Ambush at Generation Gap

For an auto-parts company, Midas-International used to be a remarkable place to work. At its Chicago headquarters, Bach chamber music wafted from hidden loudspeakers, while Technicolor-plumed finches twittered in a giant cage. The boss, bumper-bald Gordon Sherman, 43, was in the office round the clock some days--and other days scarcely at all. A man of intense energy and occasional brilliance, he often worked at home, where he also liked to tend his orchids and hummingbirds or tootle his oboe and English horn. Occasionally he held executive meetings at a zoo, or in the office by candlelight. "A certain truth comes out at night that doesn't come out in the board room," he explained.

The whole stress in the company, as one former executive put it, was not so much on working hard and filling up time as on working smart and solving problems. Some of Sherman's executives were psychologists and sociologists, whom he had recruited with want ads in the Saturday Review and Psychology Today. "You can take a so-called good businessman, but you can't necessarily teach him to communicate," he said. "But if you take a man who somehow has learned to excel in the skills of communication, put him in a business suit and pay him a fair salary, then in short order he'll learn to read a financial statement."

Barrage from the Board. This unstructured management approach did not go over well with the company's founder and major stockholder, 72-year-old Nate Sherman, who is Gordon Sherman's father. Nate had started the firm in 1938, become known for dependable wholesale distribution in a generally haphazard field, and prospered in the postwar auto boom. He built the business into a $3.5-million-a-year operation by the time Son Gordon joined the organization in 1950. Gordon promoted the idea of starting Midas Muffler Shops --franchised retail outlets with specialists in trim uniforms. The Midas idea caught on quickly, and after sales hit $42 million in 1967--much of it from the muffler shops--Gordon laid down an ultimatum: he would resign if his father did not hand over the presidency. Reluctantly, Nate assented and stepped up to the chairmanship.

From his seat on the board, however, Nate kept up a steady barrage of criticism of his son's business methods. Last fall Gordon Sherman yielded to the sniping and resigned. But in March he mounted a proxy challenge that has acquired overtones of a Greek tragedy and a war of conflicting management philosophies.

Edifice Complex. As the battle neared a climax last week, the charges and countercharges flew fast. Gordon said that his father was dismantling the team that had led Midas to success. Since Gordon left the presidency, seven executives have been fired and another eight have resigned. Gordon argues that his father is too aged to run the company and that "his management is attuned to a small wholesale auto-parts distribution company." Adds Gordon: "The old man just won't let go."

Father Nate, who likes to compare himself with Golda Meir, publicly replied: "I'm a strong 72, with the blood pressure of a 40-year-old." He added that when Gordon ran the company, "he had people around him who were not qualified businessmen, people who never sold anything in their lives and never bought anything except clothes and food." As Nate told it, Gordon had plunged the company deeply into debt to finance poorly planned expansion. Partly as a result of this edifice complex. Nate contends, earnings fell from $3,600,000 in 1968 to $2,400,000 in 1969. They advanced last year to $2,600,000 on sales of $67 million.

Nate also complains that Gordon had alienated Midas dealers and customers through some of his extracurricular activities. Gordon had been channeling money from the company foundation into the activities of Community Organizer Saul Alinsky and Consumer Crusader Ralph Nader. After Gordon gave $300,000 last year to Nader's Center for the Study of Responsive Law, he said: "I told Nader it was O.K. if he put us out of the muffler and exhaust business, so long as he put all of our competitors out of business, too." Perhaps the crowning embarrassment for Nate came during the Chicago Seven conspiracy trial, when Gordon took Abbie Hoffman, William Kunstler and Norman Mailer to lunch at the Standard Club, staid bastion of Chicago's German-Jewish elite. Judge Julius Hoffman, lunching at a nearby table, retreated behind a pillar.

Matter of Trust. In the proxy fight, Gordon is supported by his mother, his two sisters, and at least 27 past and present Midas executives. Together they control 28% of the voting stock. Nate claims 21%, and another 19.5% is in trusts. Gordon has gone to court to enjoin a Chicago bank from voting the trust shares.

The vote is set for the annual meeting this week, but a meaningful count will probably be impossible until the legal status of the disputed trusts is cleared. Last week Nate won a personal victory. His wife, Beatrice, who had left him the day after Son Gordon quit, said she would be back home with Nate.

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