A small group of mournful revelers leaving Darwin’s just before 10 p.m. were still sober enough to notice the crane parked across the street in front of the headquarters building. They stood and stared as the hoist ripped from the ground the thirty-year-old copper and concrete sign that read The Easton Company and dropped it like so much scrap into a waiting dump truck.
Just before 2 a.m., the last nonpaying customer departed Darwin’s private room after saying goodnight to the one remaining bartender and to Jody Glick, now former vice president of Easton Company specialty marketing. Brad the bartender smoothly moved down to the far end of the bar where Jody had held court all evening. Brad and Jody were old friends. He grinned as he poured a last shot of Glenfiddich into Jody’s nearly empty glass.
“Thanks, Brad.”
“You’re welcome Jody. You are one amazing person, you know that? Lots of folks worth more money than you drank here tonight and it never crossed their minds to open their wallets.”
“Life’s been good to me. Anyway, they don’t know what they’re missing.”
“So where’s the thrill?”
Jody tipped back the contents from her scotch tumbler and stubbed out the illegally smoked cigarette in the saucer Brad had slipped her ten minutes earlier. “The thrill, my friend, is in being anonymously generous. The people here tonight – and a number of people who will wish they had been here tonight – will be talking about this last Easton bash for years to come. In the morning, a few will wake up and think to ask, ‘Who picked up the tab last night?’”
“You mean wake up this afternoon?”
“Right,” Jody chuckled. “This afternoon.”
“And no one will ever know?” Brad asked, confirming the instructions Jody had given him earlier in the day.
“Correct. This is our little secret.”
“Okay then. Ready to total up what your happy little secret is going to set you back?”
“Sure.”
Brad walked to the register and ran the grand total. “Just over twenty-three hundred.”
“Worth every penny. What about the taxis?”
“The taxi company agreed to bill you directly.”
“You are good, my man Brad. Thanks for all your help tonight,” Jody winked as she handed him her personal AmEx gold card.
“My pleasure. I’ll play Little John to your Robin Hood any day.”
PART SIX
UNDER NEW MANAGEMENT
In the News
Two days after the sale of The Easton Company concluded, the business sections of the Sunday city newspapers were filled with commentary, letters to the editors and an assortment of stories about “the most significant commercial real estate deal in North America since the Indians sold Manhattan.” One reporter chose to speculate on Ed Easton’s beyond-the-grave reaction to the sale of his company.
November 15
The Sunday Record
What Would Ed Have Said?
Ed Easton’s philosophy for the company he founded put the bottom line at the bottom of the list of corporate priorities.
But that approach disappeared from The Easton Company’s management strategy years ago. Now Easton’s name will also disappear.
As the purchase by Pratt-Miles was concluded on Friday with billions of dollars changing hands, The Easton Company followed the trajectory of many U.S.-based corporations. It was started by an entrepreneur, built up with his guidance and then went into its second act with a new set of management. Now it’s being sold to a larger company as the industry consolidates.
On numerous occasions before his death several years ago, Ed Easton maintained the purpose of setting up The Easton Company was to serve human needs. If done correctly, he said, profits would follow, but to Ed Easton profit was secondary.
The company went public in 1966. It turned a large portion of northern Virginia farmland into one of the earliest and most successful planned communities in the nation. It later created some of the most unusual and successful urban redevelopment projects in the country, which accelerated inner-city revitalization in numerous U.S. cities.
As the company progressed, it focused more on ownership and acquisition. It continued growing its land development business with communities west of the Rockies, concentrating on Las Vegas and San Diego.
Profits soared. The company brought in $1.1 billion last year. Final evidence of its growth came Friday when the deal with Pratt-Miles concluded with the new owner paying a thirty-three percent premium over Easton’s closing price on the day before the sale was announced in August.
Ed Easton’s philanthropic energies have been well documented. So what would Easton have thought about the sale of the company he founded and nurtured to prominence?
“It’s an incredible hypothetical, but after he retired he was very respectful of the way the new leadership needed to take on situations,” said a former Easton vice president who declined to be named for this article. “He was constantly changing with the times. He saw life as a set of opportunities.”
“Current executives have acted responsibly in managing the company. Even as they agreed to the sale, Easton Chief Executive Officer Jeffrey Elkins insisted on establishing and fully funding The Easton Foundation.”
Plans are to channel about $4 million in charitable donations through the Foundation each year. The bulk of those donations will go to a variety of organizations, such as a $100,000 pledge to the Virginia Museum of Modern Art, $80,000 to NOVA-Health Medical Center, and a $60,000 donation to the Virginia Symphony Orchestra.
The Foundation did not return calls for comment.
Elkins got an extraordinary price for shareholders and he was able to ensure that The Easton Foundation will carry on good works in the community into the future. The Foundation’s work in Virginia and around the metro region will no doubt preserve Ed Easton’s legacy.
