Meetings

Once each year, in theory, the legal owners of a corporation assemble for an accounting of the stewardship of their property. In practice the annual stockholders' meeting is largely a matter of form. Only with the greatest difficulty can stockholders be persuaded to sign enough proxies for a quorum, let alone attend in person. The few stockholders who do attend can do little except talk, since the majority of the shares are generally voted, not by disinterested stockholder representatives, but by a management primarily interested in staying in office. Almost nothing short of scandal ever bestirs the absentee owners to a concerted effort to exercise any real control over their company's affairs. It is much easier for a dissatisfied shareholder to sell his stock and get out. Last week the season for these well-rehearsed assemblies was in full swing.

Steel. For U. S. Steel's annual meeting Chairman Myron Charles Taylor and a battalion of executives, clerks, lawyers and pressagents piled into a Manhattan subway one morning last week, dived under the Hudson River to Hoboken, N. J. where U. S. Steel maintains its legal residence. Among stockholders awaiting Mr. Taylor's arrival was one William Snelling, a knickerbockered 14-year-old from Allentown, Pa. who said he was in the ink business with his younger brother. Having bought one share of U. S. Steel for $30 in 1932 and watched it climb to last week's price of $71, Stockholder Snelling wanted to find out how Steel ran its business.

Aside from hearing that Chairman Taylor had as yet arrived at no definite plans for payment of U. S. Steel's $58,000,000 preferred dividend arrears, Stockholder Snelling learned little about his company that he could not have found out from published sources. Mr. Taylor's address was largely confined to sonorous generalities on the past & present of the Corporation. "In times of peace and war," intoned the handsome, dignified chairman, "it has advanced American corporate practice upon the road to ultimate perfection."

One stockholder thought that the company was still short of perfection, objecting bitterly to the salaries of Mr. Taylor ($161,000) and President William A. Irvin ($102,000). Instead of offering in rebuttal the noteworthy fact that Steel's ratio of total executive salaries to average profits has been among the lowest in the land, Mr. Taylor declared: "I think that many of us take too narrow a view on the whole salary question. I do not like anyone to attack the salaries that this corporation's executives receive. I resent it."

Among those who enjoyed U. S. Steel's annual luncheon was a grimy unemployed who slipped into the meeting unobserved, dozed through the morning session, wolfed all the food he could, crammed his pockets with sandwiches and sauntered quietly out.

Six-Figure Defense. At International Business Machines Corp.'s meeting President Thomas J. Watson felt impelled to give a lengthy defense of his corporate compensation, which at last reports was $1,000 per day. "I took charge of the company 22 years ago with an understanding that if I could develop some new things and make money, I would receive a percentage of it," said Supersalesman Watson. Under his direction the number of employes mounted from 235 to more than 9,000 while the market value of I. B. M. stock increased from $2,500,000 to $136,000,000 with the addition of only $3,600,000 in fresh capital. Moreover, in the first two months of 1936, the company made more money than any January and February in I. B. M. history.

"My total compensation during this [22-year] period has averaged $184,154 a year," Mr. Watson related. "I may add that I have to give the Government in taxes a little more than 60% of what I now get, but I am glad to do it."

President Watson's original profit-sharing contract had been renewed several times. "Today I draw a salary of $100,000 and I get 5% of the net profits after dividends of $6 per share have been paid on the stock outstanding at the end of 1934-" On that basis Mr. Watson's share of I. B. M.'s 1935 profits was approximately $118,800.

Fee. By a vote of 11,000,000 shares to 11,000 shares, stockholders in Radio Corp. of America approved the recapitalization plan especially prepared by Joseph Patrick Kennedy after he retired as chairman of the Securities & Exchange Commission (TIME, Feb. 10). Logical was the choice of "Joe" Kennedy to iron out the conflicting interests of various classes of stockholders. Not only did his SEC reputation carry great weight; he had more than a nodding acquaintance with RCA finances, having garnered no inconsiderable part of his riches from pre-New Deal market operations in Radio-Keith-Orpheum, lately divorced from Radio Corp. His plan has already been accepted by enough preferred shareholders to make it effective. Only serious criticism last week came from a Canal Zone radio dealer who traveled six days by boat to protest in person.

On hand to explain his plan to the 600 RCA stockholders who turned out for the meeting, Mr. Kennedy was asked how much he had charged for his few months work. "At the SEC we always demanded the truth and I guess some of you will get a shock," he replied. "My fee was $150,000. from which I paid $30,000 to accountants."

