Chapter 10 Stockholder Season

A FEW YEARS AGO, a European diplomat was quoted in theTimes as saying, “The American economy has become so bigthat it is beyond the imagination to comprehend. But now ontop of size you are getting rapid growth as well. It is asituation of fundamental power unequalled in the history of theworld.” At about the same time, A. A. Berle wrote, in a studyof corporate power, that the five hundred or so corporationsthat dominate that economy “represent a concentration ofpower over economics which makes the medieval feudal systemlook like a Sunday-school party.” As for the power within thosecorporations, it clearly rests, for all practical purposes, with theirdirectors and their professional managers (often not substantialowners), who, Berle goes on to suggest in the same essay,sometimes constitute a self-perpetuating oligarchy. Mostfair-minded observers these days seem to feel that thestewardship of the oligarchs, from a social point of view, isn’tanything like as bad as it might be, and in many cases ispretty good, yet, however that may be, the ultimate powertheoretically does not reside in them at all. According to thecorporate form of organization, it resides in the stockholders, ofwhom, in United States business enterprises of all sizes anddescriptions, there are more than twenty million. Even thoughthe courts have repeatedly ruled that a director does not haveto follow stockholder instructions, any more than acongressman has to follow the instructions of his constituents,stockholders nevertheless do elect directors, on the logical, if notexactly democratic, basis of one share, one vote. Thestockholders are deprived of their real power by a number offactors, among which are their indifference to it in times ofrising profits and dividends, their ignorance of corporate affairs,and their sheer numbers. One way or another, they vote themanagement slate, and the results of most director electionshave a certain Russian ring—ninety-nine per cent or more ofthe votes cast in favor. The chief, and in many cases the only,occasion when stockholders make their presence felt bymanagement is at the annual meeting. Company annualmeetings are customarily held in the spring, and one spring—itwas that of 1966—I made the rounds of a few of them to geta line on what the theoretical holders of all that feudal powerhad to say for themselves, and also on the state of theirrelations with their elected directors.
What particularly commended the 1966 season to me wasthat it promised to be a particularly lively one. Various reportsof a new “hard-line approach” by company managements tostockholders had appeared in the press. (I was charmed by thenotion of a candidate for office announcing his new hard-lineapproach to voters right before an election.) The newapproach, it was reported, was the upshot of events at theprevious year’s meetings, where a new high in stockholderunruliness was reached. The chairman of the CommunicationsSatellite Corporation was forced to call on guards to eject bodilytwo badgering stockholders at his company’s meeting, inWashington. Harland C. Forbes, who was then the chairman ofConsolidated Edison, ordered one heckler off the premises inNew York, and, in Philadelphia, American Telephone &Telegraph Chairman Frederick R. Kappel was goaded intoannouncing abruptly, “This meeting is not being run byRobert’s [Rules of Order]. It’s being run by me.” (Theexecutive director of the American Society of CorporateSecretaries later explained that precise application of Robert’srules would have had the effect not of increasing thestockholders’ freedom of speech but, rather, of restricting it. Mr.
Kappel, the secretary implied, had merely been protectingstockholders from parliamentary tyranny.) In Schenectady,Gerald L. Phillippe, chairman of General Electric, after severalhours of fencing with stockholders, summed up his new hardline by saying, “I should like it to be clear that next year, andin the years to come, the chair may well adopt a morerigorous attitude.” According to Business Week, the GeneralElectric management then assigned a special task force to thejob of seeing what could be done about cracking down onhecklers by changing the annual-meeting pattern, and early in1966 the bible of management, the Harvard Business Review,entered the lists with an article by O. Glenn Saxon, Jr., thehead of a company specializing in investor services tomanagement, in which he recommended crisply that thechairmen of annual meetings “recognize the authority inherentin the role of the chair, and resolve to use it appropriately.”
Apparently, the theoretical holders of fundamental powerunequalled in the history of the world were about to be put intheir place.
ONE thing I couldn’t help noticing as I went over the scheduleof the year’s leading meetings was a trend away from holdingthem in or near New York. Invariably, the official reason givenwas that the move would accommodate stockholders from otherareas who had seldom, if ever, been able to attend in the past;however, most of the noisiest dissident stockholders seem to bebased in the New York area, and the moves were taking placein the year of the new hard line, so I found the likelihood of arelationship between these two facts by no means remote.
United States Steel holders, for example, were to meet inCleveland, making their second foray outside their company’snominal home state of New Jersey since its formation, in 1901.
General Electric was going outside New York State for the thirdtime in recent years—and going all the way to Georgia, a statein which management appeared to have suddenly discoveredfifty-six hundred stockholders (or a bit more than one per centof the firm’s total roll) who were badly in need of a chance toattend an annual meeting. The biggest company of them all,American Telephone & Telegraph, had chosen Detroit, whichwas its third site outside New York City in its eighty-one-yearhistory, the second having been Philadelphia, where the 1965session was held.
