Chapter 17: The Price of Our Vanities

Jim Sweeney was the last of the group to take his seat. There were seven of them gathered around the table in Alvin's office. Sweeney was the Chairman; he called the meeting to order.

"I want it on the record that I don't like calling this meeting behind Frank's back," he declared after completing the preliminaries.

"Alright, you are on ze record," Herr Mueller snapped back. "Unt now vee get on vit it, ja?"

"Get on with what?" Alvin asked. "This was just to be a discussion session."

"I dit not fly across ze ocean for dees-cussion," Mueller retorted. "I haf call for action."

"What action is that, Detlef?" Lambert asked.

"Feerst, I vant it unterstood zat if ze Wertheim merger vas not lost, zis vood haf not bin necessary."

"So, this is sour grapes over Wertheim?" Sweeney said with an exasperated sigh. "It wasn't the right time. There'll be other opportunities. We have to be patient."

"Patient? I vas patient. Ze deal vas set—un-teel Frank Bennett broke it apart."

"You were patient to a fault, Detlef," Lambert agreed.

"Now, just a minute," Sweeney insisted. He turned to Alvin. "You approved the shelving of the registration. It was for good reasons."

"Well, I did," Alvin confirmed, "on Frank's say-so. It seemed like the logical thing to do at the time. Hindsight is always twenty-twenty."

"Look where we are now," Lambert pointed out. "I'm not saying that Frank was all wrong, but no one can say that we're not at a standstill. We can't go on like this much longer. We've got to think of the shareholders."

"The major players are holding firm," Sweeney said. "I've spoken with Frank about this several times. He has a plan; he's putting it in place; he'll have us back on track very soon once Al, here, gets the SEC off our back."

"Plan! Acch!" Mueller scoffed, waving his hand at Sweeney in disgust.

"We were supposed to have a hearing on Wednesday. The judge postponed until Monday," Al Crossman told them. "The SEC lawyers couldn't make it down until then."

"That seems like a big favor to them from the judge," Alvin said.

"Never mind zat!" Mueller thundered over them. "I haf deef-rent plan."

"Different plan?" Alvin asked. "What kind of plan?"

"I haf —how do you say?—consortium," Mueller told them. "My bank vill provide finance. Vee haf four persons to buy surplus shares of Vestern in ze market. Zee de-mand vill increase ze share price, ja. Zen SEC can go to hell."

"Just who are these four persons?" Sweeney demanded.

"We have to check the regulations on that," Crossman warned. "You can't take control of a company without registering with the SEC. It could be considered market manipulation."

"Zeese peoples vill be known only to me—until ze proper moment," Mueller replied. "Let me assure all zat no one person vill own more zen five percent. Vee haf checked dis."

"It might be deemed a conspiracy," Crossman insisted. "The government could treat all four as a single person.

"Perhaps in America, but vee are in Germany. Undt, as I said, ze problems of ze stock price vill be solved."

Crossman looked at the others and shrugged.

"This is nothing but strong-arm through the back door," Sweeney protested. "I think we should adjourn this meeting right now." He crossed his arms and shot a glance Alvin's way in search of support.

"I think we should, at least hear him out," one of the directors said. It was one of those who had been silent. He was A. Bartlett Dodge, head of a large private foundation. "We have to think of the shareholders and this would prop up the price and solve a lot of problems."

"That could only be a temporary..." Sweeney began to say.

"Wait a minute," Alvin interrupted. "Where would we enter in the course of this scheme, Detlef?"

"A good question," another Finance Committee Director added. It was Randall Trainor, a retired insurance company chairman. "I think we haven't heard everything, yet."

"So right, Herr Trainor," Mueller confessed. "Z'ere is no deal unless vee replace Frank Bennett."

"This is blackmail!" Sweeney shouted.

"I repeat; Bennett is out," Mueller said, ignoring Sweeney. He sat back, his arms crossed over his chest.

"But why?" Alvin asked.

"It was Frank's fault that we lost the stock issue," Lambert reminded them.

"He was always against the Wertheim deal," Dodge added.

"He was doing his job," Sweeney retorted, "and doing it well, too."

"Bennett is out," Mueller confirmed, "undt zen vee move into ze EU."

