Chapter 12: I Think I Can Manage

September 18, 1983, Chicago, Illinois

“Have you figured out what you want to do yet?” Keiko asked late on Sunday morning.

“I have a score for each person, and I’ve ranked them,” I replied. “Now I need to have a conversation with each person, then move them up or down in the ranking table. The bottom seven go unless that somehow includes all the analysts for a specific asset class, which is unlikely. I did change my plan slightly from what we discussed. I’m going to name an assistant who won’t have a specific portfolio. That person will work on special projects but also cover for me when I’m on vacation or out of the office for some reason.”

“Do you have someone in mind?”

“Tony Kirov, who works with me on the FX Desk. Mr. Spurgeon named him specifically as someone to keep. I didn’t disagree, and Tony came out at the top of my list. The analyst Mr. Spurgeon suggested he’d like to see gone is ranked in the ‘drop zone’, as it were, and would have been there even without prompting.”

“How do you feel about having to fire people?”

“Neutral,” I replied. “I understand the principle that a business is in business to make a profit, and it is in the best interest of the business to operate as efficiently as possible. That said, I understand it affects real people, and I empathize, but I also know my job exists only because I provide far more value to Spurgeon than it costs him to keep me employed. He doesn’t owe me anything except as specified in the contract, and that includes being let go if I don’t meet performance standards or I interfere with Spurgeon making a profit.”

“OK, but the people who lose their jobs, what happens to them?”

“They’ll be paid severance, as specified in their contracts; plus they’d be eligible for any of their investments to be cashed out as of December 31st, but Mr. Spurgeon has discretion to pay them out immediately. That can be a significant amount of money and should tide them over until they find a new role. Granted, I’m in a different position, but think about what I would walk away with if I was terminated.”

“OK, but you’re special! Very special!”

“I’m not sure Noel Spurgeon has the same reasons for believing that as you have!” I chuckled. “But an analyst who has been at Spurgeon for five years should have something on the order of $30,000 in investments and retained bonus. That’s in addition to severance, which is a month of pay for every year of service, up to five, and a minimum of one. That means anyone who is laid off will receive about a year’s salary in total payouts.”

“That does change the picture,” Keiko agreed. “Who has to tell them?”

“That would be me,” I replied. “Mrs. Peterson from Personnel will assist me, and she is in any meetings where someone is let go for any reason.”

“So, if you were to leave, Mr. Spurgeon could hold your money?”

“Yes. That’s a consideration as well. Golden handcuffs are still handcuffs. The interesting thing is that I could take the money that isn’t mine with me because the contracts I’m signing with my investors don’t have a lockup period.”

“Weird.”

“I’m not in a position where I could request a lockup period, and the clients I’m signing up aren’t in a position to agree to one.”

“You haven’t mentioned your business development recently.”

“I’ve had a number of calls and discussions, but nobody has requested I come to speak to them. It’ll happen, though, as I’m already receiving word-of-mouth inquiries from other unions because of the returns I’m reporting to Overland Park. Jeri is also mentioning me to other trust fund kids.”

“How does that work?”

“Someone sets up an irrevocable trust for their child or grandchild and appoints a trustee to manage the money. The child can draw some amount of money during the life of the trust, often a monthly stipend of some sort. When the trust terminates, all the proceeds are paid out. In Jeri’s case, it’s at age twenty-five. Before then, other than her stipend, she can withdraw funds to pay for college or buy a car, but not buy any real estate.

“A trust also has rules about what investments can be made. In Jeri’s case, I can’t sell short or the equivalent, cannot use options, and cannot invest in commodities. There are limits to how much can be invested in various asset classes as well. The goal is to ensure that the trust isn’t put at risk by, for example, putting everything into a single stock or investing it all in gold.”

“You could make more money for her if you didn’t have those restrictions, right?”

“Yes. But it’s not up to her — her grandparents set the rules. But it’s not like she’s not making a ton of money. Barring a reversal, her $3.8 million will be at least $6 million by the time she’s twenty-five. At least. That’s ultraconservative and would be what I’d tell Jeri I was targeting. I feel comfortable telling you it’ll be north of $8 million in 1990 when she turns twenty-five.”

