by Susan Wolfe
“In spite of your ‘evidence’,” Roy said, “I do not accept that it is in the shareholders’ interest to terminate an extraordinary sales executive like Charlie Reebuck. We’ve let this investigation get out of hand.”
Ken’s eyes widened in surprise. “How so, Roy?”
Too many facts, thought Georgia sourly. Too risky to text message right under Roy’s nose in such a little meeting, but how did people survive these meetings?
“Somehow we managed to spend over $4 million dollars to unearth less than $1 million in bad revenue. We had huge teams of lawyers reviewing a mountain of irrelevant email, and now you’re suggesting we lose a substantial portion of our most productive sales team as well. I wouldn’t permit our company to be dragged into something like this again.”
“So unfortunate,” Sally echoed, shaking her head soberly.
“I guess I’m a little confused.” Ken’s eyebrows were squeezed together, his head cocked to one side. “Are you saying we had a choice? This investigation was driven by the auditors and by SEC requirements. We consulted Jean-Claude every step of the way. We found bad deals that required moving several million dollars from one quarter to another, and we’re extremely fortunate they didn’t trigger a restatement.” He ignored Roy’s impatient hand signal that tried to cut him off. “As to the employees, Roy, I share your disappointment that we found so many who were willing to violate the rules. It’s painful to fire them, but how else do we avoid the same problem all over again?”
“We’re not going to have the same problem all over again,” Roy responded. “I won’t allow it. I shouldn’t have allowed it this time.”
Ken looked genuinely mystified. Not surprising, thought Georgia, since Roy was making no sense. Another case of intermittent marble loss? Or did Roy think he was so powerful he could rewrite history, and people would embrace it as truth? She glanced at Zack, whose face was carefully impassive. Her thumbs were just itching to text him about it.
“Well . . .” Ken began and then paused, reconsidering. “In any event, the immediate decision is whether to terminate Charlie Reebuck. Given the wealth of evidence, I just don’t see how we justify terminating the individual players and not the manager who actively encouraged them. And by the way, he did acknowledge he’s a compulsive liar.”
“Sally?” Roy asked.
Sally heaved a sigh of deep regret. “Well, it’s just so unfortunate that it got this far. We really should have contained it better.” Uh-oh. Shared delusion? Or Sally just sucking up again? “Given where we are, though, I don’t really see how we can be harder on the sales executives than we are on Charlie. Maybe we need to let them all off with a warning.”
“No!” the Internal Audit person shouted, apparently startling even himself. “I mean, please,” he continued more quietly, pressing his palm to his tie, “I could never enforce our finance rules if word got out that we let these guys off.”
“He’s right,” Ken said. “How would we justify firing the next guy, if we let all of these go free?”
“Well,” Roy said, “then you’re telling me we have no choice. I don’t accept that. Ken and Sally, I want you to come back to me in twenty-four hours with a sound basis for keeping Charlie Reebuck. Tell Nikki to schedule fifteen minutes.” He rose from his chair. “I think that’s quite enough for today on this subject. I’ll see the two of you tomorrow.” He disappeared through the door into his office.
Zack and Quan exchanged glances in the silence fostered by Sally’s continued presence. Ken began to speak to Sally about Charlie Reebuck as Georgia and the others filed out of the room. Well, she had no idea how Ken would manage his interaction with Sally, but she knew how to manage hers. Time to feed Sally some more harmless, rapport-building information.
She knocked on Sally’s door an hour later and stuck her head in. Sally was at her table with Lucy Feiffer. “Oh. Sorry,” Georgia mumbled, and started to back out again.
“No, Georgia, it’s fine,” Sally called with a welcoming smile. “Lucy and I were just finishing. Come in, have a seat. Would you like an Odwalla?” Hostess with the mostest. Georgia ignored Lucy’s curious gaze as she disappeared behind the closing door.
“How go the admin interviews?” Georgia asked.
Sally waved her hand and sighed. “I’ve seen two resumes, and they were both completely unqualified. But never mind that. What’s new in the legal department?” Her canine teeth sparkled.
