Friday, May 14, 2010

Day 134 - Day of Infamy

          One week to the garage sale. Two weeks to moving day. I’ve scheduled two crews to help us load and unload the truck. We’ll take one load to the storage facility near our son’s house and a second with us to my father-in-law’s place on the East Coast. We’ve also arranged to distribute, temporarily at least, some of our extra bedroom furniture and appliances to the kids and grandkids. This will include a newish 42 inch LCD TV, which I’m not too happy about but what else can I do. There’s only so much space available, and it’s obvious that I’m not going to be able to keep everything I want.
         The Biblical parable about it being easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of Heaven comes to mind. I’ve been told that the phrase ‘eye of the needle’ actually refers to a small gate in one of the walls of Jerusalem. The gate was small enough that camels laden with goods from trading caravans had to be unloaded in order the get through it. Knowing this takes some of the onus off becoming rich. It’s not as impossible as shoving a camel through the eye of a sewing needle for rich people to get into heaven, but they’re obviously not going to get through unless they unload their stuff first. It’s a you-can’t-take-it-with-you thing as opposed to a you-can’t-be-saved kind of thing. Good news for all the prosperity preachers out there. Of course, now that I think about it, the prosperity preachers just might be the source of this more relaxed and altogether kinder interpretation.
          Either way you cut it, I’m going to have to off-load a substantial amount of my possessions in order to enter the paradise of Southeast Florida. The irony is that I’m not even rich by any stretch of the imagination—in fact I’m soon to be quite poor—whereas, presumably, the rich traders in the Bible got to reload their camels on the other side of the gate.
* * * * *
          The consultants we had at Albatross were experts in bankruptcy reorganizations and dissolutions. They had earned huge fees from the then still fresh collapse of Enron. I won’t argue that these fees aren’t justified, although sometimes the amounts seem exorbitant. The fees, in any event, have to be approved by the judge presiding over the bankruptcy, so one should be able to assume that they are fair and reasonable in the circumstances. Still if you are an unsecured creditor getting pennies for every dollar owed you, or a loyal employee whose pension plan has turned to dust, it has to be painful to see millions of dollars flying out the door and into the coffers of the consultants whose very purpose is to feed at the trough of your troubles.
          Of course the consultants weren’t the only ones enriching themselves in the midst of our travails. Executive management had a hand in there too, as did, to my everlasting amazement, the new chairman of the board.
          The new chairman was a decorated Knight of the Realm—an honest to goodness ‘Sir’ who had achieved some notoriety in the UK for the successful conclusion to a sticky hostage negotiation back when radical fundamentalist Muslims first raised their turbaned heads. Since that time he had enjoyed some further success resuscitating both public and private enterprises that were failing in spectacular fashion. He had been appointed chairman by the board, which was comprised mainly of representatives from the consortium of banks and creditors that now owned us. He came to the U.S. to receive reports and issue orders for one day each month, and for this he received the princely sum of $25,000 per day plus expenses. Did I mention that he was a complete idiot?
          He was a small man with a high squeak of a voice. When he got excited, which was often, people in immediate ear-shot would cringe and wince as if someone were scraping their fingernails on a chalkboard. He made no sense whatsoever that I ever heard, but he certainly did not lack for confidence in himself or abject disdain for everyone around him.
          There was one company among the ownership group that was not a bank. It was a large and well known European manufacturing concern, very successful, with a substantial penetration into U.S. markets. They had fronted many millions of dollars to our former UK parent to conclude its initial purchase of Albatross. They now held about 30% of our stock. They had a significant presence on our board owing principally to their actual experience in manufacturing operations. They did not have enough seats however to prevent the banks from installing Lord McSqueak as chairman. That they were not thrilled by this choice was made abundantly clear by their near constant eye rolling and sideways glances at board meetings when His Lordship was holding forth with his customary high pitched exuberance.
          At one point management and the consultants tried to persuade this company to buy up the rest of Albatross from the banks. This probably would have been a pretty good deal for us. We would have had an ownership that actually understood what needed to be done, and they surely would have sent the chairman packing back to the UK with his last $25,000 check and a fare-thee-well. It didn’t happen though. They just bailed right before the end. They walked away from their considerable investment without a whimper or even looking back. They’d had enough.
