Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-21
{. c. GRACE BONUS
HELD S1,623,E
Bethlehem Steel President
Testifies on Amount in
Merger Hearing.
~ the Associated Press,

Bethlehem.
The bonus was in addition 10 tho stip-
ulated $4,000 annual salary, to which
he testified last week.
Revelation of Grace's compensation
for last year followed hard-fought
three-day legal battle.
Attorneys for the Cyrus s. Eaton in
terests opposed to the merger of the
Youngstown and Bethlehem companies,
sought the testimony in support of
their contention that the Bethlehem
company paid Craze unwarranted
amounts. and that these amounts were
fraudulently concealed from the stock
HOLD re of the YOUNGSTOWN company
when they ratified the merger last
April.
Objection Overruled.
An objection by defense attorneys to
the question about Grace's bonus was
considered over the week end by Judge
David G. Jenkins and overruled shortly
after court opened today. The court
held that il.asmuch as Grace testified
his present bcnus arrangement had been
in effect for the past five and one-half
years he woulA be allowed to state the
amount
ATIhCE htlGi ttNllliGu titdj StklGS 1890
he has received a bonus of 1919 per
cent of the net earnings after fixed
charges, less an amount equal TO the
annual preferred dividend. but before
depreciation. The earnings of Bethle-
hem we're SAC. 600. 900 in 1929, making
his bonus Sl,623,753.
He explained that if earnings were
low he was entitled only to a bonus
of y per cent, but explained that
since 1925 earnings had been high
enough to permit the 1919 per cent.
In the argument preceding Grace's
testimony on his bonus Attorney F. H.
Wood of defense counsel argued that
the total bonus payments and per-
centages in Bethlehem should serve
whatever purpose the plaintiffs had
without idle curiosity and parading of
figures" Wood argued further that 10
give out the amount of individual
bonuses would break down the morale
of the Bethlehem Corporation.
Luther Day OF Cleveland, chief of the
Eaton attorneys, charged in his reply
'sSlat Grace financed a loan of $500. 900
TO PickandS, Mather & Co, ore firm,
to buy Youngstown company stock
prior to the merger ratification
Would Be Increased.
"Grace's bonus would be increased by
the acquiring of youngstown Sheet 81
Tube" he said. youngstown stock
holders are entitled to all facts condi-
tions and details in regard to this"
Continuing the questioning of the
Bethlehem head after the amount of
the 1929 bonus had been stated, ,Attor-
ney Day asked
"You stated previously that you re-
ceived. $4,000 a year,"
Grace replied in the affirmative.
Isn't 1t a fact that you receive a
IL -
mo" he replied, mot as 1 under
stand It,"
do you receive s12,5oO each
month";" continued Day.
Not as 1 understand it," was the
answer
Grace then explained that he received
check for $1,000 monthly as salary
and later when calculated, his bonus
check.
Corrects His Testimony.
Following a recess Grace corrected his
testimony to say that he does receive
check for S12,500 the first of every
month. OF this, he said 81 900 is for
salary and the remaining s11.500 is
deducted from his bonus when IL Is
calculated
After that his testimony concerning
negotiations leading up to the merger
He stated his first discussion about a
merger with the Youngstown company
was with Charles NJ. Schwab, chairman,
of Bethlehem.
The first tirne he talked to any one
connected with the Youngstown COM
pany. he said, was during trip to ore
reserves Of the Northwest in 1926 or
1927 with James A. Campbell. chair
man, and Fl. @. Dalton, director of
youngstown, present.
The talk was general, Grace testified.
Inland Deal Discussed.
when again did you talk to any one
about a merger with Sheet & Tube?"
asked Day.
THE first part of January" said
Grace, referring to the present year.
Mr.. James A. Campbell came to my
apartment at the Plaza Hotel in New
York City and had breakfast with me.
He asked me If we were interested in
n merger and told him I wouldn't ex-
press myself one way or another.
Il knew that he had some arrange
fnent with Island tsteel company.
said that until such time as knew he
had no other irons in the fire / wouldn t
express myself.
"Mr. Campbell felt that he was not
entirely free from Inland. ! told him
that under those conditions l did not
want to express myself in any way |
told him that If he was subsequently
free from other negotiations 1 would
talk concerning the merger"
Next he testified to a meeting with
Campbell and Dalton on January IS
He said the meeting lasted nearly two
hours and that only the advantages OF
q merger were discussed. He related the
discussion in detail. It was agreed, he
said, that due 10 the location of the
properties of the two companies the
ability TO distribute products would be
Improved. Bethlehem had a limited pro.
auction of pipe, he stated, while the
youngstown company had oyerproduc-
ton.
Would Follow Policy.
Bethlehem the president said, hat
beer putting into effect a policy o!
gradually building up lighter products
but had unfortunately acquired plant!
with heavier products. The merger, HI
said, would have brought about an idea
ratio Of IS per cent heavy products anC
IS per cent light products.
The combination of the two com.
panies, he continued, would have Gre
ated billion-dollar corporation anc
placed it in a position for more efh'
Gent competition with the Unitec
States Steel Corporation. Among tht
advantages which he said Bethlehem
would bring TO the youngstown com.
pany was a better cash position ano
Shipping on all waters.
1t was decided at the conference
Grace said, that Price. WaterhouSe &
Co. should be employed TO do the au'
diting because the firm had for many
years been working on the books o.
both companies.
He related another meeting Of F'ebru.
airy IS, after Price, Waterhouse q Co
announced its report ready The ratio!
figured, he related, ranged from / L
i.27 to /,