by Emma Lathen
She was in fact like Tom Sawyer’s Becky Thatcher, the girl so many boys idolized. He remembered his Becky Thatcher; she appeared only in his dreams then and now, but unforgettably so. Just like Eliz- abeth had been for many of her young male friends he suspected. He mulled this over while she went on.
“So everyone in this building will be offered a transfer to Ireland. The Sloan will offer to pay their moving and relocation costs. We will offer each of them a bonus of $5,000 that rejects the Ireland move and accepts a termination offer immediately in which we pay them weekly until they get their next job. After the first day the bo- nus will be reduced to $1,000 for the next 48 hours and then none at all after that. These incentives will be far cheaper than traditional large severance payments. The Sloan will also offer each terminated employee a bridge to their next job. Most should accept quickly; the few that don’t we will have to deal with downstream. If anyone is left in the bridge program in 6 months we will discuss it with them individually at that time. Simple, easy, non-threatening, and plain nice. As with a girl back in the day, best let her reject you to avoid the woman scorned scene, or in our case, the employee scorned. Many advocates lurk in the background to jump on any bank or big company that is viewed as treating their employees unfairly in a change such as ours. We want to beat them to the punch and spike their guns with immediate and attractive offers such as we have made,” as she ended with a smile.
More cheers; more drinks.
Elizabeth went on, “The next steps are details and can be worked out as we go.” The 7th Slide came up picturing Ireland, India, and Austin. Pictures of happy people and small offices, no more fancy Exchange Place. They would become the Motel 6 of banking HQs.
“This slide says it all. The infrastructure is set. We will save a lot of money, time, stress, and effort this way. Everything will run just fine because it is doing so now.”
The 8th Slide showed a marathon runner. “Much like a marathoner, shedding weight makes you faster. That’s what we are doing.” “No decisions are required. The Sloan will work fine with no chang - es to this plan. So relax and prepare for the big one: Us getting rich and more independent.”
And the cheers broke out.
Elizabeth continued, “Are we too drunk to talk about the money?” The 9th Slide went up: “Never!”
Buyout: LBO
She had their attention. The 9th Slide showed the LBO and the new owners. “As you know, we own 10% of the billion shares outstanding as a group. 100 million shares between us. So how do we buy the other 900?”
“We estimate we will net $5 billion from the sale of Exchange Place and related real estate in New York. That will get us another 10% of the shares off the market for a net of 800 outstanding.”
The 10th Slide showed the market cap of $50 billion based on that week’s price. It showed the Walton family gradually increasing their shares with buybacks scheduled to give them a majority in another 10 years, not so long if you have a Lancer generational perspective, John thought.
“As you know, banks are out of favor as stocks for many good rea - sons. But we aren’t exactly a bank, are we? We are really a VC, Investment, and Trust firm deserving of a higher PE. OK, what do we do?”
The 11th Slide was entitled: “Hide in the Open.” “We announce the changes and buy on the dip with the news. We an - nounce we are funding a $40 billion buyback program and do that. That gives us 100% control; the few nonsellers can be dealt with legally as we know from past experience with client LBO’s.
Our current cashflow is $10 billion per year with no improvements of which we expect many. So this means in another 48 months, much like a car loan, we will have paid off the LBO. Sweet.” And they applauded.
“By being private from then on we escape public market scrutiny, from the SEC to quarterly earnings reports when much competitive information must be revealed.”
This was met with more cheering and drinking. Elizabeth smiled but did not indulge in alcohol. She was already high on events. She would do her drinking later, after the only one she had had.
They all left ecstatic only to be met by a process server on the way out who served Miss Elizabeth Thatcher with a subpoena from the US Senate to appear before the Banking Committee of the US Sen- ate, led by bank hater, California Senator Elvira Whitehorse to the world, born Elvira Whitehor, an ironic and more appropriate name most bankers thought.
