Lane’s Share

 Posted by on June 21, 2012 at 12:37 pm  Characters, Season 5
Jun 212012
 

Lane didn’t get fired.  He resigned.  Don extended that courtesy, and his suicide note was a resignation letter.

When a partner resigns, isn’t he owed the current value of his share of the firm?  In this case, wouldn’t it go to his wife?

For partners Roger, Bert and Don, this should not be a financial inconvenience.

For partners Pete and Joan, it may be more difficult.  Perhaps they will dilute some shares.

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  31 Responses to “Lane’s Share”

  1. I wouldn’t be surprised if Lane’s wife wanted nothing more to do with SCDP, regardless of financial benefits; she already seemed insulted enough by the check she was given. You do raise a good point about possible conflicts on Pete and Joan’s end, though. And — (on another site I might make a disclaimer, but I know Basketcases understand) I worry about Nigel! I wish we’d met him, I wish he wasn’t growing up without his father, given how avoidable the tragic circumstances. If Lane’s wife still plays a role in the Mad Men universe, maybe we’d get to hear from him.

    • All this time I was hoping to meet Nigel. I wonder why Matt Weiner never wrote him into something where an actor could be cast, even for just one or two scenes. We really never got to see Lane as the Family Man.

    • Rebecca did indeed seem offended by the check, yet she snatched that puppy from Don’s hand quickly enough!

  2. While I agree with Sarah that Rebecca probably wants to put SCDP behind her, I think there is at least one partner who would want to see this kind of justice done.

    Joanie is openly grieving the loss of her friend. She’s also complained about the money that keeps flooding in. She feels something bigger than guilt: the irony of a windfall on the heels of her friend’s suicide outrages her. She went to Don because she was looking to balance that load. And no, the cash is really not the load I’m referring to here.

    As a partner, and the only person with a close eye on the finances of the firm, Joanie is in a good position to do something about this.

    I hope she does, because in her hands such an action would be subtle. And legal.

  3. If the writers explore the question of Lane’s Share next season, maybe we will find out if that was the only check.

  4. The disposition of his share of the company would depend on his Will, and we don’t know anything about what Lane wanted. He could have left his share of the business to Rebecca, but he could also have left it to a charity (which I don’t think he would have). More likely is that he would have left it to the company. A very young company, which SCDP is, would not want its ownership diluted, and there could have been general agreement that partners’ shares would come back into the company in case of the death of a partner.

  5. Aren’t those kind of stipulations determined by the Partnership contracts? The same way that the firm has an insurance policies for it’s partners, but the payout goes to the firm not to the family of the partner.

    It is not automatically assumed that Lane’s share would be transferred to his wife. The $50 000 check was the return of direct investment and even then we cannot know under what conditions the partners put up the money in the first place. I believe Lane mentioned that this kind of collateral obligation was part of their Partnership contract, so even that sum would not need to be returned by the firm.

    It certainly seemed like it was a decision Don made on a whim because Joan presented him with the obscene insurance payment.

    • I thought Don said something about the firm having 6 years to pay back the partners for the money that they had to put in as an investment. Don was giving the money back so that Rebecca didn’t have to wait that long, assuming the death insurance policy didn’t already cover that.

  6. We don’t know the terms of SCDP’s partnership contract, but I doubt it’s as simple as “Lane wrote a letter of resignation, so the other partners need to buy back his shares”:

    1. There isn’t necessarily a connection between working at a firm and having an ownership interest in that firm. (After all, Alice Cooper was a partner in Sterling Cooper, but she never worked there.) Unless the partnership agreement stipulates as much, Lane resigning as CFO doesn’t automatically mean he’s relinquishing his partnership.

    2. Even if the two are bound up together, surely the partnership agreement would stipulate that the partnership is dissolved upon receipt or acceptance of a letter of resignation by the company, not simply upon its drafting. You can’t just write a letter of resignation and leave it lying around and consider the business relationship terminated, right? Since Lane’s letter could not in any way be considered “delivered” (let alone accepted) until after he was discovered dead, I’d assume that the provision for the death of a partner would take effect before and instead of the provision for his resignation.

