Fiduciary Duty

by Tim Michaels

  I concentrated on my driving for a while, then thought back to the Prince’s death again. I remembered an article I had read by a sergeant in the Marine Corps. He claimed that people weren’t natural born killers, and boot camp was used to break down people’s aversion to killing. Having just killed someone, after meticulous and careful planning, I couldn’t say that I felt bad about it at all. There wasn’t a single part of me that had remorse, or regrets, or said “this is wrong.” The Prince, after all, bore some responsibility for what had happened to my family and there was no reason to believe he cared. In my mind, I had simply removed a callous person’s ability to do damage again, nothing more.

  And that sentiment was important to me. Some sick individuals might derive joy from other people’s deaths, and I wasn’t that way. A lot of people seem to feel the need for vengeance, but this certainly wasn’t about revenge. Killing the Prince had been a job, a necessary job, and truth-to-tell, a cathartic one, but it was just a job that had to be done. And I had done it well.

  Chapter 10. Time Off

  Around 5 in the morning, I arrived in Barra da Tijuca, the southern outskirts of the city of Rio. Barra, as it’s generally shortened, is home to some of the trendier nightclubs in the city, as well as Rio’s Hard Rock Café. I found a padaria, a combination of bakery and coffee shop that was already open, and had a small loaf of French bread and butter which I washed down with strong Brazilian coffee. I waited another half hour, and then drove off. I stopped right outside Rocinha, the largest favela, or shantytown in Rio. I left the SUV double-parked, with the engine running and the key in the ignition. The mini TV and the unopened radio repeater were in the back seat but I took the radio transmitter.

  As I walked away carrying my small bag, I took off the rubber gloves I had been wearing in the car. Before I had gone a block, the SUV I just left double parked sped past me and merged anonymously into the morning traffic.

  When I got back to the apartment in Botafogo, I took a shower and then immediately fell asleep. I didn’t get up again until 4 in the afternoon. There weren’t any cops in my apartment, which was a good sign. There also weren’t any members of the Prince’s security detail, which was an even better sign. I got up slowly, grinning. Then I went to the bathroom, shaved off my beard and showered. It felt good to be clean and even better to have done to have done an important job well. Later I dismantled the transmitter surgically and precisely with a hammer. Every morning, when I went down for a jog, I dropped a few pieces into a different public trash receptacle.

  I also watched the evening news every night. I grew to like “Jornal Nacional” – the Globo Channel’s 8 PM news show. For the first two days the Prince’s assassination was big news. Though a few “experts” attributed the killing to a group of occultists heretofore operating under the radar, the general consensus among talking heads was that this was the work of an international terrorist organization. After four days, the story was no longer in the headlines, and by the middle of the following week it had dropped out of the news altogether.

  That didn’t mean I was completely safe, of course. Over and over I reviewed the job from start to finish in my head. If there had been loose ends, I couldn’t see them. The cell phone number had probably been traced back to the store where it was picked up, and it is even possible the pre-paid credit card had been traced back to Orlando. By now the authorities might know all the purchases that had been made on the card. But all of those were dead ends, which at best could be connected to a couple of cabbies. If the cabbies were found and questioned, they could only shed a bit of light on an Argentine tourist staying at the Marriott looking to get laid or an Argentine businessman of questionable scruples. Store clerks where the orders were placed might remember that the orders were placed by a Caipira, but none of them had ever seen him, and those who had seen Lincoln had no reason to associate him with the death of the Prince, assuming they remembered him at all. As to the big items, the car and the farmhouse, it was doubtful either would ever get connected to the job, and neither had any connection to me.

  Still, I knew the test would come when I tried to get on a plane. If the authorities had anything on me at all, I wouldn’t be allowed to leave the country. I tried to put the thought out of my mind and enjoy my time off. After all, I was in one of the most beautiful cities in the world. Cidade maravilhosa – the marvelous city, the Brazilians call it. I just wished my family had been there to enjoy it with me.

  On my last day in Rio, I picked up a few souvenirs. For H I got a teeny weenie Rio style bikini that I knew she wouldn’t wear in a million years. Still, it’s the thought that counts, right? For Jeremy, I bought a miniature Flamengo soccer team outfit. I always had trouble judging Jeremy’s size so I tried to err on the side of “too big” rather than “too small.”

  The next morning, I caught a plane at the Antonio Carlos Jobim airport to Guarulhos airport in São Paulo, and from there I flew to Miami. Nobody so much as looked at me twice until I got to customs in the United States.

  “That was a long trip, Mr. Reynolds,” said the customs agent who flipped through my passport, “Was it business or pleasure?”

  “Pleasure. I needed to unwind and clear my head. I needed to find myself,” I responded.

  “And did you?” he asked through his mirrored shades.

  “Yes,” I said emphatically, “Yes I did.”

  “In that case, welcome back Mr. Reynolds,” he said, handing me back my passport and waving me forward.

  “Thank you,” I said, emotionally, “It’s great to be back.”