          In the midst of our cash flow difficulties, in a surprise move that seemed calculated to make them seem as venal and self-serving as possible, executive management decided to take retention bonuses. They didn’t say anything about it. They just did it. Apparently they thought they could keep it quiet, but it is awfully hard to hide a handful of checks totaling nearly a million dollars from a payables section that is struggling daily to pay complaining vendors a few thousand bucks here and there. News of the bonuses spread like waters from a burst dam through the finance section. Everyone knew about it before the ink was dry on the checks.
          Rod was furious that the news had leaked. He wanted to blame Eddie. I don’t know why he wanted to blame Eddie specifically. Maybe he overheard Eddie discussing it with someone. Eddie was in a position to know about the checks of course because he was helping Dennis and me monitor our expenditures. His knowledge of systems and report generation was extremely helpful to our efforts in this regard. At any rate Rod’s reaction to the leaking of the news was to pitch a fit and basically forbid anyone from discussing the matter at all. I don’t know what he hoped to accomplish. I mean, seriously, that ship had sailed.
          Rod came into my office and shut the door—always a bad sign. He wanted to know if I had heard anything about some bonuses. I had. He wanted to know where I had heard it. I told him the checks were on the list of disbursements for the day. They were in the system. It was my job to know what we were paying. He wanted to know if Eddie had brought them to my attention. He had not.
I should point out here that Rod was on the list of people getting a bonus. His take was $35,000. I had my own opinion about the bonuses in general and Rod’s in particular, but I wasn’t about to say anything. Rod was placated somewhat by my answers to his queries, but he still seemed hell-bent on being angry at someone. I suggested that if they wanted to keep the bonuses quiet they should have considered paying them out of another account, one that wasn’t being scrutinized by the whole accounting department on a minute-by-minute basis because of our crippling cash shortfalls. I did not point out that those shortfalls were now exacerbated by these unconscionable bonuses.
At that point Rod felt compelled to explain the logic of the bonuses to me. They had apparently been agreed to in the last reorganization. Their purpose had been to retain the executive talent, then newly hired and seen as essential to our future success, through that reorganization when there was a substantial likelihood that the company would collapse, and executive talent being what it is, that is whorishly self-interested, would be naturally motivated to seek another street on which to peddle their affections. They were R-E-T-E-N-T-I-O-N bonuses, Rod explained to me, slowly and with emphasis so that I would be sure to understand, and they were a contractual obligation that had to be paid within 18 months of their inception. The 18 months was up that particular week, so the bonus checks had to be written in spite of our pitiful cash position. There was no choice.
Personally I thought there was quite a bit of choice available. The executives on the list, all of whom were still there, could have elected to forego or delay those bonuses. If the obligation was to them, and they had negotiated it in the first place, they could certainly change the terms. That would have been the prudent and altruistic thing to do in the circumstances. That’s what most of the long term loyalists at Albatross would have done. That’s what I would have done, but then I wasn’t an executive on the list and that pesky altruism perhaps explains why.
Only a little while later, after the bankruptcy we eventually filed and the reorganization plan that provided for me losing my job, it occurred to me that the 18 month deadline for payment of those bonuses notwithstanding, the real reason for the unfortunate timing of those bonuses was to get them discharged well in advance of any statutory look-backs that were apt to be applied by the federal bankruptcy court. Management lined their pockets to the detriment of the continuing operations of the company in time to ensure that they wouldn’t be forced to give them back by some do-gooder judge. Naturally this is pure speculation on my part. No one in management would ever admit to such a scheme, but really...come on.
More than anything else that happened at Albatross this one event sums up for me the failure of management to faithfully discharge their responsibilities to the company they were supposed to be running. They took an unconscionable bonus at a time they could not have calculated better to injure their charge. They did it, either through ignorance or arrogance, in such a way as to rub everyone else’s face in the offal. And they got angry that anyone would construe their actions as less than honorable.

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