To open my own meeting-going season, I tracked A.T.& T. toDetroit. Leafing through some papers on the plane going outthere, I learned that the number of A.T. & T. stockholders hadincreased to an all-time record of almost three million, and Ifell to wondering what would happen in the unlikely event thatall of them, or even half of them, appeared in Detroit anddemanded seats at the meeting. At any rate, each one of themhad received by mail, a few weeks earlier, a notice of themeeting along with a formal invitation to attend, and it seemedto me almost certain that American industry had achievedanother “first”—the first time almost three million individualinvitations had ever been mailed out to any event of any kindanywhere. My fears on the first score were put to rest when Igot to Cobo Hall, a huge riverfront auditorium, where themeeting was to take place. The hall was far from filled; theYankees in their better days would have been disgusted withsuch a turnout on any weekday afternoon. (The papers nextday said the attendance was four thousand and sixteen.)Looking around, I noticed in the crowd several families withsmall children, one woman in a wheelchair, one man with abeard, and just two Negro stockholders—the last observationsuggesting that the trumpeters of “people’s capitalism” mightwell do some coordinating with the civil-rights movement. Theannounced time of the meeting was one-thirty, and ChairmanKappel entered on the dot and marched to a reading stand onthe platform; the eighteen other A.T. & T. directors trooped toa row of seats just behind him, and Mr. Kappel gavelled themeeting to order.
From my reading and from annual meetings that I’d attendedin past years, I knew that the meetings of the biggestcompanies are usually marked by the presence of so-calledprofessional stockholders—persons who make a full-timeoccupation of buying stock in companies or obtaining theproxies of other stockholders, then informing themselves moreor less intimately about the corporations’ affairs and attendingannual meetings to raise questions or propose resolutions—andthat the most celebrated members of this breed were Mrs.
Wilma Soss, of New York, who heads an organization ofwomen stockholders and votes the proxies of its members aswell as her own shares, and Lewis D. Gilbert, also of NewYork, who represents his own holdings and those of hisfamily—a considerable total. Something I did not know, andlearned at the A.T. & T. meeting (and at others I attendedsubsequently), was that, apart from the prepared speeches ofmanagement, a good many big-company meetings really consistof a dialogue—in some cases it’s more of a duel—between thechairman and the few professional stockholders. Thecontributions of non-professionals run strongly to ill-informed ortame questions and windy encomiums of management, andthus the task of making cogent criticisms or askingembarrassing questions falls to the professionals. Though largelyself-appointed, they become, by default, the sole representativesof a huge constituency that may badly need representing. Someof them are not very good representatives, and a few are sobad that their conduct raises a problem in American manners;these few repeatedly say things at annual meetings—boorish,silly, insulting, or abusive things—that are apparently permissibleby corporate rules but are certainly impermissible bydrawing-room rules, and sometimes succeed in giving theannual meetings of mighty companies the general air ofbarnyard squabbles. Mrs. Soss, a former public-relations womanwho has been a tireless professional stockholder since 1947, isusually a good many cuts above this level. True, she is notbeyond playing to the gallery by wearing bizarre costumes tomeetings; she tries, with occasional success, to taunt recalcitrantchairmen into throwing her out; she is often scolding andoccasionally abusive; and nobody could accuse her of beingunduly concise. I confess that her customary tone and mannerset my teeth on edge, but I can’t help recognizing that,because she does her homework, she usually has a point. Mr.
Gilbert, who has been at it since 1933 and is the dean ofthem all, almost invariably has a point, and by comparison withhis colleagues he is the soul of brevity and punctilio as well asof dedication and diligence. Despised as professionalstockholders are by most company managements, Mrs. Sossand Mr. Gilbert are widely enough recognized to be listed inWho’s Who in America; furthermore, for what satisfaction itmay bring them, they are the nameless Agamemnons andAjaxes, invariably called “individuals,” in some of the prose epicsproduced by the business Establishment itself. (“The greaterportion of the discussion period was taken up by questions andstatements of a few individuals on matters that can scarcely bedeemed relevant.… Two individuals interrupted the openingstatement of the chairman.… The chairman advised theindividuals who had interrupted to choose between ceasing theirinterruption or leaving the meeting.…” So reads, in part, theofficial report of the 1965 A.T. & T. annual meeting.) Andalthough Mr. Saxon’s piece in the Harvard Business Reviewwas entirely about professional stockholders and how to dealwith them, the author’s corporate dignity did not permit him tomention the name of even one of them. Avoiding this wasquite a trick, but Mr. Saxon pulled it off.
Both Mrs. Soss and Mr. Gilbert were present at Cobo Hall.
