Ayer Airing

There never was an N. W. Ayer in the old Philadelphia advertising firm of N. W. Ayer & Son. The late Francis Wayland Ayer simply named the firm in honor of his father when he founded it in 1869. There are no Ayers at all in the firm today. Through the years the partnership of N. W. Ayer & Son stuck to its motto, "Keeping Everlastingly At It Brings Success," waxed rich on many & many a small account, some big ones like those of Ford Motor Co. and American Telephone & Telegraph. By 1928 the firm had grown so large that it built its own 13-story building on Philadelphia's West Washington Square, placing in the cornerstone the founder's personal Bible and a copy of the Saturday Evening Post autographed by Editor George Horace Lorimer.

Last week Ayer's solemn progress was rudely disturbed by one of those things the old firm so deplores in the affairs of its livelier corporate clients -a well-publicized fight for stock control. The year its new building was finished, N. W. Ayer & Son was converted into a corporation with a stock ownership limited to Ayer officers and employes. Control, how ever, continued to rest in the hands of President Wilfred Washington Fry until his death last summer (TIME, Aug. 3).

At the time of incorporation President Fry and four of his partners put part of their stock in a voting trust with an agreement, in effect, that when one of them died or retired the remaining certificate holders could: 1) buy his stock or 2) name another buyer. In practice, as the partners retired, the buyer elected was generally N. W. Ayer & Son, Inc., which now has 117,000 such shares in its treasury.

Largest single block of trusteed Ayer stock-234,000 shares -was held by President Fry. Current Ayer fight is primarily over the intra-corporate disposition of those shares following their owner's death.

Lined up on one side are four Ayer directors headed by Harry A. Batten, new Ayer president elected last fortnight. Now 39, President Batten entered the firm as an office boy at 15, worked up through the production and copy departments to a vice-presidency in 1929. He lives in a new $60,000 home in suburban Rosemont, takes direct part in the management of the Pennsylvania Working Home for Blind Men.

President Batten and Director Clarence L. Jordan each own 500 shares of the trusteed Ayer stock in addition to their other Ayer shares. Only other individual owner of trusteed stock is George H. Thornley, who has 39,000 shares. Director William M. Armistead, who returned to the Ayer board fortnight ago, was a partner in the original trust but had to sell out when he temporarily retired. Adman Thornley has been with Ayer for 30 years, is the only remaining partner of the original trust agreement. On the ground that he owns 39 times as many trusteed shares as Messrs. Batten & Jordan combined, he claims the right under the terms of the trust to buy the key stock block from the Fry estate.

According to President Batten & friends this right belongs to N. W. Ayer, the corporation, as owner of 117,000 trusteed shares. Last month they held a meeting for the 201 Ayer stockholders, put through a plan whereby the company allocated big blocks of the Fry stock to President Batten and Director Jordan on a deferred payment plan, undertook to buy the rest of the Fry stock for the company's treasury. The idea behind this plan was to equalize the holdings of four directors, including Adman Thornley. All the trusteed stock was voted in a block in favor of the plan, Trustee Thornley being unable to swing the other three trustees to his side. The final vote: 4,000 shares to 626,023 shares.

Meantime Adman Thornley was fired as Ayer vice president in charge of sales, though he is still a director. He set a lawyer to work to right his alleged wrongs. In ordinary corporate practice the argument that a company may not vote its own stock is watertight. In the Ayer case there is certainly room for legal debate because the question involves the exercise of an option under an agreement in which the corporation is now interested as a stockholder, not a stock issuer. To settle the question Adman Thornley announced last week that he had filed suit in the Philadelphia Court of Common Pleas.

The Batten plan, declared Mr. Thornley, was a "program by which certain of the corporation's stockholders, to the disadvantage of the others, would be privileged to obtain control of the company by use of the company's funds."

Snapped President Batten in a public counterattack: "In today's newspapers appears a statement purporting to emanate from George H. Thornley, formerly a vice president of N. W. Ayer & Son, Inc., to the effect that he has exercised an option to acquire stock control of this corporation. . . . Since he is seeking to establish this contention over the opposition of all parties concerned by litigation, the officers of the corporation are opposed to any attempt to try the case in the newspapers."

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