By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
By New Times
Springborn says, "I could understand the company being upset if we were coming back and wanting to amend our contract in a way that cost the company money. But the union developed a pension that will not cost an additional dime to Rural/Metro."
But Beam says the proposal would cost Rural/Metro more than Springborn estimates. He cites the administrative costs of transferring a percentage of an employee's salary into a pension fund as an example of additional costs.
Springborn insists the costs would be negligible.
"How much more is it going to cost for them to transfer 2 percent off my gross and write a check to the pension fund?" he asks.
One thing that Springborn and Beam can agree on is that there's nothing in the current proposal that would particularly benefit the 35-plus firefighters. The union obviously doesn't have the clout to demand expensive provisions that would bolster older employees' retirement funds. Springborn says he wanted to make an initial pension proposal that would not cost Rural/Metro any additional money. But he adds that the union is "working on a program to find a way to take care of the members who have dedicated their lives to these communities. We can't change what happened in the past; we can only make things better in the future."
No details yet.
There's not much sympathy at Rural/Metro headquarters. Beam, who started as a Scottsdale firefighter in 1978, says he was in the same situation as other stockholding firefighters, but he sold his 50 percent in early 1998, before the stock dropped.
"I feel horrible about the guy who didn't do that," Beam says, adding that he recalls going to company meetings where firefighters were advised to diversify their stocks. (The firefighters interviewed for this story remember just the opposite.)
Rural/Metro officials say their employee stockholders' requests to sell their disposable stock (50 percent) were never denied or delayed.
And as for the firefighters' future? "Obviously, 60- and 70-year-old firefighters aren't going to be fighting fire because they have to pass a fitness test . . . and they have to pass a physical agility test," Beam says. (Ironically, those requirements came as a result of unionizing.)
But just because they can't fight fires doesn't mean they can't work for Rural/Metro, Beam says. They could work dispatch, or in training or education. "They can move into the administration path."
And maybe run the company one day?
"My perspective would be, well, yeah, I want all 298 firefighters to have the mindset that I want to be CEO. I want them all to advance and work hard."
Not such a shabby proposition. Another of the firefighters' gripes is the high salaries and bonuses given to recent Rural/Metro CEOs. Jerry Brucker, the current one, is making more than $700,000 at a time when the company's not sure it can afford a 2 percent match to its employees' 401(k)s.
The question of whether the firefighters were allowed to sell their own stock when they wanted to is unresolved. What's clear, according to filings with the U.S. Securities and Exchange Commission, is that there was a flurry of stock sales by Rural/Metro executives in late 1997 and early 1998, just before the company's stock dropped. Lou Jekel, Rural/Metro's attorney and secretary of the board, sold 6,000 shares at an undisclosed amount (it was in a family trust, so he didn't have to list the price, but the stock was valued at about $30 a share) in late January 1998.
At the beginning of March, with the stock price hovering above $33 a share, Rural/Metro board member James Bolin sold more than 20,000 shares. Board member Cor Clement optioned 6,250 shares of stock at $13 and sold it the same day, March 10, for a $20-a-share profit. Earlier that week, he had sold another 5,000 shares.
But the biggest seller was Bob Ramsey, the company's executive vice president, who had sold Rural/Metro his ambulance company, Southwest Ambulance. Ramsey started selling his stock in late 1997. Between October 31, 1997, and March 6, 1998, Ramsey sold more than 500,000 shares at anywhere from $29 to $35.
The sales are the subject of two pending class-action lawsuits filed by people who bought Rural/Metro stock between April 1997 and June 1998. Among the charges, the suits allege that Rural/Metro executives bought artificially inflated stock using insider information.
Gregg Hillman, a stock analyst with First Wilshire Securities Management in Pasadena, California, who has watched Rural/Metro, says the huge stock sales hurt the company even before business began to really sour.
In the fall of 1998, with the stock below $10 a share, Rural/Metro directors began to make purchases. Ramsey alone bought hundreds of thousands of shares.
Even the fortysomething firefighters who were able to sell some of their stock when the price was high are hurting.
One says he was allowed to sell 25 percent of his stock, but the company sold the stock at a "rolled" price over a three-month period. He lost $7 a share.
"I didn't understand it and I didn't question it," he says. "It was very insulting, but I didn't pursue it at the time because the funds I put it into did very well."