Indeed, the meeting had barely got under way before Mr.
Gilbert was on his feet complaining that several resolutions hehad asked the company to include in the proxy statement andthe meeting agenda had been omitted from both. Mr. Kappel—astern-looking man with steel-rimmed spectacles, who wasunmistakably cast in the old-fashioned, aloof corporate mold,rather than the new, more permissive one—replied shortly thatthe Gilbert proposals had referred to matters that were notproper for stockholder consideration, and had been submittedtoo late, anyhow. Mr. Kappel then announced that he wasabout to report on company operations, whereupon theeighteen other directors filed off the platform. Evidently, theyhad been there only to be introduced, not to field questionsfrom stockholders. Exactly where they went I don’t know; theyvanished from my field of vision, and I wasn’t enlightenedwhen, later on in the meeting, Mr. Kappel responded to astockholder’s question as to their whereabouts with the laconicstatement “They’re here.” Going it alone, Mr. Kappel said in hisreport that “business is booming, earnings are good, and theprospect ahead is for more of the same,” declared that A.T. &T. was eager for the Federal Communications Commission toget on with its investigation of telephone rates, since thecompany had “no skeletons in the closet,” and then painted apicture of a bright telephonic future in which “picture phones”
will be commonplace and light beams will carry messages.
When Mr. Kappel’s address was over and themanagement-sponsored slate of directors for the coming yearhad been duly nominated, Mrs. Soss rose to make anomination of her own—Dr. Frances Arkin, a psychoanalyst. Inexplanation, Mrs. Soss said that she felt A.T. & T. ought tohave a woman on its board, and that, furthermore, shesometimes felt some of the company’s executives would bebenefited by occasional psychiatric examinations. (This remarkseemed to me gratuitous, but the balance of manners betweenbosses and stockholders was subsequently redressed, at least tomy mind, at another meeting, when the chairman suggestedthat some of his firm’s stockholders ought to see apsychiatrist.) The nomination of Dr. Arkin was seconded by Mr.
Gilbert, although not until Mrs. Soss, who was sitting a coupleof seats from him, had reached over and nudged himvigorously in the ribs. Presently, a professional stockholdernamed Evelyn Y. Davis protested the venue of the meeting,complaining that she had been forced to come all the wayfrom New York by bus. Mrs. Davis, a brunette, was theyoungest and perhaps the best-looking of the professionalstockholders but, on the basis of what I saw at the A.T. & T.
meeting and others, not the best informed or the mosttemperate, serious-minded, or worldly-wise. On this occasion,she was greeted by thunderous boos, and when Mr. Kappelanswered her by saying, “You’re out of order. You’re justtalking to the wind,” he was loudly cheered. It was only thenthat I understood the nature of the advantage that thecompany had gained by moving its meeting away from NewYork: it had not succeeded in shaking off the gadflies, but ithad succeeded in putting them in a climate where they weresubject to the rigors of that great American emotion, regionalpride. A lady in a flowered hat who said she was from DesPlaines, Illinois, emphasized the point by rising to say, “I wishsome of the people here would behave like intelligent adults,rather than two-year-olds.” (Prolonged applause.)Even so, the sniping from the East went on, and bythree-thirty, when the meeting had been in session for twohours, Mr. Kappel was clearly getting testy; he began pacingimpatiently around the platform, and his answers got shorterand shorter. “O.K., O.K.” was all he replied to one complaintthat he was dictatorial. The climax came in a wrangle betweenhim and Mrs. Soss about the fact that A.T. & T., although ithad listed the business affiliations of its nominees for director ina pamphlet that was handed out at the meeting, had failed tolist them in the material mailed out to the stockholders, theoverwhelming majority of whom were not at the meeting andhad done their voting by proxy. Most other big companiesmake such disclosures in their mailed proxy statements, so thestockholders were apparently entitled to a reasonableexplanation of why A.T. & T. had failed to do so, butsomewhere along the way reason was left behind. As theexchange progressed, Mrs. Soss adopted a scolding tone andMr. Kappel an icy one; as for the crowd, it was having a finetime booing the Christian, if that is what Mrs. Soss represented,and cheering the lion, if that is what Mr. Kappel represented.
“I can’t hear you, sir,” Mrs. Soss said at one point. “Well, ifyou’d just listen instead of talking—” Mr. Kappel returned. ThenMrs. Soss said something I didn’t catch, and it must have beena telling bit of chairman-baiting, because Mr. Kappel’s mannerchanged completely, from ice to fire; he began shaking hisfinger and saying he wouldn’t stand for any more abuse, andthe floor microphone that Mrs. Soss had been using wasabruptly turned off. Followed at a distance of ten or fifteen feetby a uniformed security guard, and to the accompaniment ofdeafening booing and stamping, Mrs. Soss marched up the aisleand took a stand in front of the platform, facing Mr. Kappel,who informed her that he knew she wanted him to have herthrown out and that he declined to comply.