The Sloan did not duck process hence the process server was right outside the executive offices. When served the others looked aghast; Elizabeth chuckled after the server left and said, “None too soon for our plan. Let this put air under your wings.”
At that moment, Elizabeth became the defacto CEO. She was all in; she wasn’t rattled; she was their Winston Churchill.
As if on cue, Charlie said, “Let’s get out of here!” and they did.
Removal
Elvira Whitehor, the new Senator, was an angry populist from Cali - fornia who hated banks from Hello. She had decided to pick off the largest one. No warm-ups for her. She didn’t have time for that; she had all the power or thought she did as many new Senators do. She would learn soon that was not quite true.
She knew the Sloan had already moved some assets to Ireland to escape taxes that the Senator believed rightfully belonged to the US to fund her programs, among others. She did not know that effectively the Sloan had already left. She de- cided to take on the young banker domiciled wrongfully in Ireland, in the Senator’s opinion. The Senator discounted her Chief Coun- sel’s advice to avoid Elizabeth, at least in her first hearing, because, as he said, Elizabeth was the most articulate and photogenic big bank executive. That just got Elvira pumped up for the confronta- tion.
The problem, as Harry Goldman, the Chief Counsel, knew was that Elizabeth was all of what he described and more. He would have paid to see this cat fight if he wasn’t going to have a free seat for the event. So would many others that knew Elizabeth. To know her was to bet on the outcome in her favor. Harry thought this would be like shooting fish in the barrel. Elvira had almost spat on his advice not to do it. OK, so it was up to her; he was on the record against it and that was good enough to cover himself.
Harry was a poorly aging overweight 66 year old man, who just came up just to Elizabeth or Elvira’s shoulder. He was personally disarming and charming; he could be tough as nails when required. Elvira did not know that Jack Reynolds, the Sloan’s Chief Counsel, and Harry had worked together effectively for decades. Elvira only had her transmitter on in their meeting about the Sloan so Harry hadn’t been able to tell her about this. In fact, as Harry thought about it, in all of their meetings in her short time in DC, he knew of no example when she had ever turned her receiver on. She was always broadcasting, pontificating, and so on and so on. That didn’t work in DC as even the average citizen knew; these people liked to talk and talk. If you were junior you had to start out listening before you could do much talking. Elvira hadn’t learned that yet. She would Harry thought. But it wasn’t his lookout, so he let it pass after being stomped on by her.
From their first meeting, Jack, Elizabeth, and Harry had gotten on famously, much like Gabler and Elizabeth. Jack had introduced Har- ry to Elizabeth when she first got her VP position in Ireland 5 years before. It was a nice lunch that made Harry feel years younger. They had gotten on splendidly long before Elvira arrived in DC. Eliza- beth was always ready to accommodate Harry when she could and he likewise. They expected to long after Elvira left as most shrill Senators did.
Therefore, Harry had let the Sloan’s counsel, Jack Reynolds, know a subpoena had been issued for Elizabeth to appear at the Hearing. So Elizabeth had known the subpoena was coming and had been texted that the server was outside the executive office. She had decided to use that opportunity to drive home the point that the Sloan evacuat- ing was just in time. It had worked out that way.
With the wit of a magician, Elizabeth had not let on she knew even to her top colleagues. So when physically served she got cre
dit she didn’t deserve personally but did corporately for providing the troops increased confidence in the evacuation.
Harry had told her the process server was paid a fortune to serve her so would certainly know when she arrived in New York for the meeting. As a result, Elizabeth had taken the opportunity to take the QE2 over so as to arrive in an unexpected way. The meeting was setup around her schedule which worked out splendidly. Jack knew the Senator’s Chief Counsel would be waiting for his call that the process server had done his job. Elizabeth had decided that days meant a lot with her plan. Harry thought he could wait 48 hours until he told Elvira and did.
In the meantime, Lancer, as planned, announced the day after the service the sale of the grand headquarters building, all staff was in- formed of the move to Ireland, and meetings started forthwith to decide who would move and who would not.
