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Friday, July 29, 2016

Stock Options

I mentioned that the CEO of Florida Express often had meetings with the pilots.  I always thought the basic reason for these meetings was to pacify the pilots, while not paying them nearly what pilots were earning at legacy airlines.  He also had meetings with all the combined employee groups.  The reasons varied, but were usually to bring bad news or to prepare us for something we probably would not like.

One such meeting was to announce that another airline, Air Illinois, was going to be flying some of our passengers.  The reason pilots hate something like this is that we have seen it all before.  This is a classic way to pit one pilot group against another, which leads to pilot "pushing", trying to make them do things they don't want to do, because they think it is unsafe.

This was something that I was upset about and did not know if any other pilots or other employees would be speaking out against it.  I also did not know if it was something we could stop.  Before the meeting, I was going over what I would say.  Before I had a chance to open my big mouth, my Naval Academy grad, former F-14 pilot pal, Tom, spoke up.  

Tom pointed out that Air Illinois had a crash several years ago, in which the captain had made a serious error in judgement.  He said that any such mistake in the future would reflect on Florida Express and that we could not afford such a bad reflection.  We pilots had been operating the airline with that thought in the back of our minds for several years.  We were frequently confused with Air Florida, which had a crash into the Potomac River in Washington DC several years ago.

As Tom spoke, I could see that he was persuading the members of the other employee groups and I could see that our CEO, Gordon Linkon, could see that he was loosing the argument.  I was relieved, because I would not have been so smooth and probably would have blown that opportunity.  Tom had advanced the perfect argument to get the entire company on our side of the issue and we simply got more airplanes, which we flew ourselves.  Our managers must have believed that they would need the cooperation of all the employees to make their plan work.  I think he was right.

When an airline or any other company is started, with a plan to sell stock publicly at some time, there are always key employees in the beginning who are given stock options at a price which will be significantly below the opening price on the market.  In a very small way, I was one of those employees.  You may remember that I told you how I exercised my options and used the profit as a down payment on a house.  I was being rewarded for the work I did to set up the ground school, which saved the company a significant amount of money, as it was trying to get started.  Several other pilots who worked above and beyond in the beginning received such options also.

Members of top management certainly receive such options and it is reasonable to assume that their price advantage is much greater than mine would have been.  I learned that they received much larger numbers of shares than I did, also.

For some reason, a little column in the business section the Orlando paper caught my eye.  This column is not something I usually paid attention to, it just caught my eye this one day, for some unexplainable reason.  The title was Insider Trading and it showed that Gordon Linkon, our CEO had exercised an option to buy and sell 50,000 shares of Florida Express stock.  I don't remember is there was more detail, but I was a little concerned that our boss was selling such a large amount of company stock.  The stock had peaked and the price was falling, as the company was having problems for the reasons I talked about in earlier posts.

This was the time when I was wondering if it would be better to look for another job or stay at Florida Express.

Eventually, Mr. Linkon had another meeting with members of all employee groups.  We all had a bad feeling about this one.

I tend to forget details of unhappy events like this, but there are a few things I remember.  Mr. Linkon told us the company was not making it.  They were going to try to find a buyer.  We were just not able to compete against the other airlines that had now started coming after us.

Many of the employees were so upset, that they just kind of let it all hang out in their comments to the bosses.  They pointed out that many of us had been trying to point out shortcomings and failures that were costing us customers.  I have talked about much of this in previous posts, but it was mostly about the mechanical problems with the BAC 1-11.  As I used to say partially joking, "We make our passengers earn their discount."

It was pointed out that we should have acquired better planes when we had the money from the initial stock offering.  Staying with the BAC was BAD.  There were also several who pointed out that the company failed to spend money to fix several problems that were angering our passengers.  My pal, Pepe, said with his French accent, "Mr. Gordon Linkon, we love you, but your are too cheap, cheap, el cheapo."  He was sounding more exasperated with each cheap.

So, now we were in a state of limbo, waiting to see who would be our "White Knight" to the rescue.  Good times.

I knew that I had exercised my last stock option.


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