by John Brooks
Speaking, appropriately, with a faint trace of a Brooklyn accent, Chairman John E. McKeen welcomed the stockholders as “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 said that on the way out everyone present would be given a big free-sample kit of Pfizer consumer products, such as Barbasol, Desitin, and Imprévu. Wooed thus by endearments and the promise of gifts, and further softened up by the report of President John J. Powers, Jr., on current operations (records all around) and immediate prospects (more records expected), the most intransigent professional stockholder would have been hard put to it to mount much of a rebellion at this particular meeting, and, as it happened, the only professional present seemed to be John Gilbert, brother of Lewis. (I learned later that Lewis Gilbert and Mrs. Davis were in Cleveland that day, attending the U.S. Steel meeting.) John Gilbert is the sort of professional stockholder the Pfizer management deserves, or would like to think it does. With an easygoing manner and a habit of punctuating his words with self-deprecating little laughs, he is the most ingratiating gadfly imaginable (or was on this occasion; I’m told he isn’t always), and as he ran through what seemed to be the standard Gilbert-family repertoire of questions—on the reliability of the firm’s auditors, the salaries of its officers, the fees of its directors—he seemed almost apologetic that duty called on him to commit the indelicacy of asking such things. As for the amateur stockholders present, their questions and comments were about like those at the other meetings I’d attended, but this time their attitude toward the role of the professional stockholder was noticeably different. Instead of being overwhelmingly opposed, they appeared to be split; to judge from the volume of clapping and of discreet groaning, about half of those present considered Gilbert a nuisance and half considered him a help. Powers left no doubt about how he felt; before adjourning the meeting he said, without irony, that he had welcomed Gilbert’s questions, and made a point of inviting him to come again next year. And, indeed, during the later stages of the Pfizer meeting, when Gilbert, in a conversational way, was praising the company for some things and criticizing it for others, and the various members of the board were replying to his comments just as informally, I got for the first time a fleeting sense of genuine communication between stockholders and managers.
THE Radio Corporation of America, which had held its last two meetings far from its New York headquarters—in Los Angeles in 1964, in Chicago in 1965—reserved the current trend even more decisively than Pfizer by convening this time in Carnegie Hall. The entire orchestra and the two tiers of boxes were completely filled with stockholders—about twenty-three hundred of them, of whom a strikingly larger proportion than at any of my other meetings was male. Mrs. Soss and Mrs. Davis were on hand, though, along with Lewis Gilbert and some professional stockholders I hadn’t seen before, and, as with Pfizer, the company’s whole board of directors sat on the platform, where the chief centers of attraction in R.C.A.’s case were David Sarnoff, the company’s seventy-five-year-old chairman, 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: the evident respect, amounting almost to veneration, of the stockholders for their celebrated chairman, and an unaccustomed disposition of the amateur stockholders to speak up for themselves. The elder Mr. Sarnoff, looking hale and ready for anything, conducted the meeting, and he and several other R.C.A. executives gave reports on company operations and 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 a jolt on one occasion, though, when I heard Walter D. Scott, chairman of R.C.A.’s subsidiary the National Broadcasting Company, say in connection with his network’s television programming that “creative resources are always running ahead of demand.”
No one objected to that statement or to anything else in the glowing reports, but when they were over the stockholders had their say on other matters. Mr. Gilbert raised some favorite questions of his about accounting procedures, and a representative of R.C.A.’s accountants, Arthur Young & Co., made replies that seemed to satisfy Mr. Gilbert. A Dickensian elderly lady, who identified herself as Mrs. Martha Brand and said she held “many thousands” of shares of R.C.A. stock, expressed the view that the accounting procedures of the company should not even be questioned. I have since learned that Mrs. Brand is a professional stockholder who is an anomaly within the profession, in that she leans strongly toward the management view of things. Mr. Gilbert then advanced a proposal for the adoption of cumulative voting, supporting it with about the same arguments that Mrs. Soss had used at the G.E. meeting. Mr. Sarnoff opposed the motion, and so did Mrs. Brand, who explained that she was sure the present directors always worked tirelessly for the welfare of the corporation, and added this time that she was the holder of “many, many thousands” of shares. Two or three other stockholders spoke up in favor of cumulative voting—the only occasion at any meeting on which I saw stockholders not easily identifiable as professionals speak in dissent on a matter of substance. (Cumulative voting was defeated, 95.3 per cent to 4.7 per cent.) Mrs. Soss, still in as mild a mood as in Atlanta, said she was delighted to see a woman, Mrs. Josephine Young Case, sitting on the stage as a member of the R.C.A. board, but deplored the fact that Mrs. Case’s principal occupation was given on the proxy statement as “housewife.” Couldn’t a woman who was chairman of the board of Skidmore College at least be called a “home executive”? Another lady stockholder set off a round of applause by delivering a paean to Chairman Sarnoff, whom she called “the marvellous Cinderella man of the twentieth century.”