Eventually, Mrs. Soss went back to her seat and everybodycalmed down. The rest of the meeting, given over largely toquestions and comments from amateur stockholders, ratherthan professional ones, was certainly less lively than what hadgone before, and not noticeably higher in intellectual content.
Stockholders from Grand Rapids, Detroit, and Ann Arbor allexpressed the view that it would be best to let the directorsrun the company, although the Grand Rapids man objectedmildly that the “Bell Telephone Hour” couldn’t be received ontelevision in his locality anymore. A man from Pleasant Ridge,Michigan, spoke up for retired stockholders who would like A.T.
& T. to plow less of its earnings back into expansion, so that itcould pay higher dividends. A stockholder from rural Louisianastated that when he picked up his telephone lately, the operatordidn’t answer for five or ten minutes. “Ah brang it to yourattention,” the Louisiana man said, and Mr. Kappel promised tohave somebody look into the matter. Mrs. Davis raised acomplaint about A.T. & T.’s contributions to charity, giving Mr.
Kappel the opportunity to reply that he was glad the worldcontained people more charitable than she. (Tax-exemptapplause.) A Detroit man said, “I hope you won’t let the abuseyou’ve been subjected to by a few malcontents keep you frombringing the meeting back to the great Midwest again.” It wasannounced that Dr. Arkin had been defeated for a seat on theboard, since she had received a vote of only 19,106 sharesagainst some four hundred million, proxy votes included, foreach candidate on the management slate. (By approving themanagement slate, a proxy voter can, in effect, oppose a floornomination, even though he knows nothing about it.) And thatwas how the 1966 annual meeting of the world’s largestcompany went—or how it went until five-thirty, when all but afew hundred stockholders had left, and when I headed for theairport to catch a plane back to New York.
THE A.T. & T. meeting left me in a thoughtful mood. Annualmeetings, I reflected, can be times to try the soul of anadmirer of representative democratic government, especiallywhen he finds himself guiltily sympathizing with the chairmanwho is being badgered from the floor. The professionalstockholders, in their wilder moments, are management’s secretweapon; a Mrs. Soss and a Mrs. Davis at their most stridentcould have made Commodore Vanderbilt and Pierpont Morganseem like affable old gentlemen, and they can make a latter-daymagnate like Mr. Kappel seem like a henpecked husband, if notactually a champion of stockholders’ rights. At such moments,the professional stockholders become, from a practicalstandpoint, enemies of intelligent dissent. On the other hand, Ithought, they deserve sympathy, too, whether or not onebelieves they have right on their side, because they are in theposition of representing a constituency that doesn’t want to berepresented. It’s hard to imagine anyone more reluctant toclaim his democratic rights, or more suspicious of anyone whotries to claim them for him, than a dividend-fattenedstockholder—and, of course, most stockholders are thoroughlydividend-fattened these days. Berle speaks of the estate ofstockholding as being by its nature “passive-receptive,” ratherthan “managing and creating;” most of the A.T. & T.
stockholders in Detroit, it seemed to me, were so deeplydevoted to the notion of the company as Santa Claus that theywent beyond passive receptivity to active cupboard love. Andthe professional stockholders, I felt, had taken on anassignment almost as thankless as that of recruiting for theYoung Communist League among the junior executives of theChase Manhattan Bank.
In view of Chairman Phillippe’s warning to General Electricstockholders at Schenectady in 1965, and of the report aboutthe company’s hard-line task force, it was with a sense ofbeing engaged in hot pursuit that I boarded a southboundPullman for the General Electric annual meeting. This one washeld in Atlanta’s Municipal Auditorium, a snappy hall, the rearof which was brightened by an interior garden complete withtrees and a lawn, and in spite of the fact that it was held ona languorous, rainy Southern spring morning, more than athousand G.E. stockholders turned out. As far as I could see,three of them were Negroes, and it was not long before I sawthat another of them was Mrs. Soss.
However exasperated he may have become the previous yearin Schenectady, Mr. Phillippe, who also conducted the 1966meeting, was in perfect control of himself and of the situationthis time around. Whether he was expatiating on the wondersof G.E.’s balance sheet and its laboratory discoveries or sparringwith the professional stockholders, he spoke in the samesingsong way, delicately treading the thin line between patient,careful exposition and irony. Mr. Saxon, in his HarvardBusiness Review article, had written, “Top executives arefinding it necessary to learn how to lessen the adverse impactof the few disrupters on the majority of shareowners, whilesimultaneously enhancing the positive effects of the good thingswhich do take place in the annual meeting,” and, havinglearned sometime earlier that the same Mr. Saxon had beenengaged by G.E. as an adviser on stockholder relations, Icouldn’t help suspecting that Mr. Philippe’s performance was ademonstration of Saxonism in action. The professionalstockholders, for their part, responded by adopting precisely thesame ambiguous style, and the resulting dialogue had thegeneral air of a conversation between two people who havequarrelled and then decided, not quite wholeheartedly, to makeit up. (The professional stockholders might have demanded toknow how much money G.E. had spent in the interest ofkeeping them under control, but they missed the chance.) Oneof the exchanges in this vein achieved a touch of wit. Mrs.
