“All right guys, let’s get through this and I’ll buy the coffee when we’re done,” Kate offered.
With another huge sigh, Glen pushed the door closed again so the three former Easton employees could strategize in private their presentation of facts regarding the $22 million Pratt-Miles error.
Twenty-First-Century Corporate Sampler
Soon after Easton headquarters became a Pratt-Miles regional office, Phyllis Simpson took down the ten-year-old framed photo over her desk. The photo captured the joy on her face as Ed Easton congratulated her for twenty years of company service. She was now just one of five remaining secretaries who had been employed at Easton headquarters. All the others were laid off.
In place of the photo, Phyllis hung a newly completed cross-stitched sampler she had made following the merger. Captured in a slim gold frame, the bold block maroon letters read:
WE MUST COME TO AN END
ABOUT WHAT USED TO BE
NO LONGER COMPANY A
WE ARE NOW COMPANY B
In the News
December 15
The Washington Scene - People Watch
Italy or Bust
Lee Martino, recently departed chief operating officer of The Easton Company before its acquisition last month by Denver’s Pratt-Miles, was spotted this week in Florence, Italy.
Martino has reportedly enrolled for studio art classes at La Bottega dell’Arcimboldo. Martino’s family plans to join him before the holidays once his children’s winter break begins. Locals report that Martino is leasing a villa on the outskirts of the city.
Asked in a phone interview with our business editor if he had given up corporate life, Martino replied, “Does anyone really care what I’m doing now?”
Actually Lee, we only care whose money you’re doing it with. Meow.
What Do You Give as a Farewell Gift to a Guy Worth Ninety Million Dollars? Redux
Two weeks after the sale of The Easton Company closed, the payroll manager and one of the accountants were going thorough a stack of Jeffrey Elkins’ final business expenses for reimbursement. Most of the items seemed fairly routine, although they shook their heads and trash talked about the moving company bill for his office furniture.
Near the bottom of the stack was a small yellow handwritten receipt from a boutique jeweler in the city reflecting a purchase on Jeffrey Elkins’ platinum company credit card. It read:
10 antique lapel pins $10,000.
Grounded
The week after the merger closed in November, pilot Jake Martin received a call from Jeffrey Elkins. “I’m still in negotiations with George Miles about the transfer of Easton Transportation,” Jeffrey told him. “Keep your head low, and I’ll get back to you as soon as I know more.” Then a handful of weeks passed where Jake received no work calls, emails, or any other contact from the old or new owner. Since Jake had spent much of the past three months on the ground, the hangar was in pristine shape and his flight records and reports were all up to date.
There wasn’t much to do each day except chill out at the hangar waiting for a call and swapping stories and speculations with the contract copilot and mechanic who stopped by regularly to see if there was any news. Jake envied them. As contractors they had worked for Easton but not exclusively, which meant they were still actively working and flying regularly. They were starting to kid Jake about cobwebs developing between his limbs and the floor. By Thanksgiving, Jake was itchy enough to find reasons to roll each of the two planes out of the hangar at least once a week and start their engines, just to assure himself everything checked out OK. It was as close as he was getting to flying and provided some reassurance that he was truly still a working pilot.
It was well into December when an internal auditor from Pratt-Miles showed up at the hangar unannounced one weekday morning. Jake had walked out of the office into the hangar bay just in time to see a young man, bulging briefcase in hand, spinning slowly in a circle as he looked up at the two planes. “Oh my. Wow,” Jake heard him say.
Putting on his best smile, Jake walked toward the stranger and extended his hand. “Good morning. Welcome. May I help you?” he said, looking the guy directly in the eyes and giving him his best strong military handshake.
Shifting the heavy briefcase to his left hand, the young man shook hands with the pilot and introduced himself. “Oh right. Hello. I’m Mike Taylor from Pratt-Miles in Denver? I’m part of the mid-Atlantic team conducting field audits of properties we’ve acquired from The Easton Company. Mind if I take a few pictures?”
Easton Transportation – Last Landing
During the subsidiary’s existence, detailed information about Easton Transportation’s assets and transactions were closely held – corporate lingo for information that’s reported but not publicized, and buried among other statistics whenever practical. Not that there were any irregularities to hide from regulators. It just wasn’t information company executives wanted wandering through the organization and beyond for exposure to unnecessary scrutiny. Personal use of aircraft by chief executives had been a controversial corporate governance issue for years. SEC and Internal Revenue Service rules concerning the disclosure and definition of personal use versus business use were constantly under review.
Easton Transportation’s files had been listed on the voluminous document inventory provided to Pratt-Miles in the weeks before the scheduled merger, but Pratt-Miles had never specifically requested, nor had Easton offered, to send them. It was part of Jeffery Elkins’ strategy to buy the subsidiary from the new owner at a reasonable price. The fewer details Pratt-Miles had in advance, the better.