Mrs. Davis—who had earlier objected to the site of the meeting on the ground, which I found dumfounding, that Carnegie Hall was “too unsophisticated” for R.C.A.—advanced a resolution calling for company action “to insure that hereafter no person shall serve as a director after he shall have attained the age of seventy-two.” Even though similar rulings are in effect in many companies, and even though the proposal, not being retroactive, would have no effect upon Mr. Sarnoff’s status, it seemed to be aimed at him, and thus Mrs. Davis demonstrated again her uncanny knack of playing into management’s hands. Nor did she appear to help her cause by putting on a Batman mask (the symbolism of which I didn’t grasp) when she made it. At all events, the proposal gave rise to several impassioned defenses of Mr. Sarnoff, and one of the speakers went on to complain bitterly that Mrs. Davis was insulting the intelligence of everyone present. At this, the serious-minded Mr. Gilbert leaped up to say, “I quite agree about the silliness of her costume, but there is a valid principle in her proposal.” In making this Voltairian distinction, Mr. Gilbert, to judge from his evident state of agitation, was achieving a triumph of reason over inclination that was costing him plenty. Mrs. Davis’s resolution was defeated overwhelmingly; the margin against it served to end the meeting with what amounted to a rousing vote of confidence in the Cinderella man.
CLASSIC farce, with elements of slapstick, was the dominant mood of the meeting of the Communications Satellite Corporation, with which I wound up my meeting-going season. Comsat is, of course, the glamorous space-age communications company that was set up by the government in 1963 and turned over to public ownership in a celebrated stock sale in 1964. Upon arriving at the meeting site—the Shoreham Hotel, in Washington—I was scarcely startled to discover Mrs. Davis, Mrs. Soss, and Lewis Gilbert among the thousand or so stockholders present. Mrs. Davis, decked out in stage makeup, an orange pith helmet, a short red skirt, white boots, and a black sweater bearing in white letters the legend “I Was Born to Raise Hell,” had planted herself squarely in front of a battery of television cameras. 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 possible from the televisi
on cameras. Considering that Mrs. Soss does not ordinarily seem to be averse to being photographed, I could write down this choice of seat only as a hard-won triumph of conscience akin to Mr. Gilbert’s at Carnegie Hall. As for Mr. Gilbert, he took a place not far from Mrs. Soss, and thus, of course, a long way from Mrs. Davis.
Since the previous year, Leo D. Welch, the man who had conducted the 1965 Comsat meeting with such a firm hand, has been replaced as chairman of the company by James McCormack, a West Point graduate, former Rhodes Scholar, and retired Air Force general with an impeccably polished manner, who bears a certain resemblance to the Duke of Windsor, and Mr. McCormack was conducting this year’s session. He warmed up with some preliminary remarks in the course of which he noted—-smoothly, but not without emphasis—that as for the subject of any intervention that a stockholder might choose to make, “the field of relevance is quite narrow.” When Mr. McCormack had finished his warmup, Mrs. Soss made a brief speech that may or may not have come within the field of relevance; I missed most of it, because the floor microphone supplied to her wasn’t working right. Mrs. Davis then claimed the floor, and her mike was working all too well; as the cameras ground, she launched into an earsplitting tirade against the company and its directors because there had been a special door to the meeting room reserved for the entrance of “distinguished guests.” Mrs. Davis, in a good many words, said she considered this procedure undemocratic. “We apologize, and when you go out, please go by any door you want,” Mr. McCormack said, but Mrs. Davis, clearly unappeased, went on speaking. And now the mood of farce was heightened when it became clear that the Soss-Gilbert faction had decided to abandon all efforts to keep ranks closed with Mrs. Davis. Near the height of her oration, Mr. Gilbert, looking as outraged as a boy whose ball game is being spoiled by a player who doesn’t know the rules or care about the game, got up and began shouting, “Point of order! Point of order!” But Mr. McCormack spurned this offer of parliamentary help; he ruled Mr. Gilbert’s point of order out of order, and bade Mrs. Davis proceed. I had no trouble deducing why he did this. There were unmistakable signs that he, unlike any other corporate chairman I had seen in action, was enjoying every 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 bemused spectator.
Eventually, Mrs. Davis’s speech built up to a peak of both volume and content at which she began making specific allegations against individual Comsat directors, and at this point three security guards—two beefy men and a determined-looking woman, all dressed in gaudy bottle-green uniforms that might have been costumes for “The Pirates of Penzance”—appeared at the rear, marched with brisk yet stately tread up the center aisle, and assumed the position of parade rest in the aisle within handy reach of Mrs. Davis, whereupon she abruptly concluded 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, gave the sort of glowing report on the company that I had grown accustomed to, Mr. McCormack going so far as to say that Comsat might start showing its first profit the following year rather than in 1969, as originally forecast. (It did.) Mr. Gilbert asked what fee, apart from his regular salary, Mr. McCormack received for attending directors’ meetings. Mr. McCormack replied that he got no fee, and when Mr. Gilbert said, “I’m glad you get nothing, I approve of that,” everybody laughed and Mr. McCormack grinned more broadly than ever. (Mr. Gilbert was clearly trying to make what he considered to be a serious point, but this didn’t seem to be the day for that sort of thing.) Mrs. Soss took a dig at Mrs. Davis by saying pointedly that anyone who opposed Mr. McCormack as company 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 the board, inasmuch as he had ordered her thrown out last year. A peppy old gentleman said that he thought the company was doing fine and everyone should have faith in it. Once, when Mr. Gilbert said something that Mrs. Davis didn’t like and Mrs. Davis, without waiting to be recognized, began shouting her objection across the room, Mr. McCormack gave a short irrepressible giggle. That single falsetto syllable, magnificently amplified by the chairman’s microphone, was the motif of the Comsat meeting.
