Tobacco Performance

In a barren fourth-floor office at No. 75 Montgomery St., Jersey City, N. J. some 200 men & women representing the 40,000 stockholders of American Tobacco Co. assembled last week for conference. They had been invited by their president, George Washington Hill, to elect directors and to approve the acts of the directors in granting stock-purchasing privileges to officials, especially a grant of 53,000 shares at $25 a share made in 1930 (when the stock was selling at $112).

Paul Hahn, assistant to the president, read to the assemblage a letter from President Hill: "The proposals involve a vote of confidence in me and my administration. ... I expect and hope that they will be discussed with complete freedom."

The discussion began:

A stockholder demanded to know why Mr. Hill was absent from the meeting for the second year in succession. (Mr. Hill was "a very busy man.'') An angry voice: "He is retreating under fire. He should be here to answer questions."

A stockholder moved that the meeting adjourn till Mr. Hill arrived from his Manhattan office. A loud chorus of "Ayes." Richard J. Boylan, director and holder of the majority proxies, shook his head. Motion defeated.

A stockholder moved that complete minutes of the meeting should be kept by a stenographer and sent to all absentees. Shouts of "Aye" from 100 throats, male & female. Asked Mr. Hahn, "Those opposed?" Mr. Boylan said calmly, "The motion is lost."

"What is this, a steamroller?"

"Are you afraid to face us?"

"Are you trying to steal the whole business?"

"Robbers!"

"Thieves!"

Robert Harris McCarter, former Attorney General of New Jersey, a small stockholder siding with the majority, took the floor: "It is most unfortunate that members of the board have been referred to here in most unparliamentary language. Let's consider the character of these men --are they really thieves and thugs, or are they efficient business men who have been putting up a wonderful performance in the conduct of the affairs of this company?"

Richard Reid Rogers, once attorney of the Panama Canal Commission, author of several legal attacks on American Tobacco's stock plans, demanded for the minority a place on the board of directors. Instantly another stockholder suggested electing Mr. Rogers as the minority's director. "Oh, no you don't!" Mr. Rogers shouted. "You are not going to throw me into that den of thieves!"

When the vote on directors was taken all the old directors including George Washington Hill were reelected. Then the really serious business of the meeting, the approval of the stock plans, was broached. Of 312,000 shares of Class B stock set aside in 1930 for sale to officials of the company. 53,800 shares had been allotted; 13,440 to Mr. Hill, 16,685 to vice presidents. Two months ago Mr. Hill renounced his allotment, thereby depriving himself of a potential profit of $380,000 (the market price then was 53 3/8).* He announced at the time that he did this to establish the principle of the fairness of the stock plan, which he would support to the last ditch. Last week with the proxies of 30,000 stockholders in the bag, the vote on approval of the stock allotments was a formality. Against approving the stock plan: 104,000. For Mr. Hill: 3,336.000.

* Mr. Hill did not leave himself poor. His remuneration in the last four years was: Cash Bonus based Salary on Profits 1930 $168,000 $842,508 1931 168,000 891,570 1932 120,000 669,500

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