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192 23 The Winds of Change After I became president of Sunset Scavenger Company in 1965, the company made substantial gains in all areas. We upgraded equipment and made it more efficient, enhanced working conditions , gave workers substantial increases in health and pension benefits, increased stock values, increased personal income, and— most important—implemented the transfer station, which virtually assured we would be in business in perpetuity. After we acquired companies outside San Francisco, revenues increased substantially. The formation of a real estate holding company and an equipment leasing company—all under the umbrella of Envirocal Inc.—was another achievement. Each of our rateregulated subsidiaries operated on its own, but had the advantage of purchasing equipment, fuel, and the like at large-scale discounts. The most personally rewarding part of all this to me was to feel and see what we had accomplished for the partners. Their invest­ ment in the company was increasing, and they and their families received enhanced benefits. But there was a problem: the “share,” which created the Boss Scavenger in the company. When a shareholder chose to retire or leave the company, he could sell his share to another employee on the truck or have the company purchase it back. Starting in 1972, the company opted to purchase the shares from retiring partners; by 1982, we had reduced the number of shareholders from 320 in 1965 to about 280. We did allow a few young, eligible, desirable employees to buy shares. The value of a share in Sunset Scavenger Company in 1965 was $15,000. In 1972, the board of directors established that share value at $25,000. The concept of purchasing the shares made economic sense on paper because the historical means of collecting payments for refuse collection services was provided by the Boss Scavengers, who physically collected each of the more than 146,000 accounts by hand. Once the IBM data-processing program began billing the 146,000 accounts, a Boss Scavenger’s responsibilities were narrowed to monitoring his customer base and running down delin- 193 The Winds of Change quent accounts. In other words, the need for Boss Scavengers to work as route managers declined significantly. Without the need to monitor the customer base, a three-man crew was reduced to two. At the same time, the pay differential of a Boss Scavenger and a regular scavenger was some $10,000. We reasoned that, by eliminating a high-priced employee for one costing $10,000 less per year, the company could use those savings to purchase shares from selling partners. This arrangement would also benefit the selling partner because he would be paid off in five years instead of ten if the share were sold to another employee. The downside to implementing such a program was the debt incurred. The purchase of another solid-waste collection company increased revenue to Sunset Scavengers, but purchasing shares did not result in income-producing debt. I considered the decision to buy shares an interim measure, while looking forward to creating a plan B in the future. When we commenced the program, the value of each share was $25,000. If we purchased ten shares, it would mean a potential balance sheet debt of $250,000, which would be recorded as an intangible asset. I knew that such a program was nothing more than a Band-Aid solution; the company couldn’t afford to buy all the shares back without unpleasant consequences. As the company grew, I became rather frustrated doing business with executives who were making, in some cases, more than ten times my salary as president of a multimillion-dollar corporation . On the other hand, I also recognized that one of the reasons I became president of Sunset Scavenger was to ensure the preservation of salary equity between truck scavenger and corporate management, which effectively ran the company up to 1965. I realized I had dug myself into a hole, and I couldn’t get out of it. Some long-haul drivers working overtime at Sunset were receiving W-2 forms at the end of the year showing that they made $20,000 more than I did as president. In theory, the “Equal Pay. . .regardless of office position or responsibility ” covenant was still in effect, but I was not entitled to overtime, even though I endured many sixteen-hour days. Never­ theless, I did have some unique benefits. I drove a black Cadillac and belonged to the Olympic Club and other social clubs paid...


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