Employee Bridge agreements had been prepared offsite for each staff member. There had been several thousand HQ employees just 3 years ago; they were now down to less than a thousand due to attrition, other job opportunities, and such things. No terminations had been required to reduce their HQ staff by 70% as Elizabeth and Thatcher had skillfully figured out how to get the most to leave vol- untarily, with many metaphorically giving the Sloan the finger on the way out. Not pleasant, but mutually satisfying for the Sloan and the finger giver.
In a phrase, for most staff working for the Sloan was not fun in New York; in India the same jobs at a fraction of the pay were anoint- ed with honor, respect, and privilege. The Sloan rarely had anyone leave their employ there, despite the pay being less than 10% of it in New York. But, there was a long history of New Yorkers never being satisfied and often using that lack of satisfaction to do great things. Others went into depression, saw psyches, and such things. Some just wandered off to other venues.
It was what it was John and Elizabeth knew. So all the Sloan did was to get in alignment with the culture. It was no accident that New York City, formerly home to more Fortune 500 companies than any other city, was now outdone in that regard by both Houston and Dallas, a more hospital corporate climate, having lower taxes, and therefore creating over 40% of the new jobs in America.
Fortune 500 New York City stalwarts such as Exxon had left for one and JC Penney and American Airlines the other. Reports back to the Sloan indicated the companies were happier for it.
The Sloan had arranged for their big meeting to be on Monday not the traditional Friday so they could get down to work that afternoon with no one fretting over the weekend. This worked to a T.
Elizabeth had set up shop next to Lancer in the Tower. She had a Houston style scorecard erected to follow the progress of the 846 employees left at the Sloan in New York.
The separation agreement was spectacularly simple, created by Eliz - abeth in consultation with Ken, John, Charlie, Everett, and Lancer. Each person who signed off today to leave got a bank check for $5000 above and beyond everything else. Smaller $1000 checks were available for those who waited until tomorrow or the next day. Thereafter there would be no bonus payment though the oth- er bridge benefits would be fully available to the hold outs, as the group thought of them.
This was high pressure selling at its best. But New Yorkers expected it. The Committee figured they would get away with most of it and surrender later as prudent.
As with John Reed, they found surprising interest in leaving with a check in hand for $5000. He hadn’t offered that, but he did have Sioux Falls as his fallback. Ireland was in another country and per- haps more compatible to New Yorkers. They didn’t know yet.
Elizabeth had arranged for small manager meetings for the 84 re - maining. While they had those important conferences, Harry’s law- yers hired for this onetime event went through the other 762. They added one more bonus. Any individual signing up that day would get a bonus of getting the rest of the week off and be fully paid in addition to getting bridge money for that week too. They started early so people literally queued up to get out the door.
Starting at 9 AM, 526 literally stampeded and were out by 10 AM. The management meeting continued without them being informed lower levels had already been informed, many processed and out of the bank facilities while their meetings were going on.
By 11 AM only 41 non-managers were left. Elizabeth had arranged for security informally dressed to expedite the leavings. It worked. The place emptied out smoothly and looked admirably sparse. She had also arranged for their desks and related equipment be removed as soon as they went down the elevator to make it look like the evac- uation it was.
As each person left, their leaving was noted on the Houston score - board and their counterpart in India took over. For one night, that group would stay on until done, being paid a full 8 hours to do so. This meant that most completed the task in less than an hour and they too left quickly from their India offices.
Everyone had been seen by 11 so the management meeting was al - lowed to break up then. The management meetings of 10 each with the extra 4 in the 8th meeting had had some arguments and anger flashed by some who had been long term employees.
Of the 84 managers, only 61 took their $5000 and left. This left 41 non-managers and 23 managers still theoretically on the payroll ready to move to Ireland, maybe.