On the plane returning from Washington, as I was musing on the meetings I had attended, it occurred to me that if there had been no professional stockholders at them I would probably have learned almost as much as I did about the companies’ affairs but that I would have learned a good deal less about their chief executives’ personalities. It had, after all, been the questions, interruptions, and speeches of the professional stockholders that brought the companies to life, in a sense, by forcing each chairman to shed his official portrait-by-Bachrach mask and engage in a human relationship. More often than not, this had been the hardly satisfactory human relationship of nagger and nagged, but anyone looking for humanity in high corporate affairs can’t afford to pick and choose. Still, some doubts remained. Being thirty thousand feet up in the air is conducive to taking the broader view, and, doing so as we winged over Philadelphia, I concluded that, on the basis of what I had seen and heard, both company managements and stockholders might well consider a lesson King Lear learned—that when the role of dissenter is left to the Fool, there may be trouble ahead for everybody.
11
One Free Bite
AMONG THE THOUSANDS of young scientists who were doing very well in the research-and-development programs of American companies in the fall of 1962 was one named Donald W. Wohlgemuth, who was working for the B. F. Goodrich Company, in Akron, Ohio. A 1954 graduate of the University of Michigan, where he had taken the degree of Bachelor of Science in chemical engineering, he had gone directly from the university to a job in the chemical laboratories of Goodrich, at a starting salary of three hundred and sixty-five dollars a month. Since then, except for two years spent in the Army, he had worked continuously for Goodrich, in various engineering and research capacities, and had received a total of fifteen salary increases over the six and a half years. In November, 1962, as he approached his thirty-first birthday, he was earning $10,644 a year. A tall, self-contained, serious-looking man of German ancestry, whose horn-rimmed glasses gave him an owlish expression, Wohlgemuth lived in a ranch house in Wadsworth, a suburb of Akron, with his wife and their fifteen-month-old daughter. All in all, he seemed to be the young American homme moyen réussi to the point of boredom. What was decidedly not routine about him, though, was the nature of his job; he was the manager of Goodrich’s department of space-suit engineering, and over the past years, in the process of working his way up to that position, he had had a considerable part in the designing and construction of the suits worn by our Mercury astronauts on their orbital and suborbital flights.
Then, in the first week of November, Wohlgemuth got a phone call from an employment agent in New York, who informed him that the executives of a large company in Dover, Delaware, were most anxious to talk to him about the possibility of his taking a job with them. Despite the caller’s reticence—a trait common among employment agents making first approaches to prospective employees—Wohlgemuth instantly knew the identity of the large company. The International Latex Corporation, which is best known to the public as a maker of girdles and brassiéres, but which Wohlgemuth knew to be also one of Goodrich’s three major competitors in the space-suit field, is situated in Dover. He knew, further, that Latex had recently been awarded a subcontract, amounting to some three-quarters of a million dollars, to do research and development on space suits for the Apollo, or man-on-the-moon, project. As a matter of fact, Latex had won this contract in competition with Goodrich, among others, and was thus for the moment much the hottest company in the space-suit field. On top of that, Wohlgemuth was somewhat discontented with his situation at Goodrich; for one thing, his salary, howeve
r bountiful it might seem to many thirty-year-olds, was considerably below the average for Goodrich employees of his rank, and, for another, he had been turned down not long before by the company authorities when he asked for air-conditioning or filtering to keep dust out of the plant area allocated to space-suit work. Accordingly, after making arrangements by phone with the executives mentioned by the employment agent—and they did indeed prove to be Latex men—Wohlgemuth went to Dover the following Sunday.
He stayed there a day and a half, borrowing Monday from vacation time that was due him from Goodrich, and getting what he subsequently described as “a real red-carpet treatment.” He was taken on a tour of the Latex space-suit-development facilities by Leonard Shepard, director of the company’s Industrial Products Division. He was entertained at the home of Max Feller, a Latex vice-president. He was shown the Dover housing situation by another company executive. Finally, before lunch on Monday, he had a talk with all three of the Latex executives, following which—as Wohlgemuth later described the scene in court—the three “removed themselves to another room for approximately ten minutes.” When they reappeared, one of them offered Wohlgemuth the position of manager of engineering for the Industrial Products Division, which included responsibility for space-suit development, at an annual salary of $13,700, effective at the beginning of December. After getting his wife’s approval by telephone—and it was not hard to get, since she was originally from Baltimore and was delighted at the prospect of moving back to her own part of the world—Wohlgemuth accepted. He flew back to Akron that night. First thing Tuesday morning, Wohlgemuth confronted Carl Effler, his immediate boss at Goodrich, with the news that he was quitting at the end of the month to take another job.
“Are you kidding?” Effler asked.