Soss, speaking in her sweetest tone, called attention to the factthat one of the board-of-directors candidates—Frederick L.
Hovde, President of Purdue University and former chairman ofthe Army Scientific Advisory Panel—owned only ten shares ofG.E. stock, and said she felt that the board should be madeup of more substantial holders, whereupon Mr. Philippe pointedout, just as sweetly, that the company had many thousands ofholders of ten or fewer shares, Mrs. Soss among them, andsuggested that perhaps these small holders were deserving ofrepresentation on the board by one of their number. Mrs. Sosshad to concede a fine stroke of chairmanship, and she did. Onanother matter, although decorum was stringently maintained byboth sides, outward accord was less complete. Severalstockholders, Mrs. Soss among them, had formally proposedthat the company adopt for its director elections the systemcalled cumulative voting, under which a stockholder mayconcentrate all the votes he is entitled to on a single candidaterather than spread them over the whole slate, and whichtherefore gives a minority group of stockholders a much betterchance of electing one representative to the board. Cumulativevoting, though a subject of controversy in big-business circles,for obvious reasons, is nevertheless a perfectly respectable idea;indeed, it is mandatory for companies incorporated in morethan twenty states, and it is used by some four hundredcompanies listed on the New York Stock Exchange.
Nevertheless, Mr. Phillippe did not find it necessary to answerMrs. Soss’s argument for cumulative voting; he chose instead tostand on a brief company statement on this subject that hadbeen previously mailed out to stockholders, the main point ofwhich was that the presence on the G.E. board, as a result ofcumulative voting, of representatives of special-interest groupsmight have a “divisive and disruptive effect.” Of course, Mr.
Phillippe did not say he knew, as he doubtless did know, thatthe company had in hand more than enough proxies to defeatthe proposal.
Some companies, like some animals, have their private, highlyspecialized gadflies, who harass them and nobody else, andGeneral Electric is one. In this instance, the gadfly was Louis A.
Brusati, of Chicago, who at the company’s meetings over thepast thirteen years had advanced thirty-one proposals, all ofwhich had been defeated by a vote of at least ninety-seven percent to three per cent. In Atlanta, Mr. Brusati, a gray-hairedman built like a football player, was at it again—not withproposals this time but with questions. For one thing, hewanted to know why Mr. Phillippe’s personal holdings of G.E.
stock, listed in the proxy statement, now were four hundredand twenty-three shares fewer than they had been a year ago.
Mr. Phillippe replied that the difference represented shares thathe had contributed to family trust funds, and added, mildly butwith emphasis, “I could say it’s none of your business. I believeI have a right to the privacy of my affairs.” There was morereason for the mildness than for the emphasis, as Mr. Brusatidid not fail to point out, in an impeccably unemotionalmonotone; many of Mr. Phillippe’s shares had been acquiredunder options at preferential prices not available to others, and,moreover, the fact that Mr. Phillippe’s precise holdings hadbeen included in the proxy statement clearly showed that in theopinion of the Securities and Exchange Commission his holdingswere Mr. Brusati’s business. Going on to the matter of the feespaid directors, Mr. Brusati elicited from Mr. Phillippe theinformation that over the past seven years these had beenraised from twenty-five hundred dollars per annum first to fivethousand dollars and then to seventy-five hundred. The ensuingdialogue between the two men went like this:
“By the way, who establishes those fees?”
“Those fees are established by the board of directors.”
“The board of directors establish their own fees?”
“Yes.”
“Thank you.”
“Thank you, Mr. Brusati.”
Later on in the morning, there were several lengthy andeloquent orations by stockholders on the virtues of GeneralElectric and of the South, but this rather elegantly ellipticalexchange between Mr. Brusati and Mr. Phillippe stuck in mymind, for it seemed to sum up the spirit of the meeting. Onlyafter adjournment—which came at twelve-thirty, following Mr.
Phillippe’s announcement that the unopposed slate of directorshad been elected and that cumulative voting had lost by 97.51per cent to 2.49 per cent—did I realize that not only had therebeen no stamping, booing, or shouting, as there had been inDetroit, but regional pride had not had to be invoked againstthe professional stockholders. It had been General Electric’s holecard, I felt, but General Electric had won on the board, withoutneeding to turn it up.