After the close of the sale, the new owner’s knowledge about Easton Transportation was little more than a name on a long list of unresolved post-merger items. For several weeks Easton Transportation continued to fly under the radar. Pratt-Miles knew that Easton owned a corporate jet, but that was about the extent of it. The records for Easton Transportation remained in the office of the associate general counsel in Virginia. They were stacked on the floor among other important documents that Pratt-Miles staff in Denver had not yet requested. By year-end, Pratt-Miles executives would finally access those files and learn that Easton Transportation was comprised of the following assets and employees:
Corporate jet hangar located at Dulles International Airport in Northern Virginia. 10,500 square feet walled off by insulated, interlocking, double-sided steel panels built to withstand the blow of a Mack truck traveling at 50 mph; metal halide lighting and high-gloss Tennant floors emblazoned with the subsidiary’s logo – ET – in ten-foot green Edwardian script letters; gated secure complex with twenty-four-hour, Web-accessible security camera mounted in the center of the thirty-three-foot ceiling (this allowed Jeffrey to check on his plane from anywhere in the world by punching it up on his laptop); a plush furnished office and conference room; restrooms with marble countertops, walls and floors; private crew quarters with showers; and a small climate controlled wine cellar.
Hawker 800A Jet: Serial Number 253718
Learjet 31A: Serial Number 157824
Employees: Full-time pilot, co-pilot (contract) and a part-time mechanic (contract)
All necessary licenses, inspections and contracts for operation of the aircraft and the hangar
Easton Transportation assessed value: $32.5 million
The discovery came as the new owners began to visit and inventory their recently acquired properties. Ironically, it was Jeffrey Elkins’ persistent phone messages to George Miles that expedited the subsidiary’s evaluation. Two weeks after the close, Jeffrey Elkins managed to connect with George Miles by phone. Again George did not want to discuss the company jet. “Let me get back to you on that Jeffrey. We just haven’t had time to look into it yet, but let me get Legal working on it.”
As a former CEO, Elkins was gaining awareness that his powers were swiftly shrinking with each passing day. Now an outsider looking in, what else could he do but say “Thanks George. I’ll lo
ok forward to hearing from you soon.”
After another ten days passed without a word from George Miles, Jeffrey placed one more call to the Pratt-Miles CEO. This time George’s executive assistant intercepted his call. After briefly discussing the purpose of his call, she gave him George’s voice mail, where he left a message asking for a status on Easton Transportation. In his message Jeffrey once again emphasized that he was anxious to move forward with acquiring the subsidiary. Inexperienced with voice mail, Jeffrey caught himself rambling a bit as he left his message. He was accustomed to having his calls taken directly and returned promptly. Leaving recorded messages in the ether was new territory for the former CEO.
A week later Jeffrey received a phone message from George suggesting that Jeffrey should have his attorney get in touch with the Pratt-Miles attorneys “to see what we can work out.”
It was around this time – more than a month after the Easton sale had closed – that Dan Strauss stepped into Howard Beck’s office at Pratt-Miles headquarters. Howard was Pratt-Miles’ chief financial officer and Dan was one of the Pratt-Miles attorneys working on post-merger clean up. After asking for a moment of the CFO’s time, Dan placed a folder on Howard’s desk and said, “I think you should see this.”
“Whatcha got now Dan?” Howard smiled raising an eyebrow.
The past several weeks had been interesting. Usually Howard found himself dealing with fairly mundane stuff in the post-acquisition phase of a merger, but not this time. Long after the close date, they were still uncovering interesting goodies in the pile of Easton merger surprises. Thirteen billion dollars was a big number, but with this merger Pratt-Miles had finally moved up in the world and their well-to-do acquisition had left much undisclosed as all parties rushed to final signature on the deal.
“It’s this Easton Transportation thing. You remember George has been getting calls from Jeffrey Elkins about it?”
“Right. I remember. Jeffrey wanted to buy the subsidiary outright before close and we put him off. So what’s the status?” Howard asked.
“It seems there’s more to this than we realized. One of our site auditors stopped by the Easton headquarters building for the transportation subsidiary documents and files before going out to see the plane. Turns out there are two jets. And that’s not all. Well, see for yourself.” He flipped open the folder on Howard’s desk. Howard quickly scanned the contents. Dan explained this was only a portion of the information the site auditor had emailed that morning. Dan had printed some of the attachments for Howard to see. They included photos of the hangar, the planes, and the financial summary of Easton Transportation’s assets.
“Holy crap!” Howard puffed as he looked at the asset page. “Somehow I had the impression from Elkins that this was a modest $5 million subsidiary that had one little ol’ plane. No wonder he’s been so anxious to take it off our hands.”
“So what do we do now?” Dan asked.
“I’ll talk to George. I’m going to suggest he stop returning Jeffrey’s calls. I’ll get in touch with Jeffrey myself about this when the time is right,” Howard said.
“So do you think we’ll sell these planes or what?” Dan asked.
“Most definitely. But not necessarily to Elkins,” the CFO said with a devilish grin. “Do we know which one Jeffrey considered the CEO jet?”
“The Hawker. It was the Hawker he was trying to secure for himself. Apparently, if you read the details, he had it customized to his specifications,” Dan explained.
