of scale” the new couplings create. By economies of scale, of course, the merger partners mean layoffs. Among the surest merger casualties: mid-level headquarters jobs. Who benefits from mergers? The biggest beneficiary from last week’s dance between Easton and Pratt-Miles will be the Easton CEO who cut the deal. Easton CEO Jeffrey Elkins stands to pocket at least $90 million from the transaction. That would give Elkins what appears to be the biggest executive payday in Virginia history.
Change in Control
Change in control. In mergers and acquisitions, there is no phrase more powerful. Change in control refers to a change in ownership or control of a company triggered by one of the following events: someone grabs a significant block of the company’s voting stock; the company’s existing board members are no longer the majority on the board of
directors; a merger is completed; or the shareholders approve the sale of the company.
Once the event occurs, change in control becomes a modifier for other nouns. Foremost is the change in control group – employees blessed with change in control executive agreements. The change in control group is often synonymous with the company's key executives, the most senior dynamic dozen or so individuals whose rank and value to the organization qualify them to parachute out when the company is turned over to new owners.
The change in control agreements are the official parachute documents. It’s common for such agreements to run twenty or more pages and include not just a list detailing the parachute payments, but also the terms under which the payments will be made. There are pages of definitions, but frequently there is no definition of “Executive.” The language used in executive agreements often reaches the pinnacle of legalese. Every sentence requires intense parsing to gain a vague sense of the true meaning, and the sensational details are not revealed until the attachments. This is why savvy document reviewers flip to the end of a document and work backward.
Pink Slips and Parting Gifts Page 10
