Chapter 118

While Phil was giving Hailey a primer on the costs associated with a studio, the men and women who ran the production company were sitting in their conference room seething.

“Fucking little prick,” Lewis Steinmetz said as soon as he was certain Phil couldn’t hear him. “Who does he think he is to come in here and tell us how to run our business?”

The others at the table were silent. They had seen the president of Lambswool Productions rant and rave with great frequency. They knew just to let him go. But this time he didn’t appear to be winding down.

“I’ll put that snot-nosed little fucker in his place!” Steinmetz raged. “I’ll ruin that cocksucker.”

It was only then that one of the executive vice presidents found the courage to speak up.

“I’d talk to Courtney Hollings before you start putting action to words,” Clark Withers chimed in. He had spent a full day with Phil Warner and his mother during their visit. He had also learned from the conversation with the actress about how Phil had reacted to her attempts to discredit him and his friends.

“What the fuck would she know about this?” Steinmetz asked angrily.

“Do you remember last fall when all the dirt on her came out in the press?” Withers asked rhetorically. Everyone knew about Courtney’s fall from grace. “That was Phil Warner.”

“Bullshit,” Steinmetz said. “He’s a fucking kid whose Mommy is letting him play grown up.”

“Maybe so but he is the one who put all that out there and got her arrested,” Withers replied. “She told me that herself.”

“Wait,” another of the VPs interrupted. “Are you saying he destroyed her reputation to drive her price down for ‘Kismet’?”

There was a clear note of appreciation in his voice.

“He destroyed her reputation because she fucked with him and his friends,” Withers stated. “I’m telling you now: If you have anything you don’t want everyone in the world to know, steer clear of that guy.”

“Fuck him,” Steinmetz said. “What can he do?”

“He got her medical records, for Christ’s sake,” Withers shot back. He was almost positive he had left the Warners with a positive impression during their visit. He could afford to stand up to Steinmetz because he was pretty certain the president would be looking for a job in a day or two. “Do you think he won’t be able to find out about an arrest for solicitation? Don’t forget, he got her arrested and tossed in jail for two months. And you can bet that a lot more people would go to bat for Courtney Hollings than will for Lewis Steinmetz.”

“We can talk later about what he can do to us,” a female interrupted. “Let’s talk about what we can do to him.”

“Well the first thing we do is to vote him off the board,” Steinmetz stated. “All in favor?”

The studio’s attorney had sat silently during the exchange. Now he sat forward in his chair.

“You can’t vote him off the board,” he said in a firm voice.

“The hell we can’t!” Steinmetz countered.

“Let me try it this way,” Marc Edmonds said with a weary sigh. “You don’t have enough votes to remove him from the board. The bylaws require that you give him 48 hours notice of the meeting and the intention to remove him. That means you would have to tell him in advance and he would appear.”

“So what?” Steinmetz said. “We got 25 votes to his one. He’s gone.”

“You really haven’t read the amended bylaws, have you?” Edmonds asked. Again, it was rhetorical. “The group in this room comprises 43 percent of the votes. Correct me if I’m wrong, but no one in this room owns more than 1 or 2 percent of corporate stock. He controls 57 percent. Yes, in his absence, without a written proxy, this board decides the day-to-day operations. Each of you holds one vote and the chairman holds two. That’s 25 votes. When Mr. Warner is present his vote is worth 30 of yours. He is the primary shareholder and the chairman of the board of directors when he is available. It is only in his absence that you have any power at all. When he is here, you answer to him. If he chooses a proxy, you will answer to them. It really is that simple.”

The news struck Lewis Steinmetz like a body blow. He sat down hard in his chair and looked around the room. It appeared to him that several of the vice presidents were aware of what the corporate attorney had just imparted. He also noted that those were the ones who had abstained from voting themselves a salary increase the year before.

“Well he can’t just fire us,” a man asked. “Can he?”

“He can fire you,” Edmonds said simply.

“What about our contracts?” the man inquired.

“Did you read the contracts last year?” Edmonds wondered. He saw from several faces that they had not. “Do you remember when I told you the exclusionary language had been updated at the insistence of the primary shareholder?”

Again, he saw many blank expressions around the room.

