Shareholders & Salaries

Annual meetings, like trout-fly sales, are a highly seasonal phenomenon. Singer Manufacturing Co.'s shareholders do not gather until autumn because it takes nine or ten months to collect its sewing machine figures from all the Earth's corners. Bank of the Manhattan Co. holds its meeting in December before the year is done. But traditional annual meeting season is spring. And last week throughout the land stockholders took full advantage of their yearly opportunity to ask questions, make speeches and exercise their corporate franchise.

Bethlehem Steel's meetings have never been routine since shareholders learned that President Eugene Grace once received a $1,600,000-bonus for one year's work. Bethlehem's bonus plan has since been modified, and today Mr. Grace is paid a straight salary of $180,000 per year. But old Chairman Charles Michael Schwab now gets his $250,000, good years or bad, and when the Bethlehem stockholders met in Newark, N. J. last week, the aging founder, present but not presiding, bore the brunt of the complaints. Loyally defending his chief from the chair, President Grace called Mr. Schwab a "real asset to the corporation."

"Yes," interrupted Stockholder Leopold Coshland, "but there comes a time when a man outlives his usefulness. . . . There are 44,000 men getting 67-c- an hour by the sweat of their brows in the plants of the corporation while three officers draw

$488,000." "No wonder Father Coughlin preaches about blood money," cried a woman shareholder. "Here we are without a cent while you men store up millions. Mr. Grace should know that there are no pockets in shrouds."

"If I were you, Mr. Grace," chimed in

Stockholder Coshland, "I would hide my face in shame."

When the Coshland motion to slash salaries came to a vote, however, it was defeated, 2,370,000 to 335 shares. Apparently oblivious to the commotion he had caused, Chairman Schwab uprose to remind the stockholders: "This is our thirtieth meeting and I think we have every reason to be proud. ... In the steel business I have been known as an optimist and a dreamer for 55 years, and I have seen those dreams come true."

Indeed, for at least ten years, in the steel business and out, Mr. Schwab has been known for little else than his optimism. His record for public cheerfulness was unbroken until last month when the 73-yearold steelmaster stepped off shipboard, gloomily observing that U. S. Business seemed to be "marking time." Last week he half-apologized for that slip, saying: "My words may have conveyed a lack of enthusiasm but my heart and my mind contain optimism and enthusiasm which will never change. Don't worry. We're going to have good business again."

Pennsylvania R. R.'s annual meeting was conducted, as it has been for years, by Effingham Buckley Morris, senior director (elected 1896) and chairman of the finance committee. Now 78, head of Philadelphia's big Girard Trust Co. and a civic leader of his community, Chairman Morris has been annoyed at the past few Pennsylvania meetings by what he undoubtedly believes to be sheer impudence. Last year the stockholders wanted to know all about salaries. This year they demanded the details of Pennroad Corp., an ill-starred venture into railroad holding companies.

But Chairman Morris would not listen to any questions about Pennroad Corp., ruling that the holding company had not the remotest connection with the carrier. Technically he was correct: while the practical management of both is almost identical, the holding company is legally an independent corporation investing in railroad stocks. Pennroad's investments, largely made for "strategic" reasons, now show a depreciation close to $100,000,000. Though not admitting for an instant any tie between the holding company and the carrier, Financial Vice President Albert John County finally yielded to shouts from the floor, lamely explaining: "Pennroad has most valuable investments. In time if anything is worth while in the U. S., its investments will be higher than they are today."

Western Union. Asked about the possibilities of a merger with Postal Telegraph, Chairman Newcomb Carlton of Western Union told stockholders last week: "That subject is very much asleep. . . . Washington does not seem disposed to the extension of monopoly. Our opinion is that we will hear little of mergers in the future."

North Western. Last year Chicago & North Western was the first to pick up President Roosevelt's idea of sinking funds for railroads. Fred Wesley Sargent, North Western's bustling president, could, however, never have been accused of over-reaching himself in his plans. All he promised was that a certain percentage of profits would be sunk in the sinking fund when & if the road returned to the black. For four years Mr. Sargent has been deep in the red, losing $8,000,000 last year alone.

Last week the energetic railroader, who sometimes spends a quiet evening in his hometown station of Evanston, Ill. watching his trains go by, flatly announced that North Western would borrow no more money. "The time has come." he thundered, "when we have got to stop piling up debt if there is to be anything left for the equity of the stockholders." Then President Sargent solemnly warned shareholders not to be alarmed if North Western suspended interest payment on certain classes of its bonds before the year was up. Under the Securities Exchange Act of 1934, every corporation seeking permanent listing on a registered stock exchange must divulge the salaries of all important executives. Though SEC has received only 10% of the applications expected for permanent listing, which must be secured before July 1, it was plain last week that scores of companies would not give up their secrets without a struggle. Some have filed their salary schedules as confidential; some have even mailed them personally to SEChairman Kennedy. Biggest kicker so far against salary publicity has been Standard Oil of New Jersey but loudest has been S. S. Kresge Co., second only to Woolworth among variety chain-stores. Kresge objected to disclosing not only salaries but also security ownership of officials and big shareholders--with one exception: Founder-Chairman Sebastian Spering Kresge admitted ownership of 23% of Kresge common stock.

If for no other reason than the fact that his 1,286,000 shares were last week worth $25,000,000, Sebastian Spering Kresge is a notable U. S. businessman. Starting with one store in Detroit less than 40 years ago, he branched & branched until today his chain has some 700 units throughout the eastern half of the U. S. and Canada. Last year those stores sold to the U. S. middle classes $137,000,000 worth of assorted merchandise at a profit of $9,835,000.

Born 67 years ago in Bald Mount, Pa., the plump, dour little merchant has cherished his farm-learned virtues, of which the dearest is Hard Work. He has spent his millions freely in a long war against Rum, Tobacco and other worldly evils, has set up a $25,000,000 Kresge Foundation to further his moral and philanthropic ends.* Offered a drink or a cigar, Mr. Kresge says politely: "Hoping always to have my own views and opinions respected, I respect the opinions of others." Another Kresgeism: "If there were any sound arguments to be advanced on behalf of the use of alcoholic beverages, I wonder if I might not have discovered them in all these years."

*Once Mr. Kresge wrote Michigan's rich Senator Couzens, for a $1,000 contribution to a girls' home. Enclosing a $2,500 check, the Senator pointedly replied: "I think you could do a lot more for girls and women by paying them better wages than you can by subscribing money to rescue them after they have gotten into trouble."

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