Few readers knew that Jeffrey Elkins’ new personal press secretary wrote this editorial-like news article. It was only after the merger was consummated that stockholders and the public learned that Jeffrey had conveniently named himself The Easton Foundation’s chairman. What wasn’t reported was that the millions of dollars Elkins had secured for the Foundation – along with his six figure salary, a very nice office with a northwest D.C. address, and an executive secretary of his own choosing – had come from the proceeds of the sale, not from the new owner. Or as some perceived it, out of the pockets of the stockholders and the company’s retirees.
Easton No More
The line of former Easton corporate employees snaked in through the front doors of their workplace at precisely 9 a.m. Monday morning. Most were dressed to impress. George Miles was there with a big smile to greet each person, introduce himself and shake hands. It was like meeting the new minister of the church you’d been attending since childhood.
Once through the reception line, people quietly milled around the table of pastries and coffee set out on silver service and white linen. Those choosing to talk were muttering softly and standing close. Animated conversations and laughter – the hallmarks of Easton Company gatherings – were noticeably absent.
The sophisticated three-dimensional Easton Company logo, which hung in the headquarters lobby for years, had been replaced by Pratt-Miles’ gaudy and cartoonish orange logo. People stayed long enough to be polite, but once assured that there would be no speeches or other announcements from the new management, they drifted away to their offices.
The morning reception felt freshly artificial to employees as they passed the now empty offices of senior management and the desks of nearly fifty coworkers who had been pink-slipped just three days earlier. Some offices were starkly vacant. Others looked as though the occupants had evacuated in the face of a natural disaster.
Before leaving the lobby, each employee was encouraged to take a small gift from their new employer: a coffee mug filled with orange jelly beans and imprinted with the Pratt-Miles logo and slogan, Pratt-Miles – You’re Gonna Love Us!
Monday M
orning Hangover – The $22 Million Error
Kate left the morning reception holding only a slim portfolio and walked toward what had been the offices of Easton corporate finance. Before leaving her office on Friday, she had hastily scheduled a meeting with her counterparts in accounting and finance. With all three of their division heads gone, Glen, the senior director of finance, Greta, the managing director of accounting, and Kate, the human resources director, were now in charge of the remains. It was up to them to initiate the call to Pratt-Miles headquarters in Denver to resolve the $22 million transfer error made at the close on Friday afternoon – an error of which Pratt-Miles management was apparently still unaware.
Greta and Kate walked into Glen’s office together and Glen quietly closed the door. No one took a seat. Somehow the idea of having this conversation standing up, leaning against walls and furniture, seemed less serious. Or maybe it was the pretense that if they remained standing, this issue really wouldn’t take as long or be as critical as it sounded.
Glen sighed. “So. Exactly what are we looking at here?” He and Greta both stared at Kate.
Kate reached into her portfolio and pulled out a single piece of paper containing less than a half page of print. It was the confirmation email from the 401(k) plan administrator verifying that when Pratt-Miles wired funds to cover the purchase of the Easton shares in the plan, the amount of the wire exceeded the value of the shares by nearly $23 million. It took just ninety seconds to read the text of the email out loud from start to finish.
“For the love of Pete,” Greta exclaimed. “I’ve been saying for weeks the Pratt-Miles accounting group in Denver were idiots. They couldn’t even get the fund transfer right.”
“We walked them through these figures enough times. I’m just not clear on how they arrived at a transfer amount that is $22,664,475 more than the stock price we needed to cover. Any ideas about what that additional number might represent?” Kate asked hopefully looking at the other two.
“Not a clue,” Glen replied shaking his head. “I was helping search for the missing mortgage and lease documents for La Vista Place on Friday. How the heck someone misplaces that kind of paperwork for a 700-acre development project worth more than a hundred million is beyond me. Anyway, that’s my excuse for being useless on this one.”
“What’s that number again?” Greta asked.
“$22,664,475” Kate replied.
“Let me get something from my office. It sounds vaguely familiar but I’m not placing the source. I’ll be right back.” Greta opened the door and stepped out of the office.
“How are you holding up?” Kate asked Glen, taking a look at the exhaustion showing on his face that no doubt mirrored the dark circles under her own eyes.
“Oh, well. You know.” Glen dipped his head to one side while shrugging his shoulders and rolling his eyes. “I sense this is only the beginning of the end. Do you think you’ll be staying?” he asked gingerly.
“Not for long. Not likely anyway. The senior human resources executive in Denver has already suggested I might want to start looking for another job.” Kate chuckled bleakly. “Like I don’t see the writing on the wall. Especially after telling them I wasn’t interested in moving to Denver. Not that saying yes would have made a difference. The reality is that I’m more experienced and higher paid than their most senior human resources executive. It seems they are either threatened by me or afraid of me. Mostly they don’t know how to react to the straightforward answers and information I keep giving them. On conference calls with the Denver team there’s always several seconds of dead silence after I respond to whatever they’re asking about. Half the time I can’t figure out if they have no idea what I’m talking about or if they’re pondering the veracity of my reply. It’s weird. I’d give anything to have them on a video call so I could see their faces and assess their reactions.”