“Well, not too much, I guess. The paper trail on that credit card fraud looks pretty damaging, but they still have to interview the guy. And then the only other thing is that situation in Italy.”
“Italy,” Sally repeated, interlacing her fingers into one big, braided fist on the table top. “Tell me about that.”
“Well, they just hired a new head of sales for Italy, and now somebody told Ken in confidence that the guy was dismissed from his last job because of an ethics violation.”
“That’s ridiculous.” Sally curled her lip with disgust. “Didn’t they do a background check?”
“Well, they might have, but it didn’t turn this up. In fact, the only reason Ken found out about it is that somebody who used to work at the guy’s former company contacted Ken in complete confidence.”
“I see,” Sally said. “So what is Ken’s plan?”
“I’m pretty sure he’s going to ask for Roy’s help with it. He mentioned they have a meeting tomorrow.”
“Interesting. Thank you, Georgia. And what else?”
Georgia shrugged. “Nothing else, really. We’re busy, but it’s pretty routine stuff.”
“Great. Thanks for stopping by. I really appreciate your efforts to keep our departments working well together.”
“Oh, no problem. Good luck with your admin search. It’s worth holding out for somebody terrific.”
“Thanks for making dinner tonight, Katie-Ann,” Georgia said, resting a pot on a stained potholder on their rickety card table. “Big help.” She began spooning black-eyed pea chili into Katie-Ann’s bowl.
“No problem. I got my geometry test back today.”
“And?” Georgia paused, the serving spoon suspended over her bowl.
Katie-Ann shrugged. “C plus.”
“C plus? That’s a huge improvement over F. The tutoring must be paying off.”
“I guess. That girl Ginger saw my paper, though, and she still made fun of me to those other girls who follow her around.”
Georgia joined Katie-Ann at the table and spread her paper towel across her lap. “Ginger and her friends don’t amount to a wart on the backside of a sorry hog, Katie-Ann. You’re making real progress. I hope you feel proud of yourself.”
“And I think I can do better for sure. Ginger Bitch is more important than you think, though. People really listen to her.”
“Don’t say ‘bitch.’ Yeah, those so-called popular girls can cause a lot of misery. Just don’t let her see that she’s getting to you.” She held up her car keys. “Forget Ginger. After dinner, we’ll head over to Happy Donuts and celebrate.”
“Guys, I just had an odd conversation with Roy.” Ken had asked Zack and Georgia to join him in his office, and they were standing in the area between his desk and his oval conference table.
“Odder than usual?” Zack asked mildly.
“I take your point, but yes. I went to talk to him about the Italy matter, and he said Sally had already told him about it.”
Zack frowned. “How did Sally know?”
“Exactly my point. Anton was absolutely clear that he couldn’t go through Human Resources, because he didn’t trust their discretion. So who told Sally?”
“Maybe the head of sales for Europe?”
“Don’t think he knew about it, either. I hope we don’t have a leak here in the department.” Georgia began breathing deeply, careful not to look startled as her pulse began to sound in her ears.
“But the three of us are the only ones who know about it,” Zack objected. Argh! Really?
&nbs
p; Georgia tried to make her voice casual. “Anton must have told somebody else. Or maybe Sally overheard something through the walls?” Fucking hell. Would Sally be smart enough to cover if Ken asked her about it?
“Don’t know,” Ken said, “but we need to be careful. I’ll mention it at our next team meeting. This one turned out okay, but next time it could cause real trouble.”
Big trouble, Georgia concurred as she hurried out of his office, though not in the way Ken feared. She’d been so intent on choosing information that was harmless that she’d forgotten almost nobody knew about it. Didn’t sound like Ken would pursue it, but you didn’t get a lot of chances to be sloppy with this stuff. Imagining how disappointed her father would have been, Georgia winced.
