Questions & Answers

Pepsi-Cola had not been hitting the spot. Earnings had slipped, the last quarterly dividend had been omitted, and within a year Pepsi's stock on the New York Stock Exchange had skidded from 24 1/8 to as low as 7 1/2 a share. Pepsi's President Walter S. Mack Jr. thought it time to hire halls in New York and Chicago and tell stockholders the score.

For the 300 stockholders who gathered in Manhattan's Town Hall last week, President Mack had some more bad news. Pepsi's 1948 net had dropped to $3,152,817 (from $6,769,834 in 1947), and its first-quarter sales for 1949 were below those of the same period in 1948. Nevertheless, Mack was sure the worst of the company's postwar readjustment would be over in another six months.

Bottles & Bonuses. Pepsi has cut costs (minor item: its annual art awards have been abandoned), and the company has a new eight-ounce bottle to sell for 5-c- at race tracks and ball parks. For home consumption, there is still the old twelve-ounce bottle (new price: 6-c-). Pepsi also has a new syrup pump for drugstores; at the first plunge, it plays the Pepsi jingle. To cash in on these new ideas, Mack has brought Coca-Cola Vice President Al Steele into the company as sales boss.

Now, asked President Mack, did anybody have any questions? One stockholder, who had not been wasting his time on soft drinks, staggered down the center aisle and peered blearily at Mack. Why, he demanded, had executive bonuses been maintained while the dividend had been passed? Said Mack: bonuses had been scaled down according to the earnings (in 1948, Mack got $20,000 on top of his $104,000 salary). Anyway, he added, good executives "don't come a dime a dozen."

"Where's Steele?" asked the stockholder, looking over the executives seated on the stage. "Oh, there y'are, Steele. Glad t'see ya, ole boy. G'luck."

Shots & Shares. After he stumbled off, another stockholder popped up. Why not put vending machines in high-school cafeterias? Mack said he would try. Why had Pepsi's simple offices in Long Island City been sold, and expensive, midtown Manhattan offices rented instead? Said Mack: renting was cheaper and, anyhow, shouldn't executives have dignified offices? The stockholders applauded.

One more shot was taken at Mack's salary. Did he think he was worth more than the President of the U.S. Said Mack smoothly: "I don't put myself in a class with Mr. Truman."

Finally, everyone had another round of Pepsi, and the pepped-up stockholders went home. Stock-market traders had joined the party for a little whirl; this week, Pepsi rose to $12 a share.

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