Henderson daily dispatch. (Henderson, N.C.) 1914-1995, 1939-02-10

Kate Furman.
interest in the affairs of their com
panies. Investors have been squeezed
long enough by grating politicians,
selfish labor-leaders, and unscrupul-
Gus 'insiders'.
Chairman William Douglas of the S.
E. c.. is starting public thinking along
this line. He recognizes that the pub
lication of transactions of officers and
| directors in the securities of their
companies is only one STEP It has
stopped a certain amount of inside"
security manipulation. But that alone
will not give us better management.
So he has done two important things
recently:
1. He has required a new proxy
form in order to make boards of di-
rectors more careful of their actions.
2. He has suggested that boards of
directors be composed of manage
ment, plus professional directors
who are experts in their line.
New Proxy Form.
Stockholders will recall the old type
of annual proxy. By signing the
little card, the stockholders empow-
cred several of the directors to vote
his stock in any way they wished at
the annual meeting. The new proxy
requires giving information on what
is to be voted upon; it lists the di-
rectOrs and the amount of company
securities they own; and certain other
interests the directors may have in
he company. Cor instance, a direc-
or may also be the %company's attor-
ley. If so, his legal fees must be re-.
,orted)
This is a big step. 1t will open many
a stockholders eye. My forecast is
that the corporation lawyer will cut
lis fee if he continues to be direc-
tor. Many board members will buy
some stock in the company they are
directing" or resign in favor of 9TH
ers who do have a substantial finan-
cial interest in the company Finally
the stockholder, before he gives his
proxy, will know the nature of the
business to be voted upon at the meet
ing
professional" Directors.
Mr.. Douglas second step is still in
the "talking-it-over'' stage. To en-
ploy PROFESSIONAL directors would
he hitting at the same trouble that
[ wanted to correct when | recon-
nended a stockholders union last
year. Currently, many boards of di-
ectors are composed of three or four
managing officers of the company
plus two or three outside directors.
The latter are often just "big names.
Many of these men know little about
he company's operations and may
have no financial interest in it,
1t is not their fault. The directors
Fees are so small they cannot afford
% give time to the company's affairs
They simply okay what the manage
ment recommends. Many of these
members go on the board for contact
Information and for the honor of be-
ing "big shot" Chairman Douglas
directors, however, would be experts
in their line. They would have moth
, ing else to do but be directors. They
would represent not only stockhold-
ers but workers and customers. They
would be well-paid for their Job. They
would make the board of directors
what it is supposed to be: A check on
the officers and operating policies of
he company
All Depends On Character.
l am not advocating that we should
have new legislation covering this.
We have enough laws. 1 would hate to
see the government get any further
into business. 1t has made a terrible
flop of most of the industries it has
tried to regulate. Maybe the reason
is because the personnel has been
selected by political favoritism rath-
er than by ability. SO long as the
''spOils" system exists, we cannot ex-
Dect much from government regula-
lion.
A general system of professional
directors would be a great boon to the
investor, provided they are men of
character. No law or S. E. C. ruling.
however, can make men able. honest.
and courageous. Hence, I keep re-
peating that Americas greatest need
| is for a spiritual revival.
Losses Can Be Avoided.
In the meantime, the small stock
holder must not lay the blame for al;
his losses on bad management. Many
of our companies are run with amaz
ing efficiency, honesty and ability.
The small investor, who has "taken
a licking, should ask himself if he
has violated any of the accompany-
ing ten Investment Don'ts". These
are responsible for the majority of
investment losses.
Ten Investment "DOn'ts".
Roger Babson says 35-years' exper-
fence in studying investors portfolios
shows the following ten errors are the