Georgia responded to Ken’s summons and found him standing next to his oval conference table, his laptop under one arm and a notepad in his hand. His pale gray bow tie set off the green of his eyes as he looked at her in greeting. “Georgia, there you are. I’d like your help with something. Roy was just in here, and it looks like the company might be doing an earnings preannouncement. You know what that is?”
Georgia shook her head. “Sorry. Maybe you should start with what a plain old ‘earnings announcement’ is.” That tie also brought out the red in his military-style hair. It was a good tie.
“Happy to,” he agreed, “but can we start walking? Okay, so our 10-Q is the official public document that tells investors how we did for the quarter.”
“Right.”
“Frankly, it’s a little dry.”
Georgia’s laugh caused two people to glance up from their desks.
“Fine. Make that very dry. So we also do a conference call at the end of every quarter for two reasons. First, we ‘announce’ in plain English how we did for the quarter, and answer questions about it. That’s the ‘announcement.’ Second, we predict how we’re going to do in the upcoming quarter. That’s called ‘guidance.’ So it’s an announcement about the past, and then guidance for the future. With me so far?”
Georgia nodded, hurrying to keep up. Good thing she was ‘lanky’ as her father called her.
“Great.” He lowered his voice, and held his notepad at an angle near his mouth to muffle the sound. “Now, if we find out in the middle of a quarter that the guidance we’ve given is wrong, then we sometimes have a legal obligation to go out with a press release to correct the guidance. That’s called a preannouncement, and it’s both rare and very unfortunate. Our shareholders could easily lose several hundred million dollars when the stock drops. Evidently, Roy thinks we might have to do one for this quarter that’s about to end.”
He dropped the notepad away from his face and resumed his normal volume. “So. I’m headed into a meeting to discuss it, and we need your help with the press release. Here we are.” He held the frosted swinging glass door so that she could enter the boardroom.
The room had been transformed by sheer body count and nervous energy into command central. Cliff was walking back and forth behind a tightly packed row of finance people, whose voices created a low, urgent hum as they reviewed and debated the data on each other’s screens. Someone handed her a set of financial charts, and she squeezed herself in next to Ken at the far end of the table and opened her laptop. After a moment Roy entered through the side door from his office and the room fell silent.
“Okay, Cliff, tell us where we are.”
Cliff stood behind his chair and rested his hands on the chair back. “We’ve just done a region-by-region summary for this quarter, and the news isn’t good. The bottom line is we think we’re going to be at least $8 million below street expectation on license revenue.
“We think it’s big enough,” he added, “that we should do a preannouncement in the next forty-eight hours.”
“Wait a minute, though,” Ken said as he studied his copy of the chart. “This is about license revenue? We don’t give guidance on license revenue. We only give guidance on total revenue.”
“True,” Cliff said, “but that doesn’t stop the analysts from making their own predictions. This is going to be such a big disappointment in the marketplace that we ought to get the word out early so that we don’t look like we’re trying to hide anything.”
“I must be missing something,” Ken responded, looking up from the charts. “We never have any obligation to comment on analysts’ speculations about our company. That includes their speculations about license revenue. So how could we be accused of hiding anything? We don’t want to hurt ourselves in the market if we don’t have to.”
“We’re going to miss on total revenue and earnings as well,” Cliff said. “And we did give guidance on those.”
“By how much?”
“We don’t know that yet. It looks like about $3 million to $5 million on revenue, and probably a point or two on earnings.”
“When will you know?” Ken asked.
“To know exactly will take another two or three weeks, after the auditors sign off.”
“Then I guess I have two issues,” Ken said. “My first issue is that we have no obligation to say anything at all about license revenue. You seem to be saying you might want to do that for nonlegal reasons.”
“Right,” Cliff said.
“Setting that aside for a moment, my second issue is that we shouldn’t ‘correct’ our guidance before we have accurate information to correct it with. I mean, isn’t there a chance that we’ll find more revenue and hit the low end of our guidance?”
“Nice wishing, Ken,” Cliff said, “but we’re not going to find another $5 million in revenue.”