“And that’s all hers?” Keiko asked.

“Yes. Of course, her mom is worth something like $400 million, but a good chunk of that is Foundation money. It’s not hers, per se, but she controls it, so it might as well be. There are tax and other restrictions on what she can do, but there’s no reason she couldn’t pay herself $5,000,000 a year to run it. Well, except bad PR if that information leaked out.

“So the way to handle that is to have the Foundation pay most of her expenses and take a modest salary of a few hundred grand, which isn’t out of line for someone running a major charitable organization. They have to pay that much to attract the best talent. Otherwise, those people go to industry where they could make significantly more.”

“Things I never knew! Are you ready for lunch?”

“I am!”

September 20, 1983, Chicago, Illinois

On Monday, I had met with eight analysts to evaluate them for the new team. It was clear to me that three of them were very unhappy with the re-organization, and those analysts were each downgraded two spots in my ranking list. One of them had already been in the ‘drop zone’, and the change moved another one there.

On Tuesday, I met with the remaining analysts and moved another one into the drop zone based on attitude, and at that point, I had a list I felt represented the strongest team I could build. With that list of names, I began filling the slots. I penciled Tony’s name into the assistant slot as a senior analyst responsible for special projects. I also penciled in Bianca’s name as the lead data analyst.

The choice for fixed income was fairly easy, as Mark Burton was the most senior analyst in that area, and was one that Mr. Spurgeon wanted gone. That left Jerry Stein and Mark Sinclair, and given Jerry had been hired by Mr. Matheson, he’d be the lead for that team. The decision about commodities was also fairly easy, as there were four to choose from, and two were head and shoulders above the other two. I penciled in Steve Mansour as the lead and Ken Parker as the second analyst.

Much more difficult was the choice for equities. I had nine to choose from for two positions, though one of the seven who were above the drop zone would be offered the FX analyst role. I’d done my best to get a feel from each of them for how they’d respond to switching from equities to FX and how well I thought I could work with them. That led me to a slightly different course of action than my ranking sheet indicated.

The top-ranked equity analyst behind Tony was Scott Moreland, but he was also the one I felt could handle the FX role and work closely with me. I penciled his name into that slot, though I’d have to discuss it with him once Mr. Spurgeon reviewed my list.

If he chose not to, then I’d need to shuffle people around and go with my second choice. The downside of THAT was that it meant that either the third or fourth-highest-ranked equity analyst would be let go. Hoping that would not happen, having penciled Scott Moreland in for FX, I selected John Peters and Bill Young for equities, with John as the lead.

I triple-checked my proposed staffing list, then went to see Mr. Matheson. He reviewed the list and smiled.

“Dumping both of Enderlee’s guys and keeping both of mine?”

“That is my honest evaluation. I’d have dumped Mark Burton even if Mr. Spurgeon hadn’t suggested he’d like to see him out.”

“For certain definitions of ‘suggested’?” he asked with a raised eyebrow.

“I would very likely have taken that suggestion no matter what, but Burton has a seriously bad attitude.”

“I see you basically eliminated all the malcontents. A new broom sweeps clean?”

“Given we’re moving into a new structure, the last thing I want is anyone who isn’t all-in. All of our livelihoods will depend on the work of the new Research Department, and I want to make sure it runs like a well-oiled machine.”

“One thing I know I can count on is you won’t be afraid to speak up or pull the trigger. I have no complaints about this list. Enderlee, on the other hand, is going to lose his shit.”

“My heart bleeds,” I replied. “He can get with the program and stoke the engine or get off the train.”

“Jesus, Kane! Now you sound like Noel!”

“And your point is?” I asked with a grin.

“Get out of here! Go see Noel. I think he’ll be happy.”

“I am, so he should be.”

“We’ve created a fucking monster!” Mr. Matheson said, shaking his head but also laughing.

