Evening star., 1954-05-09

Young and Mr.. White issued proxy
statements. These named each sides
board candidates and set out the
general aspirations Of the two sides.
Opposing Slotes
Mr.. Young's statement was inter-
esting for the names it contained.
In addition to MessrS. Young and
Kirby and the two Texans, the list
included Andrew Van Pelt, long
time Young associate; Eugene Pulli-
am, midwestern publisher; William
H. LanderS, a retired locomotive
engineer who owns 80 shares, and
Mrs. Lila Bell Acheson Wallace, CO.
owner and editor of Readers Digest.
Most observers, not sensing in Mrs.
Wallace's background any strong
element Of railroad know-how, ana
lyzed her nomination as direct bid
for the female vote.
The White slate was unremark-
able. 1t contained the Is present di-
rectorS, including two VanderbiltS,
a Whitney, an Aldrich and former
Postmaster General James A. Farley,
now head of Coca-Cola Export.
Letters accompanying the proxy
statements were less innocuouS than
the basic documents.
The Young letter, for example,
charged a poor operating record"
at Central, and pointed to increased
earnings at Allegheny as evidence
of good management by Mr.. Young.
The inference was left to oe drawn
that, having beefed up a holding
company, Mr.. Young could do the
same for an operating company. The
letter also blasted Central for hir-
ing "a high-powered publicity firm
and professional proxy SQlici-
tors to sway your vote in their
favor" Finally, Mr.. Young pledged
to serve "for one dollar q year as
chairman of the board, but not as
principal operating officer"
[Mr. Young explained to The
Star last week that this meant
he intended to hire an operating
man, not that he would charge
extra for running the railroad
himSelf.]
The White letter scored the
Young drive to take over Central
as based on propaganda, publicity,
:. false promises" It defended the
present management as having made
significant gains for the company in
Mr.. Whites relatively short tenure.
The Proxies
A third document that went to
each shareowner at this time was
the proxy itself. This simply turns
over the voting power to one group
or the other-but is revocable at
will. Any one giving his proxy one
day can invalidate it the next
simply by issuing a later proxy in
favor of the opposition.
This potential perishability of
proxies has kept both sides on the
Qui UiDe and has caused the pre-
liminary stage of the battle to be
long and hard-fought. Aggressive
solicitation will continue until the
meeting is gaveled to order May 26.
Proxy fights are common enough
in American business to create a
need for proxy solicitation firms.
One such is GeorgeSon & Co. (com-
monty pronounced "Jorgensen"),
which has been retained by Central
at an estimated $4,000 to keep tabs
on enough votes to assure victory
at Albany.
Concurrently with the retention
of GeorgeSon, Central hired Robin
flanagan Associates for a pub
lie relations job that probably will
run in excess Of $4,000.
Further, Central has purchased
large newspaper advertisements
around the country. Through April
80. total advertising cost was cal
culated at $141 1857.
Youno's Suit
Because the company is picking
up this check, Mr.. Young has fled
suit against the directors. ostensibly
to recover misspent money. The
case was in pre-trial examination
last week, at which time Mr.. White
testified that the railroad actually
is spending less on publicity this
year-including all proxy fight costs
than it did in 1852 and 1853 when
there were no election contests.
The Centrals justification Of
these expenditures from the COM
pany's funds is that the directors
are charged with guarding the share
owners best interests, and that these
interests would not be served by q
Young victory. Therefore, Central
says. it is completely proper to pub
licize the incumbents' point Of view
and solicit proxies to maintain a
healthy status quo.
A further answer to Mr.. Young
by Mr.. White is that Allegheny, too,
is using professional proxy solicitors.
Mr.. Young has contended that the
would-be directors are paying their
own expenses, but Mr.. White points
to a cryptic sentence in the Young
groups proxy statement which
reads:
Whether Allegheny and the nom
inees will seek any reimbursement
from the Central Of all or any part
of their solicitation expenses will be
determined in the light Of the re-
suits of the litigation instituted by
Messrs. Young and Kirby against
your present directors referred TO