EACH meeting I attended had its easily discernible characteristictone, and that of Chas. Pfizer & Co., the diversifiedpharmaceutical and chemical firm, was amicability. Pfizer, whichin previous years had customarily held its annual meeting at itsheadquarters in Brooklyn, reversed the trend by moving thisyear’s meeting right into the lair of the most vocal dissenters,midtown Manhattan, but everything that I saw and heardconvinced me that the motivation behind this move had beennot a brash resolve on the company’s part to beard the lionsin their den but a highly unfashionable desire to get themaximum possible turnout. Pfizer seemed to feel self-confidentenough to meet its stockholders with its guard down. Forinstance, in contrast with the other meetings I attended, nostockholder tickets were collected or credentials checked at theentrance to the Grand Ballroom of the Commodore Hotel,where the Pfizer meeting was held; Fidel Castro himself, whoseoratorical style I have occasionally felt that the professionalstockholders were using as a model, could presumably havewalked in and said whatever he chose. Some seventeenhundred persons, or nearly enough to fill the ballroom, showedup, and all the members of the Pfizer board of directors saton the platform from start to finish and answered anyquestions addressed to them individually.
Speaking, appropriately, with a faint trace of a Brooklynaccent, Chairman John E. McKeen welcomed the stockholdersas “my dear and cherished friends” (I tried to imagine Mr.
Kappel and Mr. Phillippe addressing their stockholders that way,and couldn’t, but then their companies are bigger), and saidthat on the way out everyone present would be given a bigfree-sample kit of Pfizer consumer products, such as Barbasol,Desitin, and Imprévu. Wooed thus by endearments and thepromise of gifts, and further softened up by the report ofPresident John J. Powers, Jr., on current operations (recordsall around) and immediate prospects (more records expected),the most intransigent professional stockholder would have beenhard put to it to mount much of a rebellion at this particularmeeting, and, as it happened, the only professional presentseemed to be John Gilbert, brother of Lewis. (I learned laterthat Lewis Gilbert and Mrs. Davis were in Cleveland that day,attending the U.S. Steel meeting.) John Gilbert is the sort ofprofessional stockholder the Pfizer management deserves, orwould like to think it does. With an easygoing manner and ahabit of punctuating his words with self-deprecating little laughs,he is the most ingratiating gadfly imaginable (or was on thisoccasion; I’m told he isn’t always), and as he ran throughwhat seemed to be the standard Gilbert-family repertoire ofquestions—on the reliability of the firm’s auditors, the salaries ofits officers, the fees of its directors—he seemed almostapologetic that duty called on him to commit the indelicacy ofasking such things. As for the amateur stockholders present,their questions and comments were about like those at theother meetings I’d attended, but this time their attitude towardthe role of the professional stockholder was noticeably different.
Instead of being overwhelmingly opposed, they appeared to besplit; to judge from the volume of clapping and of discreetgroaning, about half of those present considered Gilbert anuisance and half considered him a help. Powers left no doubtabout how he felt; before adjourning the meeting he said,without irony, that he had welcomed Gilbert’s questions, andmade a point of inviting him to come again next year. And,indeed, during the later stages of the Pfizer meeting, whenGilbert, in a conversational way, was praising the company forsome things and criticizing it for others, and the variousmembers of the board were replying to his comments just asinformally, I got for the first time a fleeting sense of genuinecommunication between stockholders and managers.
THE Radio Corporation of America, which had held its last twomeetings far from its New York headquarters—in Los Angelesin 1964, in Chicago in 1965—reserved the current trend evenmore decisively than Pfizer by convening this time in CarnegieHall. The entire orchestra and the two tiers of boxes werecompletely filled with stockholders—about twenty-three hundredof them, of whom a strikingly larger proportion than at any ofmy other meetings was male. Mrs. Soss and Mrs. Davis wereon hand, though, along with Lewis Gilbert and someprofessional stockholders I hadn’t seen before, and, as withPfizer, the company’s whole board of directors sat on theplatform, where the chief centers of attraction in R.C.A.’s casewere David Sarnoff, the company’s seventy-five-year-oldchairman, and his forty-eight-year-old son, Robert W. Sarnoff,who had been its president since the beginning of the year.
For me, two aspects of the R.C.A. meeting stood out: theevident respect, amounting almost to veneration, of thestockholders for their celebrated chairman, and anunaccustomed disposition of the amateur stockholders to speakup for themselves. The elder Mr. Sarnoff, looking hale andready for anything, conducted the meeting, and he and severalother R.C.A. executives gave reports on company operationsand prospects, in the course of which the words “record” and“growth” recurred so monotonously that I, not being an R.C.A.
stockholder, began to nod. I was brought wide awake with ajolt on one occasion, though, when I heard Walter D. Scott,chairman of R.C.A.’s subsidiary the National BroadcastingCompany, say in connection with his network’s televisionprogramming that “creative resources are always running aheadof demand.”