I left his office, went back to my desk, called Julie, and arranged to see Mr. Spurgeon first thing on Wednesday morning. That completed, I spent the rest of the afternoon doing research. After work, I headed to Violet’s house for dinner, then went to class.

September 21, 1983, Chicago, Illinois

“I have a tentative plan,” I said to Mr. Spurgeon on Wednesday morning.

“I don’t want to see a tentative plan; I want to see the plan.”

“I understand that, but to produce it, I need your permission to speak to Scott Moreland about switching from equities to FX.”

“He’s one of our best equity analysts.”

“Yes, he is. And you’re losing at least some of my time as the sole FX analyst. I need someone who can produce similar quality reports when I’m on vacation or out pitching investors or managing. I want him.”

“Why not Kirov? He had FX and equities before Matheson brought you on board.”

“I have a specific role in mind for him. I can go into detail now or wait until Friday. Which?”

“Friday. Make it happen.”

“Thank you. I’ll be back with a final plan on Friday, as promised.”

“I’ll expect you then. I received a quote and drawings from Brown Construction. I’ll sign the contract by Friday and then put Clinton on it. Dismissed.”

As I turned to leave, he picked up the phone and dialed. I walked down the hall to where Scott sat and asked him to come to the conference room to have a chat.

“Well,” he said when I shut the door, “Mrs. Peterson isn’t here, so I’m assuming this is positive news.”

“I’d like you to switch asset classes and work with me as an FX analyst. You’re the only one of the entire team I trust with taking over my work.”

“I’ve focused on equities since my first day here six years ago and for three years before that at Lehman.”

I nodded, “I remember from our conversation. I’m positive you can do this; otherwise, I wouldn’t offer it to you. That said, this is not a ‘take it or leave it’ conversation. If you say ‘no’, you’ll be an equity analyst. I want you for FX, and I’ll make sure you have all the tools and information you need to be successful. My job depends on me making the right decision, and I’m positive this is the right decision.”

“Do I have time to think about it?”

“I owe Mr. Spurgeon a completed staffing plan on Friday morning. If you say ‘no’, I have to shuffle roles, so I need to know by tomorrow morning at the latest.”

He grimaced and was silent.

“I’ll do it,” he said after a moment.

“Thank you. Keep this to yourself until Mr. Spurgeon approves my plan. He knows I’m having this conversation with you.”

“Can I ask you a question, off the record, man-to-man?”

“Sure.”

“How the fuck did you pull this off? You were in the mailroom less than a year ago!”

“I know it’ll sound trite, but hard work, determination, and absolute loyalty to Murray Matheson, along with sniffing out major currency and precious metals plays. Add in bringing in around $60 million in new money, and I think you can see why.”

“OK, but how?”

“I asked for study material for my securities licenses inside of the first few weeks I was here, and I have both a Series 3 and Series 7 license. I showed Mr. Matheson I could make money and I could do research, and he gave me the opportunity. I seized it and ran with it.”

“Still off the record — if you ever decide to open your own shop, take me with you.”

“If that day ever comes, I’ll talk to you.”

“Thanks. I’m fully on board.”

“I was sure that was the case.”

We left the conference room. I headed back to my desk on 29, and began working on the formal plan I would turn in to Mr. Spurgeon on Friday morning. Just after 4:00pm, Keiko called.

“My blast count is up slightly, at 7%, which Doctor Morrison said is promising, as the next round of chemo should knock it below 5%.”

“That’s great! Anything else?”

“My white count was slightly elevated. I don’t have any symptoms, but Doctor Morrison conferred with Doctor Weiss, and they want me to take antibiotics prophylactically. Doctor Morrison called in a prescription for me, and my dad picked it up and brought it to me.”

“Did he say what he suspects?”

“It could actually just be my body recovering, but it could also be some kind of infection. I’m sure you remember bacterial infections are very dangerous for AML patients. He prescribed the antibiotics out of an abundance of caution. With no symptoms, it won’t interfere with the chemo, and they’ll give me a higher dose of antibiotics via IV.”