“It was while you were deciding how much you were going to stuff in your pockets,” Edmonds continued after a sad shake of his head. “I’m not surprised. Well, for those of you who don’t recall, let me clarify what I meant.”

He pulled out his laptop and brought up the standard contract for the studio employees.

“OK, under Subsection C, Paragraph 19,” Edmonds began.

“Just explain it to us,” a man insisted.

“He can fire you for cause under any number of clauses he included,” Edmonds began only to have someone else interrupt.

“He included these clauses?” a woman asked. “The kid?”

“The primary shareholder,” Edmonds admonished. “Yes, he did. He assumed control of the Lambswool stock last fall. The very first thing he did was to telephone me and insist that the exclusionary language be updated to reflect that of Barton Holdings. I will just hit the highlights. If you are charged with a crime, you must report it to him within 48 hours. To him, not to me, not to Mr. Steinmetz, not to your parish priest. You must alert the primary shareholder within 48 hours. I noted to Mr. Warner that the language was vague. It did not differentiate between a speeding ticket – which is a crime, by the way – and multiple homicides.”

The attorney got a slight smile on his face.

“He said he was perfectly aware of the language and its ambiguities,” Edmonds continued. “So, I can look around the room and just from personal knowledge, I can count six of you who could be dismissed for cause for that reason alone.”

“I ran a stop sign!” a woman yelled.

“And you were given a ticket for it,” Edmonds said with a shrug. “That means you were charged with a violation of the penal or motor vehicle code. By the terms of the contract you willingly signed, you were required to alert Mr. Warner within 48 hours. As I said, that is just one of the reasons you can be dismissed for cause. You can be terminated if you create a hostile or dangerous work environment, for theft of company property and, here is the one that will hit each of you where you live, for conduct detrimental to Lambswool Productions or its affiliates.”

“That would be impossible to prove,” Steinmetz remarked.

“Do you recall last fall when I advised you that certain topics should not be broached in open session?” Edmonds said, referring to the compensation increases the board voted for themselves. “It was the day after you spoke so glowingly of Lambswool and its future during the board meeting that Mr. Warner contacted me. You do realize that he gets a copy of the minutes of every meeting?”

Again, it was evident that few at the table were aware. Edmonds sighed again.

“Let me offer a history lesson,” he said for those who were still looking blankly into space. “About a dozen years ago, Lambswool was on the brink of bankruptcy. We were primarily a television production company and the writers went on strike for three months in the middle of our season. We were forced to cut our episodic content to 14 shows that year instead of the standard 23. That caused us to forfeit several million dollars in revenue and kept us from syndicating a couple of our longer-running programs for another year. William Barton stepped in, bought out the majority of the shares and propped us up until we could get back on solid footing. He insisted upon one thing before he would pull the studio out of the fire: the other stockholders were to be non-voting members of the board. They could attend meetings if they wanted but they could not vote. Instead, he made the executives here the board of directors and for many years it worked well.”

A few in the group nodded but most continued their vacuous stares.

“William Barton was a hands-off owner,” Edmonds continued. “He set up the bylaws so the proxy board – which is what this group is – could act without his direct participation. He gave the members of this board one vote per person and two for the chairman – but the caveat was that he would always have five more votes than the composite of this board to use if he deemed it necessary. When he was the owner, there were only seven people on the board. They had eight votes and he had 13. As the board grew, so did the number of votes the primary shareholder controls.

“About five years ago, Mr. Barton passed control of the Lambswool stock to his daughter, Elizabeth. Like her father, she was a hands-off owner. At the time, Lambswool was in a boom period. We made a significant profit each year and we made movies that people enjoyed. I am not a movie mogul like Mr. Steinmetz but I can see a correlation between the two. Then, the president of Lambswool died unexpectedly and Mr. Steinmetz was selected to replace him. The boom era ended shortly thereafter – and the number of executives and their salaries ballooned. While I am not a movie mogul, I do possess an MBA. Sadly, it is not necessary to possess an advanced business degree to see the correlation between higher administrative costs and lower profits.

“Still, we had enough worthwhile projects in the pipeline that we persevered. Well, we persevered until about 18 months ago. That is when we saw the last major profit from one of our projects. We have moved away from network television to the cable side and that has limited our ability to syndicate our shows. The shows we now produce are termed ‘edgier’ or ‘cinematic television.’ What that means is that they cannot be shown on network television and thus cannot be sold to syndication. We cut our profits two ways in one fell swoop.