    • Agreed. Lane (or his survivors) can resign from the firm and yet still retain his ownership stake (and the resulting share of the firm’s profits.) While firms in this position do indeed often negotiate a buyout of the resigning principles share relatively quickly, that usually has more to do with a desire to free up those shares to go to new partner(s). Unless and until SCDP buys Lane’s share out, they would most likely be obligated to send his estate whatever share of profit his partnership stake would’ve entitled him to were he still living.

  7. I don’t know if they reported Lane’s resignation. If they had, why would the insurance company have paid. I suspect if they had let Lane’s resignation “stand” then there would have been no money. He would have been jobless.

    And I do think that unless it was specified in the partner agreement that the shares to to his family it cannot be assumed they did. It certainly doesn’t make Rebecca an automatic partner.

    Regardless of any speculation on shares, I’m fairly certain the partners did not share his resignation.

  8. It’s interesting to remember that it was Lane who informed Pete Campbell that Don had paid his partner assessment when Pete didn’t have the money. So Lane had first hand knowledge that Don could be persuaded to front him some of his tax shortfall if he’d only asked.

    It’s almost as if Lane had some kind of death-wish.

    • Wow, what a brutal and powerful statement. I felt it was painfully, terribly clear that every time someone complimented Lane (in that episode), he heard instead his father’s voice, telling him he was worthless, nothing, better off dead. Because of how ashamed and hopeless he felt, I think he let that voice take over completely, and, as you point out, block out any possibility of a world in which he could seek, attain, and lose no respect for the help he needed.

  9. Strangely enough, my husband is currently going through this situation at work. A partner resigned and based upon the contract he signed when hired, he had broken several provisions of the contract resulting in several financial effects. As the company lawyer pointed out to all the partners, it depends on the contract you sign. If the contract states his shares will not be transferred but initial investment or buy in cost will be paid out, then that is what happens. It sounds like the contract said (at the very least) that the buy in costs would be paid out over at most a six year time frame. That is what Don told Lane’s wife. Again, it all depends on the contract. I suspect that there were no transferable shares built into the company structure, or if there were, they would be transferred to the current partners.

    • I could be wrong, but I understood the six year term to refer to the repayment of Lane’s share of the loan the partners “floated” the firm with after Lucky Strike left. Lane was a founding partner, which in a contractual and legal sense, often occurs under different terms than someone who buys in to an existing partnership structure at a later date.

  10. Remembering when Don was invited to the partners table to witness the vote of selling the company to the British, it was clear that some partners had died and left their shares and votes to their wives. Now it seems that SCDP will experience the same thing. I’m sure we’ll see Rebecca at the table but maybe Weiner will write in a part where Rebecca sells her shares. She didn’t seem to manage money well and will eventually need money. Plus, Pete is a silent owner, which means to me that he profits when the firm profits, but isn’t allowed to vote since he’s a silent partner. Also, Joan asked for 5% ownership and voting rights, so there isn’t anything silent about her vote. So, can someone explain why Pete turned to Don and said he had his proxy to vote. Did Pete become a partner with full voting rights or does silent partner mean they get voting rights, ownership, but don’t get their name on the building?

    Just Curious

    • Pete has always been a voting partner, not silent. In fact all of them (including Joan) were in that status. Roger, Bert & Don were “senior” partners with a greater share but no additional rights as far as I can tell.

      When it came time to fire people it was Roger, Don, Joan and Harry post the Lucky Strike implosion. So it’s not hire/fire authority either.

      In theory, for the rest of that meeting Don had a 35.5% voting authority (25+12.5-2).

    • It’s fairly common for existing partners to have right of first refusal should one parner decide to liquidate their stake, so it’s not out of the question that even if Rebecca does sell, they’ll pretty much revert to SCDP by default. (the firm certainly has the money now, and I doubt any of the remaining partners would want to give an outsider access to the firm.)

  11. Perhaps I am a little slow but the $175,000 death benefit check that Joan handed Don was she the actual beneficiary or was the company the actual beneficiary of the proceeds.

    In other words did the $50,000 that went to Rebecca come out of Joan’s pocket or did it come out of the company’s pocket?