“Okay, thanks Dan. I want to see the rest of the documents when the site auditor gets back.”
“No problem,” replied Dan, “but what are you up to?” He couldn’t help but ask given the tiny smirk on Howard’s face. It was clear he was plotting something.
“I’m not quite sure yet. I need to talk to George first. But I promise, I’ll let you know how this progresses.”
Jeffrey Elkins continued to phone George Miles more and more frequently over the next two weeks, requesting a progress report on his interest in purchasing Easton Transportation. But George never called him back. In a fit of frustration he left a final voice mail for George, “Damn it, George! What the hell’s the problem? Enough is enough. It’s time to stop this amateur hour behavior and get on with selling me the plane.” Then he slammed down the phone.
The next day Jeffrey returned from his morning workout to see the message light blinking on his home office phone. Touching the Play Messages button, he heard the voice of Howard Beck, Pratt-Miles’ CFO. “Good morning, Jeffrey. Hope you’re doing well. Just getting back to you about your request to buy the Hawker. If you want your plane so badly, feel free to bid on it. You’ll find it on eBay. Good luck.”
Jeffrey’s face turned purple with rage. “That bastard,” he seethed. “He can’t be serious.”
Jeffrey had never visited the eBay website but he quickly located it after sitting down at his computer. With all he had heard about the junk people sold on eBay, he never imagined that anyone put jets up for bid. His initial search turned up toy airplanes and model jets, but not multimillion-dollar aircraft. Certainly this was some kind of sick joke Beck was playing on him. Then it occurred to him to enter “aircraft” in the search box. And there it was – his customized Hawker 800A listed on eBay. Jeffrey Elkins sat stunned, staring at his computer screen. He couldn’t believe this was happening. Nine days, eighteen hours and twenty-seven minutes later, Jeffrey Elkins’ customized Hawker sold on eBay for $6,235,100.
The Hero’s Farewell
The day after the Hawker sold on eBay, Jeffrey received an overnight Fed Ex package from the Pratt-Miles Denver headquarters. There was no note inside the envelope – only a paperback. It was a book that Jeffrey was not familiar with. The title was The Hero’s Farewell: What Happens When CEOs Retire, written by Jeffrey Sonnenfeld and published by the Oxford University Press. The back cover noted that Business Week had named it one of “The Ten Best Business Books of the Year.” A small orange plastic self-adhesive tab extended from a page near the front of the book, inviting Jeffrey to flip to it. Two paragraphs on the right hand page were highlighted in bright orange:
Among retiring leaders, chief executives experience the greatest tensions and must face an especially challenging retirement transition, for over their careers their purpose and self-worth have become increasingly linked to the well being of the firm. The chief executive becomes the personal symbol of the institution. Within his or her own organization, the chief executive becomes a folk hero.
A retired CEO faces difficult challenges in seeking meaningful self-purpose. Stepping into alternative jobs and roles of lower stature can be difficult and rare. The challenge is how to find meaningful post-CEO employment for a retired executive whose work skills are not so easily utilized or transferable. For example, violinists in retirement can still offer solo performances or play with small ensembles. A conductor, however, needs the full orchestra to be employed, and thus a conductor’s skills are not usually portable into retirement.
“Folk hero my ass,” Jeffrey muttered. Reaching the end of the passage, Jeffrey angrily tossed the book across the room toward his desk. Between leaving his hand and landing on the desktop, a piece of paper fell out of the book and onto the floor. Jeffrey picked it up and turned it over. It was a glossy photo of the Hawker.
The Stuff at Iron Mountain
The business records environment is exploding with billions of paper documents, trillions of electronic messages, and exabytes of electronic records – all of which must be managed.
– Iron Mountain corporate website
There was a time in American corporations when “business file management and retention” referred to sliding walls of rotating steel cabinetry containing thousands of manila folders sporting colored labels. These files were organized by indexes cataloged in a library of notebooks. A full-time employee was often hired to be the strict guardian of the files.
That was before the advent of desktop computers and the
information age. Once an office was no longer dependent on fast typists, carbon paper, and white correction fluid to produce quality correspondence, documents and reports, the amount of paper generated within organizations quickly quadrupled. The paper explosion was initially fueled by Xerox copiers and later expanded when teams of word processing employees replaced typing pools. Suddenly offices, desks and files were awash in dot matrix printouts, and soon, laser printer reports. Although some organizations had begun copying records to microfiche as early as the 1950s, it was a time-consuming process requiring cameras, a pricey fiche reader, and excellent eyesight.
Most of this evolution took place in the 1980s before the widespread use of floppy disks, email, CDs and PDAs. The result was a paper usage explosion. Instead of circulating one copy of a memo or a report to several employees who each read it, initialed it, and passed it along to the next recipient, everyone got their own copy of every document. This resulted in multiple people throughout an organization sending the same documents to be filed and stored. Consequently, most offices in the early days of word processing and desktop computing devoted as much floor space to file storage as to desks and chairs.
Pink Slips and Parting Gifts Page 18