"We need a better presence in the EU," Lambert argued. "It was our strategy all along."

The meeting began breaking down. Several private conversations erupted.

"Let's have order," Sweeney yelled out. The room went silent. "First of all, Al's got something to say."

Crossman cleared his throat. "I have doubts about the legality of this whole thing. I have to advise everyone here to keep silent on this until the proper legal research can be done. Any action taken now would be extremely risky."

"We'd have to bring it to the whole Board," Alvin cautioned. "It would have to be explained to them."

Legal research performed by your firm, no doubt," Dodge said.

Crossman raised his eyebrows, but didn't say anything.

Sweeney seized the opportunity. "Well then, we'll adjourn; and let the record show that there was discussion only with no agreement, and no action was taken, on advice of counsel."

"Let me state vone zing," Mueller declared. "Z'ere is little time. Bennett must go, and zen we move into Urope!"

"Well, if you want Bennett gone, I suppose you want me out, too?" Sweeney said.

"Ja, ja"

"Come on, come on," Alvin soothed. "Let's go have a few drinks and some lunch. We'll all feel better."

"Nein," answered Mueller. "I have a flight."

After the meeting adjourned only Jim Sweeney, Al Crossman and Alvin remained seated at the conference table. They decided to order lunch into the office instead of going up to the Executive Dining Room with Lambert, Trainor and Dodge.

"I don't like this, not one bit," Sweeney said. "I don't like going behind a man's back and not give him a chance to defend himself."

"I don't like it either," Alvin said, "but you have to admit that this SEC thing has this company tied in knots and this could be an easy way out."

"I wouldn't underestimate Mueller," Crossman cautioned. "There's no doubt that it's skirting the edges of legality., Herr Mueller's smart enough to know that he's got to keep his legal bases covered. He's probably hired a sharp law firm to help him. He's got the attention of Lambert and Dodge, and I think Trainor is on the fence."

"Why are we pussy-footing around with him?" Sweeney asked. "Why don't we just cut it off now?"

"I just thought I'd advise you to keep options open," Crossman said. "Let's see how far these guys are willing to go. They seem very eager to put their money in—and that would be a big help to us right now."

"It could develop a momentum all its own," Alvin mused. "If they think the door is still slightly open, they could get impatient and dump their money in without the Board's backing. What is there to stop them?"

"You might have to let Frank go, anyway," Crossman reasoned. "It would be crazy to turn this deal down and then dump him. Let's get some mileage out of it, if it comes to that."

"I'm behind Frank on this," Sweeney declared.

"Everyone is expendable," Alvin grumbled.

"Just think on this," Sweeney countered. "If Mueller gets his way it won't be long before you're out and this company's headquarters is in Frankfurt."

"Not until they pay off big, so I don't give a damn," Alvin said. "And that goes for all the shareholders, too. That's what we're supposed to do, protect the interests of the shareholders."

"Well, I still don't like it," Sweeney said.

"We should bring the key officers in on this. That'd be Tyler Smith and Blake Hart," Alvin said. "The last thing we'd want is for rumors to start flying and have them jump to conclusions. We'll need them on our side—especially if Frank's head goes on the chopping block."

"Okay; just don't let on about the Frank thing," Crossman said. "They don't need to worry about something that doesn't officially exist—at least not yet."

Frank arrived at the office early the following day, determined to confront Alvin about the secret meeting. He expected to see Floyd waiting for him at the entrance to the Executive Suite, but found a substitute in his place. The morning had started out bad already and he didn't expect it to get any better.

There was a note from Aaron on his desk saying he was ready to review the first draft of the forecast. Frank nodded. "That guy's right on the bal, at leastl." He thought about going down to the employee cafeteria and getting a coffee to go. Instead, he dialed Aaron's number.

"Hey, Aaron; why don't you come up to my office now and go over those numbers? Stop and get us a couple of coffees on your way up. Floyd isn't in and Jeannette won't be here for another hour. I don't think I can hold out that long."

While he waited for Aaron he wrote a note to Jeannette and left it on her desk: "Jeannette—please get me on Alvin's calendar ASAP."

