|
|
CIT Al Gamper is a “Straight Shooter.” CIT President/C.E.O. Al Gamper told it straight to his employees last Friday, April 25th on the telephone conference call, as we reported in Monday’s Leasing News. However,. the Tuesday front page of the New York Times Business Section gives the impression the exchange of stock between Tyco and CIT after the sale will result in a loss for everyone, except the executives. Here are excerpts from the telephone conference with CIT employees: “When Tyco purchased us last year, all our stock, and stock options, they were converted over to Tyco---are they going to be converted back over to CIT stock and options?” “Good question – my feeling on that is management and employees should be aligned with the company they work for. So we should not have Tyco options if we are CIT people. We should have CIT options. We are going to put in place and we are working on what I feel would be a very fair and good stock option program for the CIT team tied to CIT stock--- OK?” “That’s about the going forward stock. What about existing stock?” “Existing stock?” “And Tyco’s International stock that was converted over to CIT?” “ We will take into consideration all that Tyco stock, the CIT that went to Tyco that goes back to CIT. That’s part of the program that we are looking at so everyone so that everybody has a program that is fair and equitable. That’s part of the process we’re still working on--- but we are going to cover that in the next couple of weeks. We’ll put it all together. I can assure you, as an individual who has more options than anybody, I would be interested in that--- OK?” “Okay.” “Thank you.” “You’re welcome.” A female employee asked: “Under Tyco, we were told we were 100% invested in the company. We are wondering now going back to CIT, we will still be 100% invested in the company?” “ 100% invested in what? “ “ Originally we had to wait five years, under CIT, to become invested in the company for the portion.”. “100% vested in what, your 401K plan? “ “ Yes.” “I think the principles that whatever applied under TICO would apply under us. If you are talking about the 401k plan, are you a new employee? “ “Yes, I have been here about a year now? “ “ I think there is a certain requirement for vesting for the 401K. You have to be with the Company so long a time before you are vested. Whatever you had under the Tyco arrangement we will continue under the CIT arrangement--- OK?” “Okay. Thank you.” “You’re welcome” A male employee asked: “Any news when we get the 1% back into 401K?” “You got me because I don’t remember losing 1% in mine.” “Didn’t they go for six percent down to five percent?” “ I’ll have to look into this, I’ll tell you what--- that’s a good question, you can call the human resources dept, call Susan Mitchell She’ll give you an answer. I don’t recall that happening--- that we changed the company match on this at all. I must have missed it, if it did. But, I don’t recall that. Why don’t’ you give her a call on 740- 5414 and she’ll give you an answer to that--- OK? “Great.” “ Area code 973, don’t tell her I said to call.” Laughter “ I don’t remember your name anyway.” More laughter “Anything else?” “No, thank you.” “You’re welcome.” If your heard the conversation, the tone, the determination, the intonation, if Gamper has anything to do with it, Tyco’s International’s plan to spin off its financing off its financing unit will not cost several thousand employees their stock options. There are several factors affecting this transition for employees. The major dilemma is Tyco’s falling stock.. Tyco’s stock today is at its lowest level in almost five years. Tyco
said in its filing with the S.E.C that CIT workers would forfeit any
unvested options---those that have been promised but that employees
have not yet earned — as soon as the spin-off was completed. It
said they would have up to 90 days to exercise any options that had
already vested. But
because Tyco's stock has fallen so sharply this year, many of the CIT
employees' options are worthless, with an exercise price higher than
Tyco's current stock price. The
best bet is for Tyco stock to recover within 90 days of the CIT actual sale date. There may be several options
available, including borrowing to purchase the stock for the future,
but with possible tax consequences, to pay with cash, or to allow their
options to expire. Gamper says his company is looking into all the options
and at the behest of “all” employees. The
exact number of options that CIT's workers stand to lose is not known
at this time. Tyco did not disclose the figure in the CIT prospectus,
and Brad McGee, a spokesman for Tyco, told the New York Times he did
not know it. "This
is something we're very sensitive to," Mr. McGee said to the New
York Times.. "The goal behind any stock option program is retention
of employees — it's a motivator of employees." Each
of CIT's 5,700 employees will receive some new options in CIT when the
company's offering is complete, Mr. McGee said, although the number
has not yet been determined. Those options will be set at CIT's offering
price and take three years to vest. The
New York Times reported “ top employees of CIT have already received
new options, according to the CIT prospectus. In February, Tyco gave
545 employees at CIT 1.2 million options to buy Tyco shares at $23.83
each, just above the lows that Tyco set early that month. Albert Gamper,
CIT's chief executive, received 200,000 of the options, and four other
senior CIT executives were given 50,000 each. “ Those
options will not be canceled when Tyco spins off CIT, according to the
prospectus. Instead they will be converted into CIT options and continue
to vest. The
grant in February was "a retention option grant" intended
to enable Tyco and CIT to keep crucial employees, Mr. McGee said. Mr.
Gamper in his telephone conversation was quite candid with his employees
that he had also a big interest in this event. The
New York Times reported Tyco's decision last week to cancel a breakup
plan the company announced in January has badly damaged the company's
credibility, said Brett Gallagher, head of United States equities for
Bank Julius Baer, which owns about 200,000 Tyco shares. “Now,
even though Tyco's stock appears cheap relative to the company's earnings,
Mr. Gallagher said that he wanted Tyco to spin off CIT and win an upgrade
from bond-rating agencies before he would buy more shares. “Because
investors are so skeptical, spinning off CIT is ‘going to be a
difficult deal to get done,’ Mr. Gallagher said. “Tyco
said yesterday that Goldman, Sachs and Lehman
Brothers would be the lead underwriters on the CIT offering.” The
reality is a lot more complicated than any prediction. It is dependent on the perception of the stock
buyers about the company, its employees, as well as management. They have a very high espirit des corp, a growing,
solid position in their marketplace, and to sum it up, know what they
are doing. It will be up to
Gamper and his staff to barnstorm the country as if he were running
for president of the United Sates, but perhaps more difficult.
He will not only have to get them to vote for him, but to take
money out of their family budget to invest in CIT. Gamper
appears to be a straight shooter. I bet CIT rises again as its own company
under he and his staff’s leadership. (Another
viewpoint, Gamper is trying to save his employees their jobs. In this “wobbly” economy, there are
many unemployed people in the bank, finance, and leasing community.
The Leasing Industry should be supporting the CIT IPO. editor ) |
|