“What do you think their reaction will be to this?” Glen asked nodding toward the paper Kate was still holding in her hand.
“Clueless. Part of me thinks the three of us could take the $22 million, transfer it to an offshore account and they’d never miss it. Not that I’m suggesting that. Just commenting on Denver’s apparent lack of math skills, or whatever you want to attribute this screw-up to.” As Greta walked back in Kate finished, “This isn’t our mistake, that’s for sure. This is a Pratt-Miles blunder.”
“Amen to that,” Greta chimed in. “I found what I was looking for. Those idiots in Pratt-Miles corporate accounting failed to follow our simple instructions about how to handle the restricted Easton shares. The $22 million? That’s the gross value of the restricted shares held by Easton executives along with the related tax withholdings owed. Now the money for those shares and the taxes appear to have been moved into the Easton Company Rabbi Trust. It wasn’t part of the merger plan or anyone’s intention for those funds to actually go into the Rabbi Trust at close. But it looks like that’s what happened. Of course Pratt-Miles hasn’t named new trustees yet for any of the Easton plans, which means the named trustees for the Rabbi Trust whose signatures we would need to fix this mess are all former Easton executives. And none of them can legally initiate a reversal to pull the erroneous deposit of funds back out of the Trust.”
“Oh great,” Kate moaned. “Now we’ll face the legal question about a distribution from the Rabbi Trust to fix an erroneous contribution to an executive retirement plan upon merger. Shoot me now.”
“You’ve gotta wonder how these people tie their shoes and start their cars in the morning.” Greta enthused.
For a moment there was quiet in the room. Glen had been staring at a coffee stain on the green carpet that was left like a birthmark in his office during the closing melee Friday afternoon. He was feeling the same frustration and superiority being voiced by these two very bright women – they were much smarter than most of the men he worked with, but he would never admit that out loud. Yet even smart women let their emotions cloud the reality of the moment. He was being quiet, waiting to see if Kate and Greta would realize what had suddenly struck him hard in the gut a few minutes earlier when both women asserted their fiercest “us versus them” posturing that this was a Pratt-Miles error.
Glen glanced up and saw the two women staring at him with looks of concern and expectation on their faces – an expression of emotions rarely found on the faces of most men he knew and worked with.
“What is it, Glen?” Greta asked. “What are we missing here?”
Kate added, “Yeah, what are you thinking over there. I get the feeling you’re somehow a few steps ahead of us on this. You have that look on your face.”
That made Glen give a little guffaw from behind the hand that was now stretched across his forehead. Apparently his lack of emotion had given him away.
“Well,” Glen stretched the word out and paused for another one of his large sighs, “it’s just this. Like it or not – no matter what occurred before today – as of this morning it’s no long us versus them. Starting today, their problems are now our problems. Their errors are our errors.”
“Thanks Glen,” Kate said. “I guess we had that coming.”
“Despite the fact that you are dead-on accurate as usual Glen,” Greta retorted, “it still doesn’t make me like your perspective.”
“However,” Kate grinned impishly, “since Greta and I need to go look in the mirror for a bit and practice our best we-are-now-Pratt-Miles smiles and pronoun usage, how about you initiate the call to Denver on this one? We’ll be available if you need back up.” Kate extended her arm holding the printed email message toward Glen as she snapped shut her portfolio with the other hand.
“Nice try, gorgeous,” Glen laughed. “I wasn’t trying to be a smart-ass. I was just saying the dividing line is gone. The tug of war is over and we got pulled across to the other side. So it’s time to drop the rope and…”
“Get on the bus?” Greta interrupted.
“Drink the Kool-Aid?” Kate said in a singsong voice. �
�Greta, go get this man a mug of orange jelly beans from the lobby. He’s definitely on board.”
“Okay, okay. You made your point. And yes, I’ll even make the call, but not without the two of you in the room. So I guess we’d better sit down and walk through what we need to say to our friends in Denver before it gets to be 8 a.m. mountain time.”
“Maybe there is some good news in this ‘we’re all Pratt-Miles now’ perspective after all,” Kate said as she moved to sit down.
“Yeah, what’s that?” Greta asked, also taking a seat.
Looking back at Glen she continued, “It just occurred to me that the people ultimately responsible for resolving this thing are no longer in this building. Our bosses and the Easton decision-makers are gone and no one else in the Pratt-Miles organization is even aware of it. Under the circumstances, it’s not as though anyone has actually asked us to take charge of anything yet. To put it another way, I don’t think the fix on this one is in our court. So although we’ll be supplying them the information, the reconciliation work on this particular mess is likely to take place in Denver, not here. Good news friends. When we hang up the phone at the end of the call, this problem will be out of our hands. We’re resource, but we’re no longer corporate. Right Glen?”
“Right Kate. Which is why I’m willing to make the call.”
“Suddenly I feel a lot lighter. If this is what being relieved of responsibility feels like, I may enjoy learning to live with it,” Greta chuckled.
Pink Slips and Parting Gifts Page 17