He'd been pondering the reason for the secret meeting ever since Jeannette's call the day before. Someone wanted him excluded from whatever was going on, and that meant excluded from his job, too. It would have had to have been someone at the highest level. He ruled Jim Sweeney out. He would have ruled Alvin out until recently. Frank thought Alvin looked old and tired. He could imagine Alvin going along with it in a weak moment, but just couldn't bring himself to believe that it would be him who would get it started. That left Detlef Mueller, and that made a lot of sense.

Aaron appeared in the doorway. He was carrying two styrofoam coffee cups from the cafeteria fastened with plastic lids and several folders wedged under his arm. "I'm ready when you are," he said as he walked into the office. He marched in and set the coffee and the folders on Frank's conference table.

"Ahh! Accountant's blood transfusion," Frank said as he opened the lid on a cup and then took a sip. "What do I owe you?"

"On me today," Aaron replied.

Frank took another sip from his steaming cup. "What vitamins are in coffee, anyway? When I was your age, I could live on it for days."

"I don't know," Aaron said. "I don't think there are many, especially if you drink it black. Maybe..."

"Never mind, Aaron. It's just one of my old jokes." Aaron failed to crack a smile. "It looks like it's older than I thought."

Aaron opened one of the folders and handed Frank a draft of about ten pages stapled together.

"Tell me the good news first," Frank said.

"It's like you said, the Euro-Pac divisions are coming in stronger after converting to US dollars. It's offsetting the bad news."

"Which is..."

"The US units are going to be in for it, especially Adhesives and Sealants. Consumer Products is flat. The Industrial Polymers Division is holding up, but it isn't big enough to offset the others."

"No big mystery there. What does Blake want to do?"

"He has a plan to shut down Texas City for maintenance and modernization and shift all production to Bayonne while the work is in process."

"What if the downturn lasts longer than that?" Frank asked.

"He wants to do the same thing in reverse."

The trouble is, we can't be sure when the home-building industry might rebound. It's so open ended; and that maintenance program is going to cost a lot of money. He'll have to move some equipment up to Bayonne to pull it off. And, when he's done he'll have to move it back again."

"Unit costs go way down with the Bayonne Plant up to full capacity. Margins go up and help offset the overall volume loss."

"Pricing?" Frank asked.

"No pricing action assumed in the model," Aaron said. "Since the Bayonne plant is expected to run full out, there didn't seem to be any sense in pricing cuts."

"Good—good," Frank said, "the sales force won't like it, but it makes perfect sense."

"Mr. Hart wants to know if he should build a contingency plan in case the downturn extends past the maintenance cycle," Aaron reported.

"Definitely yes," Frank said. "It'll have to be Bayonne. We promised to maintain a certain number of jobs in Texas City according to our tax abatement deal with the State. Any major layoffs there and we'll lose more tax benefits than we'll save costs."

"The Texas City plant is more efficient than Bayonne, anyway," Aaron added.

"Good thinking on that," Frank commented. "Get the details on the shutdown spending and make sure we know how much can be capitalized and what we'll have to take as a current expense. One last thing, be sure to get the tax provision right. It gets tricky with changing exchange rates. Get Charley White in the Tax Department to take a long look at it. We could be dead nuts above the line and lose it all below. It won't matter to Wall Street. To them, it's just EPS."

Jeannette knocked at the door. "Two coffees?" she asked.

"I'm just leaving," Aaron said. "Thanks, just the same." He gathered up his papers into the folder.

"Leave me with this," Frank said, holding up his copy of the Draft Forecast. "I'll probably have more comments later. I'll call you." Aaron nodded and left the office.

"Mr. Warner isn't in the office today, Frank," Jeannette said. "He's in Austin at his lecture series at the University."

"Lecture series?" Frank asked.

"It's the 'Distinguished Lecturer Series'," Jeannette explained. "UT invited him to give a series of lectures at the Business and Engineering Colleges. They invite a half-dozen executives each year."

"Great!" Frank exclaimed. "I wanted to speak with him about the secret meeting yesterday. He's over there playing professor."

"If it's any help, Mr. Sweeney called and asked if you could clear some time for him. He was calling from his car. He should be here any minute."

"That helps a lot," Frank said. "Hold all my calls when he gets here."

Jeannette brought the coffee into the office and set it on the table. Jim Sweeney followed her in and sat in one of the stuffed chairs. "Do you need anything else, Mr. Bennett?" she asked.

