Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-21
PROFIT
BY BONUS SYSTEM
Growth of Firms Results in
Huge Rewards for Many
Officials.
BY JOHN r. SINCLAIR.

Special DlSpatcn TO Ine star.
NEW YORK, July 2l.-Eugene
Grace's salary as president of the
Bethlehem Steel is $4,000 year. But
his bonus is something to dream
about, for it adds from $750,0O0 to
81 500, 900 more to his income an
nuaIly.
Mr.. Grace, testifying about this
bonus, said: The factor used to de-
termine my bonus is y per cent"
"One and one-half per cent of what?"
he was asked.
Il don't know" answered Mr.. Grace.
1t now develops that certain officers
of Bethlehem Steel receive as bonus
per cent of the net profits annually,
in addition to salaries. AS the COM
pany earned $49,252, 900 in 1929. then
So, 800 900 was the bonus melon" which
was shared by these certain officers and
heads of departments. Not bad
Sehwab'S Salary.
How many American executives re-
ceive $l.000,000 year-as compenSa-
ton? Not in salary, or bonus, or in
special favored stock arrangements, but
in combination of all three.
The first thing j. P. Morgan discov-
cred when he began to reorganize the
United States Steel Corporation was
that Charles M. Schwab was receiving
81 900, 900 a year as salary from Andrew
Carnegie Mr. Morgan summoned Mr.
Schwab handed him the contract and
asked him what could be done about it,
This" replied MT SchWab, tearing
1t up and throwing it into the waste
basket.
Yes, Mr.. Morgan sent the steel presi-
dent enough steel bonds to buy up the
contract, but for the year before Mr..
Schwab tore up the contract he received
81 1900, 900 from the shrewd Scotchman,
Carnegie.
Mr.. Grace, as president of the Bethle-
hem Co., of which Mr.. Schwab is the
chairman of the board, is known to
have received as high as 100000 in
one year for his services.
other steel men, such as the late
Judge E. H. Gary and James A. Farrell
Of the United States Steel, are under
stood to have received more than ST.
900 900 several years in succession.
But the motor industry has probably
pushed more executives into the million
aire class than has any other. 1t was
John j. Raskob who in 1928 said
They say that Carnegie made 80 mil
lionaires over period OF years. Well,
we made 80 millionaires in four years
in General Motors. In 1928 we put into
execution modern ideas of the relation
ship of capital labor and management,
making MANAGEMENT as important as
either, and working on the principles
that brains should buy capital rather
than capital should buy brains
I'VE induced 30 of our senior and
Junior executives to go into debt to buy
General Motors stock. We got them to
pledge themselves to buy $4,000, 600
worth. They put up S5,00O,OOo ana
borrowed $2l, 100000. That STOCK Is
worth today $250,000,000. All ooiiga-
lions have been paid of, and every one
of those men, even the juniors, who put
in SOS, 900, are millionaires.
Profits in Stocks.
Here is a case where compensation
did not come from salary or bonus, put
from a joint profit made in the rise Oh
particular stock.
Among the men who shared In these
huge General Motors profits and en-
tered the millionaire class were the
Fisher brothers, Fred j., Charles T,
William A. and Lawrence P; also G. >.
Mott, A. P. Sloan and Pierre s. du
Point,
Walter p. Chrysler was among the
first of the million dollar year auto
mobile executives. John N. WHY'S, now
American Minister to Poland, paid him
$750, 900 year salary ana later HloNeu
the figure up to cold million.
c. w. Nash of the Nash Motor Co,
who succeeded w. C. Durant as prest-
dent of General Motors, has often had
an annual income exceeding million
dollars. A. r. Erskine of the Stude-
baker Corporation is another. The same
holds for w. C. Durant. the Little Ma
poleon" of the industry.
Bankers salaries are not so large, but
the perquisites help lot. Charles E,
Mitchell, president of the National City
Bank, is understood to have reached the
million "A year class. The same goes for
A. H. Wiggin of the Chase National and
Percy johnson of the Chemical Ma
tional, both of New York, although the
facts in the case of bankers are hard
to get.
Copyright 1890 by North American News
paper Alliance.)