No one objected to that statement or to anything else in theglowing reports, but when they were over the stockholders hadtheir say on other matters. Mr. Gilbert raised some favoritequestions of his about accounting procedures, and arepresentative of R.C.A.’s accountants, Arthur Young & Co.,made replies that seemed to satisfy Mr. Gilbert. A Dickensianelderly lady, who identified herself as Mrs. Martha Brand andsaid she held “many thousands” of shares of R.C.A. stock,expressed the view that the accounting procedures of thecompany should not even be questioned. I have since learnedthat Mrs. Brand is a professional stockholder who is ananomaly within the profession, in that she leans strongly towardthe management view of things. Mr. Gilbert then advanced aproposal for the adoption of cumulative voting, supporting itwith about the same arguments that Mrs. Soss had used atthe G.E. meeting. Mr. Sarnoff opposed the motion, and so didMrs. Brand, who explained that she was sure the presentdirectors always worked tirelessly for the welfare of thecorporation, and added this time that she was the holder of“many, many thousands” of shares. Two or three otherstockholders spoke up in favor of cumulative voting—the onlyoccasion at any meeting on which I saw stockholders not easilyidentifiable as professionals speak in dissent on a matter ofsubstance. (Cumulative voting was defeated, 95.3 per cent to4.7 per cent.) Mrs. Soss, still in as mild a mood as in Atlanta,said she was delighted to see a woman, Mrs. Josephine YoungCase, sitting on the stage as a member of the R.C.A. board,but deplored the fact that Mrs. Case’s principal occupation wasgiven on the proxy statement as “housewife.” Couldn’t awoman who was chairman of the board of Skidmore College atleast be called a “home executive”? Another lady stockholderset off a round of applause by delivering a paean to ChairmanSarnoff, whom she called “the marvellous Cinderella man of thetwentieth century.”
Mrs. Davis—who had earlier objected to the site of themeeting on the ground, which I found dumfounding, thatCarnegie Hall was “too unsophisticated” for R.C.A.—advanced aresolution calling for company action “to insure that hereafterno person shall serve as a director after he shall have attainedthe age of seventy-two.” Even though similar rulings are ineffect in many companies, and even though the proposal, notbeing retroactive, would have no effect upon Mr. Sarnoff’sstatus, it seemed to be aimed at him, and thus Mrs. Davisdemonstrated again her uncanny knack of playing intomanagement’s hands. Nor did she appear to help her cause byputting on a Batman mask (the symbolism of which I didn’tgrasp) when she made it. At all events, the proposal gave riseto several impassioned defenses of Mr. Sarnoff, and one of thespeakers went on to complain bitterly that Mrs. Davis wasinsulting the intelligence of everyone present. At this, theserious-minded Mr. Gilbert leaped up to say, “I quite agreeabout the silliness of her costume, but there is a valid principlein her proposal.” In making this Voltairian distinction, Mr.
Gilbert, to judge from his evident state of agitation, wasachieving a triumph of reason over inclination that was costinghim plenty. Mrs. Davis’s resolution was defeated overwhelmingly;the margin against it served to end the meeting with whatamounted to a rousing vote of confidence in the Cinderellaman.
CLASSIC farce, with elements of slapstick, was the dominantmood of the meeting of the Communications SatelliteCorporation, with which I wound up my meeting-going season.
Comsat is, of course, the glamorous space-age communicationscompany that was set up by the government in 1963 andturned over to public ownership in a celebrated stock sale in1964. Upon arriving at the meeting site—the Shoreham Hotel, inWashington—I was scarcely startled to discover Mrs. Davis, Mrs.
Soss, and Lewis Gilbert among the thousand or so stockholderspresent. Mrs. Davis, decked out in stage makeup, an orangepith helmet, a short red skirt, white boots, and a black sweaterbearing in white letters the legend “I Was Born to Raise Hell,”
had planted herself squarely in front of a battery of televisioncameras. Mrs. Soss, as I had learned by now was her custom,had taken a place at the opposite side of the room from Mrs.
Davis, and this meant that she was now as far as possiblefrom the television cameras. Considering that Mrs. Soss doesnot ordinarily seem to be averse to being photographed, Icould write down this choice of seat only as a hard-wontriumph of conscience akin to Mr. Gilbert’s at Carnegie Hall. Asfor Mr. Gilbert, he took a place not far from Mrs. Soss, andthus, of course, a long way from Mrs. Davis.