When the managers saw that their departments were decimated, 15 of the 23 holdouts came back to sign up leaving only 8. With them vacated by 11:30 AM, the other 41 non-managers were scattered around the office dazed and hardly working. 27 of them decided to fold their tent and leave, with only 14 remaining by lunch.
After lunch the remaining 8 managers and 14 workers showed up but 5 managers and 9 workers just went to their designated spots to pick up their paperwork to sign, gave it to the processing manager on hand, got their $5000 bonus checks, and left quietly. This left 3 managers and 6 workers in space for 846.
As expected these were the troublemakers. Ken and Elizabeth then showed up to see if they could further thin the herd. Several of the 9 remaining wanted to leave for home; Ken and Elizabeth in their first hard ball moment said there was work to do.
When one worker said he was just going to leave for home, Ken said that would be walking off the job and they would lose it by statute. He continued, “We need you now that so many left. Can’t have it.”
The individual was angered, spoke about where to work, and was met with stony silence. The 3 remaining managers calculated they would need references and banks were a tight community, especial- ly the HR departments, so they accepted their $5,000 checks, signed the paperwork, gave it to Ken with a smile, and left.
4 of the workers did the same despite the protest of the angry worker and his remaining pal. They were now down to 2 holdouts. Elizabeth told the remaining 2 they could help the moving staff. The angry one just walked off the job; he had been videotaped and recorded by the security cameras which were standard in the office. When he left the other looked, and smiled, took his $5000 check, signed the paperwork, and also smiled at Elizabeth, saying, “Sorry. A bit slow on the uptake. Just wanted to wait until Jack left. Take care and thanks.”
Elizabeth and Ken paused. Yes, they had hoped for a peaceful result like this but had not expected it. She said, “Let’s get out of here fast and let Security give it over to JP Morgan,” whose movers were ready to remove the old desks and install the new ones.
They went back to the Tower, collected everyone, and they all took the elevator down to the ground floor except for Elizabeth, nodded to the Security Guard, and left without incident.
The Security Guard had sealed off the elevators and door behind them as they did every night but added vacating the downstairs and going up to view things through a video camera.
When Elizabeth got back to the 6th floor, the Third Army seemed to have stripped out all the obvious irrelevant things, moving by num- ber the remaining desks, chairs, and other items for shipment to an outside storage company for disposal. Yes, she could have sold them to JP Morgan but that would have involved
time they did not have. JP Morgan was taking over at 12 midnight and that was worth more than any stray funds from used office equipment and the time it would take to deal with it all. In any event, the disposal company had already found a few customers who wanted it and actually man- aged to ship most of it to those firms directly without ever reaching their own warehouse space.
They were going to go to Lancer’s to celebrate further but thought better of it and went home. In the meantime the evacuation at HQ was going on. The JP sign installers had arrived on cue in the early evening and the next morning Elizabeth was sure it would look as if JP Morgan was born there.
She emailed everyone simply, “We are out and JPM is in, complete - ly including signage. The JP Morgan decorators were furiously at work to get things ready for their client. Their signature sign was erected on top of the building just after midnight, JPM being a stick- ler for legalities. The whole world will know tomorrow.”
The news channels had gotten some reports of the uproar on Ex - change Street but after business hours when they knew, or thought they knew, that no one would be there. When they arrived the next morning, they met JP Morgan signs and Security. “No, Sir, no one is here from the Sloan. They left yesterday,” and some more conver- sation ensued.
Elizabeth had wisely hired a young lawyer intent on becoming an actor to play the security guard role and have the videotape to prove it. Upon seeing it, she had to admit it was a virtuoso effort. He stayed on duty for the rest of the week during the day to ward off others. He had exerted the precaution of always going out the door with one locked to the outside and one able to be locked to the inside. He was wise to do so; several reporters tried to jump the line. He didn’t argue with the line jumpers; he just went outside until they left. He had hired a classic film heavy to sit and look dangerous at the recep- tion desk in the hallway. He was another budding actor so put his all into it. It worked.