Thursday, December 8, 2016

Labor Pick Puzder is PEU Partner

President elect Donald Trump stacked his cabinet with another private equity underwriter (PEU).  Trump nominated Andrew Puzder, CEO of CKE Restaurants, an affiliate of Roark Capital.  Roark purchased CKE from fellow PEU Apollo Global in 2013 for a reported $1.6 billion.  The company's press release stated:

CKE Inc. (“CKE” or the “Company”) announced today that an affiliate of Roark Capital Group has entered into a definitive agreement to acquire a majority stake in the Company with senior management retaining a minority stake. 
The sale price — which the news service Reuters reported at $1.65 billion to $1.75 billion, citing anonymous sources — represents a healthy return for Apollo, which took the company private in 2010 for about $1 billion..
Puzder's minority stake makes him a PEU partner, as evidenced by an SEC filing.

In connection with the Merger, certain affiliates of Apollo, our directors and certain members of our senior management entered into the Partnership Agreement. All executive officers and directors investing in Class A Units and receiving awards of Class B Units were required to execute the Partnership Agreement and become limited partners of Apollo CKE Holdings, L.P.
How much did Puzder pocket in the flip in 2013?  Rest assured no Senator would ask such a gauche question.  Might they feed back his recent words on problematic humanity?

A NYT piece reported:
Mr. Puzder said that increased automation could be a welcome development because machines were “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall or an age, sex or race discrimination case.”
Andrew Puzder knows executive enrichment:

Executive pay at CKE was outsized for the food industry, given the size of the company. Puzder’s compensation, for example, peaked at $10.1 million in 2011. 

When the company sold to Apollo, it inked a deal in which the executives were hired for a four-year term, and contractual provisions that would have forced Apollo to pay out more than $8 million in cash for firing Puzder.  

During the last year that disclosures were made, CKE said that it paid for dues to recreation clubs, car allowances and even personal use of the company aircraft by executives and their family members, which the executives paid income tax on. The perks themselves came up to about $241,000 in the most recent year data was reported. 
Here's what this implies for labor:

I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as greed has hollowed out the economy. These are people took pride in their jobs and held themselves to this invisible standard that we all just took for granted, but is being wiped out.
A former business reporter (think WSJ, FT, Bloomberg) wrote those words in 2011.  It was a stark assessment at the time.  It remains a warning as President-elect Trump populates his cabinet with the greed and leverage boys.  It's a PEU world and the Red Team's in charge after eight years of Blue abdication. 

Workers don't have much a hand in the Trump Casino.  The deck looks stacked.