Since the previous year, Leo D. Welch, the man who hadconducted the 1965 Comsat meeting with such a firm hand,has been replaced as chairman of the company by JamesMcCormack, a West Point graduate, former Rhodes Scholar,and retired Air Force general with an impeccably polishedmanner, who bears a certain resemblance to the Duke ofWindsor, and Mr. McCormack was conducting this year’ssession. He warmed up with some preliminary remarks in thecourse of which he noted—-smoothly, but not withoutemphasis—that as for the subject of any intervention that astockholder might choose to make, “the field of relevance isquite narrow.” When Mr. McCormack had finished his warmup,Mrs. Soss made a brief speech that may or may not havecome within the field of relevance; I missed most of it, becausethe floor microphone supplied to her wasn’t working right. Mrs.
Davis then claimed the floor, and her mike was working all toowell; as the cameras ground, she launched into an earsplittingtirade against the company and its directors because there hadbeen a special door to the meeting room reserved for theentrance of “distinguished guests.” Mrs. Davis, in a good manywords, said she considered this procedure undemocratic. “Weapologize, and when you go out, please go by any door youwant,” Mr. McCormack said, but Mrs. Davis, clearlyunappeased, went on speaking. And now the mood of farcewas heightened when it became clear that the Soss-Gilbertfaction had decided to abandon all efforts to keep ranks closedwith Mrs. Davis. Near the height of her oration, Mr. Gilbert,looking as outraged as a boy whose ball game is being spoiledby a player who doesn’t know the rules or care about thegame, got up and began shouting, “Point of order! Point oforder!” But Mr. McCormack spurned this offer of parliamentaryhelp; he ruled Mr. Gilbert’s point of order out of order, andbade Mrs. Davis proceed. I had no trouble deducing why hedid this. There were unmistakable signs that he, unlike anyother corporate chairman I had seen in action, was enjoyingevery minute of the goings on. Through most of the meeting,and especially when the professional stockholders had the floor,Mr. McCormack wore the dreamy smile of a wholly bemusedspectator.
Eventually, Mrs. Davis’s speech built up to a peak of bothvolume and content at which she began making specificallegations against individual Comsat directors, and at this pointthree security guards—two beefy men and a determined-lookingwoman, all dressed in gaudy bottle-green uniforms that mighthave been costumes for “The Pirates of Penzance”—appeared atthe rear, marched with brisk yet stately tread up the centeraisle, and assumed the position of parade rest in the aislewithin handy reach of Mrs. Davis, whereupon she abruptlyconcluded her speech and sat down. “All right,” Mr.
McCormack said, still grinning. “Everything’s cool now.”
The guards retired, and the meeting proceeded. Mr.
McCormack and the Comsat president, Joseph V. Charyk, gavethe sort of glowing report on the company that I had grownaccustomed to, Mr. McCormack going so far as to say thatComsat might start showing its first profit the following yearrather than in 1969, as originally forecast. (It did.) Mr. Gilbertasked what fee, apart from his regular salary, Mr. McCormackreceived for attending directors’ meetings. Mr. McCormackreplied that he got no fee, and when Mr. Gilbert said, “I’mglad you get nothing, I approve of that,” everybody laughedand Mr. McCormack grinned more broadly than ever. (Mr.
Gilbert was clearly trying to make what he considered to be aserious point, but this didn’t seem to be the day for that sortof thing.) Mrs. Soss took a dig at Mrs. Davis by sayingpointedly that anyone who opposed Mr. McCormack ascompany chairman was “lacking in perspicacity;” she did note,however, that she couldn’t quite bring herself to vote for Mr.
Welch, the former chairman, who was now a candidate for theboard, inasmuch as he had ordered her thrown out last year.
A peppy old gentleman said that he thought the company wasdoing fine and everyone should have faith in it. Once, whenMr. Gilbert said something that Mrs. Davis didn’t like and Mrs.
Davis, without waiting to be recognized, began shouting herobjection across the room, Mr. McCormack gave a shortirrepressible giggle. That single falsetto syllable, magnificentlyamplified by the chairman’s microphone, was the motif of theComsat meeting.
On the plane returning from Washington, as I was musing onthe meetings I had attended, it occurred to me that if therehad been no professional stockholders at them I wouldprobably have learned almost as much as I did about thecompanies’ affairs but that I would have learned a good dealless about their chief executives’ personalities. It had, after all,been the questions, interruptions, and speeches of theprofessional stockholders that brought the companies to life, ina sense, by forcing each chairman to shed his officialportrait-by-Bachrach mask and engage in a human relationship.
More often than not, this had been the hardly satisfactoryhuman relationship of nagger and nagged, but anyone lookingfor humanity in high corporate affairs can’t afford to pick andchoose. Still, some doubts remained. Being thirty thousand feetup in the air is conducive to taking the broader view, and,doing so as we winged over Philadelphia, I concluded that, onthe basis of what I had seen and heard, both companymanagements and stockholders might well consider a lessonKing Lear learned—that when the role of dissenter is left to theFool, there may be trouble ahead for everybody.