Round for Wolfson

Financier Louis Wolfson last week won a key battle in his proxy war with Sewell Avery for control of Montgomery Ward & Co. In a suit filed by Wolfson, Chicago Circuit Court Judge Harry M. Fisher ruled that Ward's staggered system for electing directors was illegal; it was a violation of the state constitution that guarantees every stockholder the right to enjoy maximum voting strength.

By electing only three of Ward's nine directors each year (for three-year terms) Avery has concentrated his proxies, been able to keep any minority stockholder group from getting a foothold. To Ward's courtroom arguments that staggered terms* preserve continuity and stability in management, Judge Fisher replied: ". . . Stability in management is always desirable, but whether continuity of the same individuals on the board insures stability may be questioned ... It may lead to the perpetuation of error and mismanagement." Judge Fisher ordered Ward's directors to repeal the staggered-term bylaw, notify stockholders that all nine directorships will be up for election at the April 22 meeting.

Ward's attorneys went to work forthwith to appeal the decision to the Illinois Supreme Court. Both Avery and Wolfson announced that they will press for a quick decision, since neither wants to postpone the April showdown.

* Among other Illinois companies with staggered directors' terms: Armour & Co., Great Western Railway, Sunbeam Corp., Swift & Co., U.S. Gypsum Co.

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