  Part 2. Human Resources

  Chapter 1. The Merger

  I spent a few days with my father and stepmother in Merritt Island, Florida. I was pleased to see Little Newton and Faraday were doing well. Somehow both of them had managed to befriend my father despite his best efforts. They appear to have implemented different strategies in order to accomplish that feat. Faraday never moved much, and she would simply plop herself down on his desk first thing in the morning, staying until mid-afternoon seemingly oblivious to all of my father’s attempts to move her. Little Newton, on the other hand, would peer with big eyes from around the corner until he caught my Dad’s attention and then tiptoe up cautiously for some petting.

  My father and stepmother said I looked very well. And I did. I was physically healthy, and I had my drive again. I told them I was planning to restart my consulting business. I had done it for eight years and it involved a lot of travel so it made for a good cover with my family.

  As good as it was to see my father and stepmother, not to mention Faraday and Little Newton, I never felt quite at home visiting Merritt Island. After a few days it was time to go. I flew back to Canton. The snow had already arrived. Snow is a serious thing in Northeastern Ohio and I’ve never been fond of the white stuff. For that matter, H and Jeremy hadn’t been all that happy about snow either, or the cold that accompanied it.

  Still, I was going to need a base of operations and in general, I liked Canton. The city is big enough to contain almost anything one might need, but it doesn’t feel crowded and traffic is never a problem. It doesn’t take more than twenty minutes to get from here to there, as long as both as “here” and “there” are within city limits. Besides, I might as well stay in my own home. I was comfortable there. I called the realtor and took my house off the market. I then went on Craig’s List and picked up some furniture. I also ordered a gym-quality treadmill online.

  Once everything arrived the house still looked very empty, and felt emptier still with no other living creature in it, but I had a place to sit, a place to eat, a place to sleep, a place to jog and a place to work. I also had a big pile of mail to work through. After two hours of sorting through envelopes, I came upon a letter from Michigan and Ohio Telecom. The HR department had determined that they had overpaid my severance package and were requesting return of the overpaym
ent. This was, by my count, the third time I had gotten the same letter.

  After everything M & O had done, I should not have been surprised. It all started with the merger. M & O had purchased a company with operations in Eastern Ohio, Pennsylvania, Virginia, West Virginia and Maryland, making it temporarily the third largest landline company in the United States and fourth largest cell phone provider. Like many other mergers, this one required regulatory approval. The company’s pitch was that the merger would make the merged company more efficient, that there were synergies to be had. Additionally, the target company owned the longest fiber backbone in the country. M & O’s vice chair was fond of going around saying we were paying for the backbone and getting the rest of the company for free.

  The benefits of the merger turned out to be three-fold. First, the CEO and top brass at M & O gave themselves raises and huge bonuses for having successfully completed the merger. Second, the CEO and top brass of the acquired company also received bonuses. Third, a lot of workers in the non-executive class in both companies were summarily fired. Not surprisingly, these benefits of the merger caused morale among the non-executive class to plummet. They also didn’t save as much money as the company had anticipated.

  Some of us had warned, vehemently, against the purchase. It had seemed a no-brainer. The acquired company had enormous debt and had almost gone bankrupt due to mismanagement a few years earlier. Those circumstances alone indicated it was very unlikely that the company was doing the sort of expensive maintenance that telecom cables and switches required. However, there was more than circumstantial evidence that the necessary work wasn’t being done – filings with the Federal Communication Commission indicated that service in the acquired company’s area was consistently poorer than almost anywhere else in the country.

  Part of the problem was, in fact, the highly touted fiber backbone which, it turns out, had a tendency to shatter in the cold winters experienced in the Midwest and the Northeast. The fiber had been purchased from a Chinese company that since gone out of business. The poor quality of the fiber should not have come as a surprise either. Two years ago, after a particularly cold night, a newspaper in Lancaster County had quoted several incredulous linemen saying a quarter of mile of fiber had flat out disappeared, replaced with an assortment of glassy crystals. Similar stories had since appeared in the Bluefield Daily Telegraph, Coal Valley News, Hampton Roads News, and the Lehigh Valley Express-Times.

  Basic due diligence should have turned up these and other problems at the acquired company. But somehow none of that made its way into the executives’ decision-making process.

  When it turned out that M & O had bought a pig in the poke, the next step was obvious to anyone who has spent much time in corporate America: those who had spoken out against buying the pig would have to pay, assuming they had survived the first purging after the merger. The second “purger” was more elaborate. Those targeted got “offer letters” – giving them the opportunity to accept a lower-paying job with less responsibility. Company policy dictated that anyone who failed to accept such an offer might be eligible for a severance package. The offers were made not only to those who had warned against the merger, but to people who had been uncomfortably right on a wide range of issues. In fact, from my vantage point, the entire process seemed to be little more than an opportunity to settle scores.