Apparently the stockholders were indeed shocked, for a profound silence descended upon the rest of the meeting.

Warming Radiator. "While we do not expect inflation," Chairman Clarence Mott Woolley of American Radiator & Standard Sanitary Corp. cautiously told his stockholders last week, "we are prepared for it." Inventories had been increased $6.000.000 over a year ago. Reluctant to discuss dividends, old Mr. Woolley nevertheless announced that sales for the first quarter of 1936 were 30% ahead of the same period last year.

Houses & Taxes. Republic Steel's Tom Mercer Girdler, who gets $129,000 per year, was pleased to have a stockholder rise at his meeting in Jersey City to announce that Republic salaries were perfectly fair--"in fact an increase in business would justify higher salaries." Having predicted that his company's operations should run at better than 60% of capacity for the next few months. Mr. Girdler got involved in a long argument about steel houses. Admitting that there had been a tremendous increase in inquiries for steel houses, he said that one of the difficulties seemed to be financing, declared that all-steel houses seemed to be impractical anyway. On a subject common to most current stockholders' meetings Mr. Girdler warned: "If the stockholders of this company do not become self-conscious on the Tax question, it is just going to be too bad for them."

Wires. Western Union's shareholders learned from President Roy White that first-quarter business was about 8% ahead of last year, expenses about 6% higher. Floods damaged Western Union to the extent of some $200,000 but revenues climbed abnormally during high waters, even though countless emergency messages were handled free.

Wet Woolen. No annual meeting is likely to inspire fervent faith in Capitalism but rowdiest of the year was American Woolen Co.'s meeting last month in Springfield, Mass. That city was picked because it was well-removed from Boston and Manhattan, big centres of Woolen ownership. A fight was expected and Connecticut River floods played nicely into the management's hands, cutting attendance even more. But an embattled minority, led by Boston's E. Howard Bennett, big, tireless editor of American Wool & Cotton Reporter, turned up with stacks of proxies and two lawyers, Boston's onetime Congressman Joseph O'Connell, father of eleven, and Hugh A. Carney, also of Boston. Editor Bennett & friends charged the present Woolen management with ignorance, incompetence and general mismanagement. On the final showdown they lost, having only about 146,000 shares to the management's 320,000. To hundreds of questions plied over a period of nearly five hours, the management refused any answers at all, promising to reply later in a general letter to stockholders.

Woolen's Chairman William B. Warner and President Lionel J. Noah put in a bad three days while proxies were challenged and counter-challenged in preparation for a formal session. On the evening of the third day, when President Noah announced still another postponement, the minority revolted, electing Editor Bennett to the chair. Mr. Noah's lawyer, Leland Powers, calmly puffed a cigar, announced that the meeting would be held when his client wished.

Some one kicked out the cord to the electric comptometers, then replugged it. Two silent groups formed. Growing suspicious of this sudden tranquillity. Lawyer Powers whispered to a henchman, who dived for a door, locked it, took the key and started for the other door in the rear of the room. Before he got there, some of the minority group took a defensive position. Meantime Editor Bennett & friends grabbed up all their proxies, headed through the chairs for the open door behind a flying wedge of supporters. Without the minority's proxies there would be no quorum, no meeting.

"Mr. Bennett, you can't leave with those," roared Lawyer Powers, his cigar still clenched in his teeth. As he lunged for the boxes of proxies, the rest closed in. From the yelling confusion of heads, chairs, fists, feet and brief cases, three figures finally emerged: Mr. Bennett safely through the door with his proxies ; Lawyer Powers slammed against a wall; Lawyer Carney dashing for a telephone to summon the police, crying: "That man [Powers] committed assault & battery upon me. I'll have him arrested." Lawyer Powers, regaining his composure, gruffed: "Ridiculous!"

Attention was diverted at this point by a stenographer who was quietly emptying all the spittoons on a pink plush chair. During the scuffle the chair had been set afire by a cigar ember.

By the time the fire was extinguished Mr. Bennett had dissuaded his irate attorney from having Lawyer Powers arrested and soon brought back the proxies. Lawyer Carney cooled less quickly. "I suppose you don't call that evidence," said he, exposing his bruised shin to Mr. Powers' complacent gaze.

"Let's forget it," purred the Woolen lawyer, patting Lawyer Carney's shoulder. Sputtered Mr. Carney: "Don't touch me! Take your hands off me!"

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