“OK. My plan for next week is to come in early so I can leave early and take you home from the hospital. I’ll see you tonight after Jeri’s dinner.”

“Have fun! See you!”

“I love you, Keiko-chan!”

“I love you, Jonathan!”

We said ‘goodbye’, and after I placed the handset in the cradle, I resumed working on my report. I completed it just before the end of the day and locked the original and backup floppy in my desk before leaving the office to head to Jeri’s house for our monthly dinner.

Gary, Nelson, Allyson, Pete, Marcia, Jeri, and I had a good time together, and when our evening was finished, I drove Allyson to Loyola, then headed home.

September 23, 1983, Chicago and Evanston, Illinois

I delivered a copy of my plan to Julie first thing on Friday morning, and at 9:30am, I received the call I was expecting. I went up to Noel Spurgeon’s office, and Julie sent me right in and closed the doors.

“A bold plan,” Mr. Spurgeon said. “Who helped with the organizational structure?”

“Nobody. I simply analyzed the situation and asked myself how to achieve the results you desired. The plan I put forward will achieve your goals of tighter, more focused analyst reports and more data analysis while creating cost savings north of $700,000.”

“I see you kept both of Matheson’s guys and dumped both of Enderlee’s.”

“All three of Matheson’s guys,” I replied with a grin. “That fulfills your advice to keep Kirov and dump Burton, which was backed up by my analysis of the team. Perhaps if Mr. Enderlee had better analysts, he wouldn’t be earning such lousy returns. A twenty-year-old punk kid with limited experience is kicking his ass.”

Mr. Spurgeon laughed, “I like you, Kane. You don’t fuck around or mince words. Murray also says you’re a witch!”

“He’s just jealous,” I grinned.

“What happened to that eighteen-year-old kid who was scared to even step into this office?”

“He paid attention to every word Mr. Matheson spoke and every move you made.”

“Keep it up, Kane. The sky’s the limit.”

“I do need to disclose something to you, but I’d ask you to keep it to yourself.”

“What’s that?”

“What might be perceived as a conflict of interest. Bianca Pérez is pregnant; I’m the father, and yes, Keiko is fully aware. Pérez is due in April.”

“Not something I would have expected from you!”

“It’s something that Pérez and I discussed for some time, and with it being very unlikely Keiko can have children, it presented an opportunity to have a biological kid. Keiko and I will adopt if things go the right way.”

“There are no rules against those types of relationships here. Everyone is an adult, and I am not anyone’s dad.”

“Except Samantha’s, of course.”

He laughed, “She’s in school now, so she won’t be prowling the offices. Are you comfortable with putting this plan into action immediately?”

“I wouldn’t have presented it if I wasn’t. I will need to move people around until the new space is ready.”

“That’s fine. Take this to Mandy Peterson. She’ll make the necessary arrangements, and you can inform the staff on the 30th. She’ll have severance checks, releases, and other paperwork necessary. You’ll call each person down and inform them, then Mrs. Peterson and her staff will handle everything else.”

“Got it. When will the desks be informed?”

“I’ll speak to each person who’s losing someone before 3:30pm.”

“OK.”

“I’ll sign the personnel requisition for another data analyst. You can begin looking on Monday. Mrs. Peterson will assist you with recruiting. Any questions?”

“No.”

“Dismissed.”

I left his office and went to Personnel to speak with Mrs. Peterson. Trish ushered me in, then shut the door to the office as instructed by Mrs. Peterson.

“Mr. Spurgeon approved this plan?” she asked.

“Verbally,” I replied. “He also said he’d send you the personnel requisition form for the open position so we could begin looking on Monday.”

“One moment.”

She picked up the phone, dialed, and, as I’d expected, confirmed with Noel Spurgeon that he’d approved my plan and that he’d be sending the personnel requisition later in the day.

“OK,” she said after she replaced the handset. “You intend to lay off Mark Burton, Keith Fowler, Jake Anderson, Jim Kowalski, Lee Dodge, Rob Levinson, and Frank Birch. The effective date of the end of their employment would be September 30th?”