  But actually, it had all started before the merger. It began with a proxy fight between M & O shareholders over whether the merger should even take place. A former board member had pointed out that the company’s management had a history of overselling the benefits of proposed mergers. The latest proposed merger was the largest one by far. However, nobody had yet articulated a good reason for it, other than increasing the size of the company.

  M & O’s management struck back in the media, labeling the former board member as “disgruntled.” They went on to discuss the cost savings from the merger. In response several of the unions, recognizing that their membership comprised a likely source of much of those cost savings, promptly declared themselves against the merger as well. “Exempt employees” also tended to be against it, but most of them kept fairly quiet about it since they didn’t even have a union to protect them.

  Things got really acrimonious, however, when one of the vice-presidents of a family of mutual funds that was heavily invested in M & O stock was quoted as saying “non-management employees of telecom companies are essentially commodities. There are too many of them, they aren’t particularly skilled and are easy to replace. In fact, our research indicates that in general, non-management employees of telecom companies are overpaid by 22.7%.” He went on to say the merger was a “golden opportunity to pare down salaries and staff to sustainable levels at both companies.”

  The article in the Cleveland Plain Dealer that quoted the esteemed mutual fund VP noted that his own compensation from the previous year was just shy of $2.8 million, despite the fact that the family of funds for which he was an officer had lost 8.3% during the year. A piece in the Akron Beacon-Journal helpfully added that several funds managed by his company were among the 401-K offerings available to employees of both M & O and its merger target. Just over a third of the employees of both companies rebalanced their 401-Ks that day, and another third followed suit before the end of the week. Later in the week, an editorial in the Repository, the daily paper serving Canton itself, bemoaned the work ethic and vindictiveness of the employees.

  The battle lines were drawn. It was the classic conflict between capital and labor. Employees of both companies protested against the merger, but many of the large investors favored it precisely because it would bring workers to heel. Naturally, management of both companies lobbied employees to vote in favor of the merger.

  After a month of bitter debate, the merger ended up being approved by a very narrow margin, and then only after allegations of vote-buying. Two banks had initially planned to vote their client proxies against the merger, though they had changed their minds at the last minute. A few months after the merger, leaked internal communications showed that M & O had promised those two banks payments of $1.5 million apiece if the merger were approved, whereupon both banks had dutifully changed the votes of their client proxies in favor of the merger. Eventually, the Securities and Exchange Commission extracted fines and admissions of wrong-doing from both banks for violating Section 206(2) of the Investment Advisers Act of 1940. That is, both banks “failed to disclose a material conflict of interest in their voting of client proxies” for the merger. Total civil penalties imposed by the SEC in each case came to $750,000.

  Lest forcing the banks to disgorge half of the fees they had received in the course of violating the law of the land be viewed as too severe of a punishment, the SEC’s District Administrator helpfully added, “The Order does not find that the outcome of either bank’s proxy vote was affected by their banking relationship with M & O, but rather that the proxy voting process was tainted by the failure to discuss the conflict. What the American public should see is that the process matters.”

  In any case, the merger ended up being approved. The evidence indicated that most “aye” votes came from the expectation that cost savings would be a byproduct of reducing the combined workforce of the two companies. And that eventually led to the offer letters.

  Chapter 2. Synergies

  But I’m getting ahead of myself again, because between the merger and the offer letter, there was the webinar. The webinar was a broadcast to the entire staff of the newly-merged company. It starred Fred Phillippi, a.k.a., “Uncle Freddy,” the CEO and Chairman of the Board of M & O, and Donald Angle, his erstwhile counterpart at the acquired company.

  Angle was now President of the merged operations, and his first official act apparently was announcing he’d be retiring in a year, no doubt after collecting another large bonus and presiding over many a meeting at the golf course. Then Uncle Freddy stepped f
ront and center. In the same sentence, he congratulated us on successfully completing the merger and told us there might be further “adjustments to staff levels.” We were also told that each and every employee of the company would have his or her position evaluated so that the maximum possible efficiencies could be extracted.

  I was watching the webinar in the big auditorium and the gasps were audible. A lot of people were surprised, proving, once again, the adage that there are none so blind as those who would not see. After all, it wasn’t just the constant “save on labor costs” messages from the pro-merger side of the merger battle. It was also that this wasn’t the first, or the second, or even the third merger by M & O in the last decade and a half. Some of the old timers had been through seven or eight mergers, and layoffs were as inevitable a byproduct of mergers as the bonuses were to those doing the firing.

  Uncle Freddy went on to explain the process. The top executives, having recently been rewarded with hefty bonuses, would select Vice Presidents of the new, merged company. Then, the Vice Presidents would meet to determine who would be the Directors who stayed on. Then, Directors and Vice Presidents would select Managers. Finally, Managers, Directors, and Vice Presidents would determine which of the rank and file would be selected to remain with the company. Those who were offered lesser positions than they currently held, or reductions in pay, would receive one of the dreaded offer letters. Those offered nothing at all would simply be asked to leave. Uncle Freddy assured us the entire process would take about two months. He also described the process as “relatively painless” and thanked us for our patience.