    And if the latter was the case, did Don have the authority to insist on the payout to her?

    • The insurance policy preceded Joan’s equity interest. The death benefit belongs to the company.

      Don probably did not have the authority to accelerate the payment of SCDP obligation to Lane(‘s estate) – but then he doesn’t think the rules apply to him.

      • Don didn’t have the authority and did it anyway and Joan let him. Theoretically Don + Pete’s proxy (although that meeting was already over so he really couldn’t count Pete’s proxy) = 35.5% +Lane’s 11.5 (Don’t ASSUMING his proxy) +Joan (5%) would equate to =52% and thus a majority.

        OTOH, Don could just give them a “don’t give me this crap” and now were even kind of a look and move on. More likely scenario IMO.

        • I doubt that Weiner will go into that little “conflict”. Dramatically, there are much bigger fish to fry.

          Off camera, Pete is the one I’d expect to object. That alone would cause Roger to favor the $50k payment. Bert would be alright with it – he might even draw a connection between the rogue $7,500 check and the suicide.

          Plus, the $175,000 is gravy (pretty much a longshot bet that paid off) – roughly the equal of a $1.2-million account – with all twleve months paid up front.

  12. The questions I would ask about the existing partnership:

    1) What are the provisions for Pete or Joan being moved up to becoming a senior partner? Does he or she have to assume more responsibility or invest more money in the company or can he or she be moved up in the ranks by a vote of the other partners?

    2) Did Rebecca automatically inherit Lane’s seat at the table or because she received back his $50,000 investment is she entitled to anything?

    3) Can the firm leave Lane’s seat empty permanently or do they have fill it eventually?

    • I think they can have as many partners as they want (they added Joan) and there is no need to replace Lane. As mentioned before I highly doubt Rebecca gets a seat but there’s enough wiggle room that if Matt wants it that way, he’ll do it.

      Finally, they can vote Pete a higher percentage to make him a senior partner simply to keep him from leaving if they wanted to. I’m presuming the 3 year contract is up and I’m surprised this never came up this season. Since Pete is the chief rainmaker, a corner office plus senior partnership seems like a reasonable expectation. That would require Don/Roger/Bert to give up some of their percentage OR give him Lanes and be done with it. I don’t think they will “give” Pete anything though. So, IDK what, if anything is going to happen.

  13. In Mad Men, there are certain scenes in the five seasons which have way more impact on the future of the characters than was thought at the time.

    When you look at Lane Pryce’s downward arc, it started after Lois ran over the Brit’s foot with a John Deere tractor. A scene which inspired a bit of levity in a scene between Joan and Don and provided a bit of comic relief instead became the start of the Lane Pryce tragedy, where instead of ending up in Bombay as an esteemed bureaucrat for PPL, Lane was kept on in NYC, answering to London. And by being kept in NYC, he was seduced by the bright lights of Madison Avenue and in the words of his father Robert, thought he could live in-between.

    Most of people will focus on his personal life as an example of Lane doing that (his “chocolate bunny”) but once Lane decided to throw in his lot with Draper, Cooper and Sterling and become a partner in the new firm at the end of season three and break from his British connections, he put himself on a road where he did not have the ability to succeed. As Rebecca Pryce put it, “You shouldn’t have filled a man like that with ambition.”

    Lane was a victim of The Peter Principle. By being forced to liquidate personal holdings to invest $50,000 after the loss of Lucky Strike causing him to owe back taxes that he could not afford to pay, Lane proved he was ironically out of his league when it came to managing or juggling his own finances while still doing a good job managing the finances of SCDP.

    Many bureaucrats are like Lane. They take orders from their bosses and believe they do all the work and their bosses get all the glory. And they begin to think they don’t need any boss any more. But the truth for most of these bureaucrats is they are simply workers and no better than drywallers who work for a drywall contractor. Not every drywaller aspires to or is capable of being a drywall contractor and not every bureaucrat is capable of making the right decisions when they are in charge.If Lane had remained a bureaucrat he would NOT have compromised himself and would not have been forced to embezzle from the firm. Hubris has claimed many victims over the centuries. Lane won’t be the last.