Ken ignored Cliff’s patronizing smile. “Okay, but whenever you preannounce something, you call a lot more attention to how bad it is. And here’s a basic truth: You go out into the market with a correction, the correction had better be right. Otherwise, you get clobbered once now, and then clobbered again when your correction is wrong.” He sounded like he wouldn’t mind doing some clobbering himself. She noticed with alarm that his face was taking on the dark red tinge that she associated with Irish temper.
“Nobody’s going to get clobbered,” Roy declared, holding up his hand. “My decision is made. We’re going out with the preannouncement.”
Ken was silent a moment, his lips in that alarming straight line. “Have we told the board?”
“Not yet,” Roy replied. “I’ll do that as soon as I have the draft press release,” Roy replied. “We’ll turn to that now.”
Two days later the preannouncement regarding Lumina Software’s anticipated disappointing quarterly results hit the wires. By the end of the day the stock price had dropped from 38 to 32. On day three it stabilized at 26. The company had lost $1.2 billion, roughly a third of its market value, in three days. Georgia found the plunge terrifying, but Roy appeared to take grim comfort in the fact that they had gotten the news out promptly, and thereby preserved their credibility with the street.
Roy was sporting an uncharacteristic smile as he entered the Executive Committee meeting through the connecting door from his office. Georgia watched an elegantly dressed man in his late thirties follow Roy into the room, a tall man with curly black hair and the subtle swagger of a man who believes women find him attractive.
“Over here, Giuseppe,” Sally called enthusiastically, pulling out the chair next to her. He dutifully joined her.
“We have an important agenda this morning,” Roy said, holding his maroon and gold striped tie against his chest as he seated himself. “I’d like to begin by introducing our new head of business development, Giuseppe Coppola.”
From the looks of astonishment and intense interest around the table, Georgia guessed that most team members hadn’t interviewed Mr. Coppola. Text message to Ken: u know him?
Response: Didn’t knw we wr interviewing.
“I’m going to let Giuseppe introduce himself in a minute, but I’d like to begin by saying we are very fortunate to have found a person with such a strong background on such short notice. For
that we must thank Sally, who worked with him at a previous company.”
Text from Ken: Jsus, Mary & Jseph!
Georgia: Certainly 1 way 2 get allies.
Ken: Mybe he’s good. Dresses better thn Burt.
Georgia glanced at Mr. Coppola’s very tailored summer weight gray suit and crimson silk tie: Dresses better thn Jacki O’.
Ken: LOL. Cld b why I’m suspicious.
Indeed, by now the men on the executive team were so colorfully dressed that the women were starting to look like drab little peahens.
“. . . and after three years with Sangallo Software I felt is a good time for making a change,” Mr. Coppola was saying. “So I am here, and I think I will be good for work with you. Thank you very much.”
“Giuseppe,” Mark called out as if he were thrilled, “can you say a bit about why you view this as a step up from your previous position?”
“Is chance to work in business development,” Giuseppe replied. “And of course, is a much bigger company.”
“So, if you’re new to business development,” Mark pursued brightly, “what was your focus at Sangallo?”
“R&D, the product development,” Giuseppe explained, shrugging. “I think is similar, but I prefer now to do business development.”
“Giuseppe’s too modest to say this,” Sally said with an admiring smile, “but he’s fluent in five languages.”
Text to Ken: English 1 of them? Ken frowned at his iPhone and set it down. Uh-oh, too snarky?
“I know you’ll want to introduce yourselves to Giuseppe over the next few days,” Roy continued. “And with that, let’s turn to the morning’s agenda.”
An hour later Burt, whose mumbling had gotten even worse in the wake of his demotion, was presenting his “management is listening” posters to the executive team. Poor guy. Well, these dumb posters had been his idea, so maybe he actually believed in them.
“This is a great effort, Burt,” Mark said with his tight smile, “but I slightly question how effective these posters can be, no matter how well they’re designed and worded. Are we sure marketing is the right response to not listening? I wonder if it wouldn’t be easier to just . . . listen.” He shrugged ironically.