It's Halloween time and Ethan is fighting with his mother. He wants to be Freddy Krueger; Nancy says no. At DAA Michael comes into Miles' office and finds him lying on the floor to relieve back pain. In the office is the original 3-D nodel of DAA. Miles tells Michael he's in the office that used to belong to co-founder Duncan Arthur, who died there of a heart attack. He also tells Michael that a 10% reduction in the work force is needed and that it's his job to fire the people. Michael tells Elliot, who refuses to give him any input once he hears that Hollis and Angel are on the list. Working late that evening, Michael hears a squeaking noise. It's the janitor pushing his bucket.
Melissa is at DAA working with Elliot when Miles comes in the office. She's a bit frosty to him. Michael shows Elliot the list of layoffs. Hoillis is on it, but Angel is not. The door to Michael bathroom opens eerily, by itself. Michael finds a peanut in between bricks in his wall. Peanuts were a favorite food of Duncan Arthur, Mike has been told, and this one was apparently put there by him. Michael calls Hollis in to tell her the bad news. She's shaken, but worries about what will happen to Angel, who she assumes is also being laid off. When Michael tells Hollis that Angel is being kept on, a bad scene for both participants gets worse. After a rough day, Michael is working late again. He hears an ominous pounding noise. It's the same old janitor, who calls him by name and says he's fixing his bathroom door.
Michael fires more people; Elliot comforts the fired. Miles is now insisting that an account Elliot is working on is ready for presentation, even though Elliot and Michael disagree. Though Michael takes Elliot's side, a schism is building between them. As Michael argues with Miles, the power goes out. Miles is telling of Arthur Duncan's demise when the power surges, a light explodes and paper on the desk is set afire.
At home Elliot mollifies an unhappy Ethan by making a two-headed-man costume for both of them. Michael arrives at the company Halloween party without a costume. A lot of his disguised and made-up fellow employees take shots at him. Melissa runs into Miles on the staircase. He tells her to stay away from advertising and not to compromise her talent. Michael finds the janitor in the office looking at the model of DAA. He claims that he's Duncan Arthur. Mike is incredulous, thinking Elliot put him up to it. He tells Michael that Miles lied, that he died at home in bed, not at the office. He says that Miles is running scared, that he's nearly out of time and that he fears a "people" person like Michael. The janitor/Arthur mysteriously disappears. In the aftermath of the party, Michael tells Elliot that Miles is afraid of losing the company and that he himself wants to take control of it and improve it.