    • I thought it was very telling how Lane would constantly apologize for the British masters who were trimming the company down to make a sale. When he got that snake in the basket my heart leapt out to him.

      I don’t know if it was the Peter Principle (which I usually associate with people who get promoted beyond their capability) so much as it was a desperate attempt by Lane to step out of his father’s shadow.

      He did a decent job of keeping the books at SCDP – it was not beyond his skill. But that WAS what he was limited to. He was never going to be an account man – despite his dreams. So he didn’t actually get placed in a position he couldn’t do.

      The partnership, OTOH, was fiscally beyond both he and Pete (hence they were junior partners) and when the bill came due, both were in a financial crisis. Pete’s original plan was to borrow the money but Trudy put a stop to that. He was looking for alternate (unrealistic) solutions when he found out Don covered him but he didn’t actually go to Don to get the money. Still Pete saw it as come up with the money or lose his partnership. Lane could have lost his partnership as well, rather than liquidate his portfolio. What surprises me is that he thought he could get away without paying British taxes. Lane HAD to know better. And there was your hubris — not to be a partner but to think he could keep inland revenue at bay.

      Maybe it’s the same thing your saying but I think it’s financial Darwinism. Both he and Pete entered into a more high-stakes area without the financial deep pockets to weather a storm. Pete got lucky and survived but he also brought IN money to the company. He controlled, to some extent, the ability of the company to go forward. Lane was not lucky, took a gamble and lost, and had no way of increasing the company revenue. He didn’t fiscally survive and for Lane, he couldn’t accept that loss and be marked as a failure.

      Don- he’d move on. Don could live off on next to nothing if he needed to.
      Roger – I don’t think he’d survive going penniless. He’d do his best to fine a sugar-momma. I’d put him next in the list of completely losing it. He’s just never known poverty and is still trying to reinvent himself – actively. So far the LSD thing makes me feel like he could slip away.
      Pete – he’s scrappy, he’d survive somehow. I think he’s clearly suicide-level depressed but his strongly stated objections says to me he’s rejected that option.
      Bert – he’d survive. He’s old but he’d figure out a way. He’s the best entrepreneur of all of them.

      • Lane did know better. He simply saw his options as “liquidate now and worry about taxes later”, or “not liquidate and lose partnership” It happens all the time, people make decisions all the time they know are unsound when they feel they have no option. That’s a big part of the reason so many otherwise smart people find themselves in debt trouble.

    • At the formation of SCDP Lane brought two key “assets” to the table:

      – His authority to “cut off the legs” of the partners (to use Roger’s pithy metaphor) – thus freeing them from the old PP&L/SC. Without this they are bound to the company – or to a non-compete agreement.

      – His ability as CFO. (Roger again, rhetorically) “Can you do what he does?” This is much less crucial, since men with his ability can be hired.

      Pete, as the other junior partner, secured several million annual dollars worth of his existing accounts within a few days (hours?) before the great weekend caper. This was also crucial (along wiht Lucky Strike of course) in that cash flow was assured at the birth of the new firm.

      The nascent SCDP started with zero-capitalization (in the form of cash, that is. Of course, accounts are a form of capital). A few hotel bills and other expenses, picked up by Bert/Roger/Don, were all the cash required until the clients next checks came in (invoices were undoubtedly Lane/Joan’s first order of business).

      The first call for non-expense-type cash was $400,000 in season 4 post-Lucky-Strike.

      The partners owed Lane their business freedom. And absent a private deal with Don would undoubtedly have forked over a measly $7,500 – if only by way of reducing their $50,000 obligation to him. If only Lane had sucked it up and asked (and should have asked for at least 10 grand).

      Pride. Hubris. Dignity. Death is quite a price to pay for that.

      I think Mrs. Pryce knew Lane too well. She didn’t know all the details (at first) but knew the man and the broad outlines of his dilemna – pre- and post-PP&L.

      • Mr. Ghalt,

        An outstanding analysis, capped by:”Pride. Hubris. Dignity. Death is quite a price to pay for that. ”

        R,

    • Bombay was heavily implied not to be an esteemed assignment. PPL was shunting Lane off to an out of the way backwater assignment.

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