Frank looked at Jim, who shook his head. "No thanks, Jeannette." She left the office.

Frank turned to Sweeney who was staring out the window. "Jim, this must be serious. It's the first time you've been here that you didn't have your eyes glued to my secretary's backside."

"That's what happens when you get old, Frank. You forget to enjoy things like that when you have your mind on something else."

"You must be here about the secret meeting in Alvin's office yesterday," Frank said.

"Exactly!" Sweeney replied, stabbing the air with his finger in Frank's direction. "So you found out about it?"

"Sure, Jeannette called me while it was going on."

"She's one hell of a secretary, Frank."

"So, you do have Jeannette on your mind, after all," Frank laughed.

"Well, guilty, I suppose," Sweeney confessed. "Even more important, we have to talk about what went on in that meeting yesterday."

"I wanted to speak to Alvin about it," Frank said. "He's off on a trip to Austin."

"I know," Jim replied. "I don't think Alvin intended it that way, but it kind of shows you where you stand. One of the Directors is on a mission to kick you out and Alvin is sitting on the fence with Crossman whispering in his ear. He figures to offer you up as a sacrificial lamb at the right time. I wouldn't feel very good right now, if I were you."

"It all adds up," Frank said. "I knew that Mueller was burned up about the Wertheim deal going south. I'm disappointed by Alvin. I thought he would support me. At least, I think it was right for me to expect that."

"So, you figured out it was Mueller. He says he has four investors lined up to acquire Western stock to support the price. His bank is going to do the financing."

"Sure," Frank said, "and take control of the company in the process."

"He says it's no-go unless you're out," Jim told him.

"We'll have to see about that. There's something about Mueller's deal that doesn't make sense. If they're serious, why did Mueller come to the Finance Committee to ask permission? They could merely buy up the stock, take control and then fire me? Why impose the pre-condition?"

"Good point!" Jim said. "Could be, it's a bluff."

"We'll have to call that bluff when it comes time," Frank said. "I know I'm repeating myself; what really disappoints me is Alvin."

Jim said. "Don't be too angry at Alvin. He's just looking for an easy way out of the mess we're in. In fact, if push comes to shove, he could line up on either side."

"I understand," Frank said. "What's wrong is that Alvin is supposed to be stronger than that. He's letting Al Crossman do his thinking for him. If Mueller thought Alvin was in charge, he wouldn't even try this."

Sweeney shrugged. "So, are you gonna stay and fight it out? I wouldn't blame you if you up and quit."

"No quitting!" Frank declared. "I can't guarantee that I won't get burned to a crisp. They'll have to beat me. I won't let them scare me out."

"That's what I was hoping you would say," Sweeney said, slapping his knee in delight. "How d'ya figure on handling it."

Frank leaned back in his chair. "I'll need you behind me, Jim." Sweeney gave a swift nod of assent. Frank paused again, turning options over in his mind. "Someone has to go," Frank said. "It will be either Mueller or me. And we can't let any players sit on the fence. Sooner or later, Alvin will have to support me or fire me."

"Keep your eye on Crossman," Sweeney advised. "If he lets up, Alvin will jump on your bandwagon. Don't worry about the other directors. Leave them to me."

"A visit to some of the big shareholders seems like a good idea," Frank said. "Murray Shoreham owes me a lunch."

"We'll beat this thing," Sweeney proclaimed. "If we can keep the share price up as much as possible it will make it harder for Mueller's people to acquire shares. They're gonna have to do it a little bit at a time if they want to accumulate the numbers that they need without drawing attention. Doing it from Europe won't make it any easier."

"If there is such a thing as a 'Mueller consortium'," Frank reminded him. "Let's see what the market is doing now." Frank went to his desk and turned on the computer monitor. He maneuvered the mouse for a few seconds. "Very interesting, he mumbled.

"What gives?" Sweeney asked.

"Western stock is up a point and a half. A big block traded a half hour ago."

"Goddam! Mueller's started already," Sweeney cursed.

"Maybe not, Jim," Frank answered. "I think something else is going on."

"Whaddya mean?"

"I think someone is buying shares to cover their short-selling. Remember—that's what got this whole mess started. Take a look."