“As I said, the primary shareholder changed again last fall. Now it is Mr. Barton’s grandson, Philip Warner, who controls the stock. He noted during one of our first conversations that the tone of Lambswool has changed in the past four years. Mr. Warner recognized the cause and effect almost immediately. The cause is a change in the type of projects we’re approving and the effect is the loss of several of our major revenue streams. He has elected to become a hands-on owner. You can whine and you can complain but there is very little you can do about it.”

“We can all resign!” a woman said. “Let him try to run this place without us.”

“That is an option,” Edmonds agreed. “But I will caution you to read the exclusionary language before you make any rash decisions. Mr. Warner was well aware that some of you would balk at taking orders from him. It is why he insisted the language mirror that of his mother’s corporation.”

“Just tell us,” Steinmetz spat.

“If you resign, you are subject to a two-year non-compete from the end of your contract,” Edmonds said. Again, he couldn’t help the small smile that found its way to his lips. “This group decided that they wanted a two-year contract and Mr. Warner didn’t fight it. That means your contract will conclude Dec. 31^st of next year and your non-compete will start the next day. Essentially, you will not work in the movie or television industry for the next three-and-a-half years. I believe he will enforce your contracts to the letter.”

“What if he fires us?” Withers asked.

“Again, if you are fired for cause, it invokes a five-year non-compete from the end of your contract date,” Edmonds informed them. “As I said, the notification of arrest clause will hit some of you. Others will be caught up because you overstated your qualifications. At least two of you could be terminated for theft of company property. I would guess each of you is guilty of falsifying your expense reports. Given what we know of Mr. Warner’s research capabilities, I would wager he has something on each of you that would leave you little recourse should he choose to fire you. Oh, certainly, you could fight it but I’m sure between him and me, we could find a way to make it stick.”

“Assuming he doesn’t fire you, too,” Steinmetz said acidly.

“I was stopped for speeding in February,” Edmonds said with another smile. “Although the charge was dropped, I notified Mr. Warner of the charge and again of the disposition. I am not an angel but I feel relatively certain that I am on far safer ground than the rest of you.”

“What can we do?” a man lamented.

“We can do what he’s asked us to do,” Withers noted. “First off, we can all trim our salaries to make up the shortfall we knew was coming. I warned you last month when I met with him that he had no intention of putting more of his money into the studio. He also has no intention of selling his stock. His intention is to turn this place into a moneymaker again. I believe those were my exact words.”

“A hundred million?” Steinmetz said, shaking his head.

“Likely closer to two hundred unless we get a major influx from ‘Kismet,’” the vice president of finance interrupted.

“If each of us takes a 33 percent pay cut, I think it would go far to show Mr. Warner that we’re serious,” Withers offered.

“That’s $15 million for me,” Steinmetz said, aghast. “I can’t take that kind of hit.”

“It’s $5 million for most of us,” Withers said. “Do the math. If we cut our salaries back to what they were last year, we can cover the projected shortfall. Perhaps we ask to implement a bonus structure where we can see some of it back if we turn a profit. I’m not sure I would broach that this year but it’s something to think about for next year.”

“I am not working for free from September on,” Steinmetz stated.

“Then I would wager that you will not be working at all come September, Lewis,” Withers answered. “Perhaps none of us will.”

Hailey picked up her efforts to keep “Iconoclast” on the air the next afternoon. She was meeting with Randi Raver and Meredith Miller the following morning for her shopping trip and she hoped she might have a little good news to impart.

“So, I wanted to brainstorm some ideas about the studio projects,” Hailey announced as they returned to the hotel from a day at Santa Monica Pier.

Phil gave her a weary look.

“Hailey, since I found out how much you enjoyed the show, I have spent much of my free time trying to find a way to pay for all of this,” he said. “I had no idea that you watched the show. It runs from January through April and we didn’t know each other during that time two years ago. It wasn’t until you threw a party for the season finale this spring that I even knew it was one of your favorites. Yes, I knew that you enjoyed Randi Raver’s music but I had no idea that you were a fan of her acting, too.”