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The Columbia University Libraries reserve the right to refuse to accept a copying order if, in its judgement, fulfillment of the order would involve violation of the copyright law. Author: Bloomfield & Bloomfield Title : Stock participation plans for employees Place: Boston Date: [1 922] MASTER NEGATIVE * COLUMBIA UNIVERSITY LIBRARIES PRESERVATION DIVISION BIBLIOGRAPHIC MICROFORM TARGET ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD 268 B62 I Bloomfield & Bloomiield. Stock participation plans for employees; a survey by Industrial relations, Bloomfield 's labor digest. Boston, Mass., Bloomfield & Bloomfield, U922. 18 numb. 1. forms. 27i Type-written. cm Library of Congress Copyright A 658913 n HD2985.B5 r2i 22-15501 m RESTRICTIONS ON USE: TECHNICAL MICROFORM DATA FILM SIZE : S^ »tiM DATE FILMED: TRACKING # : REDUCTION RATIO: I2x IMAGE PLACEMENT:(|IA; HA IB MB 5\\h\^A INITIALS: W^\a/ Msi\o(ms^ FILMED BY PRESERVATION RESOURCES. BETHLEHEM, PA. > CD O O O O lO c/> X CJ1 3 > CD 0,0 o m (D CD OQ --J o O CO N X M oK A^^ ^'^ja, ^^-X). .^Z 8 O r"i5i;EiJ|5|; bo a 00 O I ro In 1.0 mm 1.5 mm 2.0 mm ABCDEFGHIJKLMNOPQRSTUVWXYZ abcclefghi|klmnopqrstuv¥»xy2l234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyzl234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 2.5 mm ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 ^^ \ C CO z ^ ^ s Ooo "CO 2 m 30 O m ^^ ^o 3 3 o 3 3 11 P -I •—-I o»x 00 IM 2c: S 8 ^ JO M (/J »-— « cr»x 00 Nl s '*--^liS ir '.-^ ^in Stock Participation Plans for Employees Ci'OOL OF BUSINESS A Survey by Industrial Relations Bloomfield's Labor Digest Copyright 1922. All rights reserved. BLOOMFIELD & BLOOMFIELD Consultants in Industrial Relations 6 BEACON STREET, BOSTON 9, MASS. ■W^-^, -^^ »*•»« ~^^ '^Q>'e> LIBRARY School of Business Stock Participation Plans for Employees A Survey by Industrial Relations Bloomfield's Labor Digest Copyright 1922. All rights reserved. BLOOMFIELD & BLOOMFIELD Consultants in Industrial Relations 6 BEACON STREET, BOSTON 9, MASS. "KLv-/' i " t.~L 3 pi i 7 -^ INDEX / ' \ Introduction 3 Make Your Plan Clear 3 Taking Part in the Enterprise 4 Do Not Mix Stock and Bonus 4- When Employee Leaves ^ Analysis of the Plans ^ Type I. — Stock Sold at Market Value 5 Guarantee of Future Value 6 Bonuses on Stock Purchases 6 Studebaker Co. — Partnership Plan 7 Type II. — Stock Sold at Par or } g Type III.— Stock Sold at a Discount ) United States Steet. Corporation Plan 10 Subscriptions to the Common Stock H Payment for Stock 1* Dividends 1* Cancellations — Refund of Installments H Special Benefits ^2 Additional Compensation ^2 Death or Permanent Disability 12 Pensioned Employees 13 Beneficiary 1^ Suspension of Employment 13 W. H. McElwain Co. Plan 14 Type IV. — Stock Given to Employees 15 Dennison Industrial Partnership Plan 16 Gifts of Stock 18 Summary 18 A Survey of Stock Participation Plans for Employees* [Specially Prepared by INDUSTRIAL Relations, Bloomfield's Labor Digest.] Many employers are experimenting with stock participation in the hope that thereby will he secured the active interest of their employee-stockholders through creating a sense of proprietorship in the business. Also stock partici- pation is often urged in place of the ordinary profit-sharing schemes because in the former the possibility of "loss sharing" is added, whereas it has been found practically impossible to attach loss sharing features to the common profit-sharing plans. It is urged in some quarters that the employee will be encouraged to work with much greater zeal if he foresees the possible loss of dividends than if he sees merely extra profits with no chance of losses. There are two general classes of stock participation plans, those that re- quire payments out of wages for the stock (whether paid for in full or not), and those that give the stock to the employee either directly as a bonus, or take such bonus money as is not a real part of wages in payment for stock. Unfortunately the former type is difficult to work successfully unless it is presented as an investment plan. Many concerns with such plans limit them to salaried officials who have larger incomes and can be presumed to be able to justify taking this financial risk with a small part of the income if they so choose. They also may be presumed to under^stand better the nature of the risk they are taking. Make Your Plan Clear When an employer sells or gives stock of the company to his employees, the action should be clear-cut. There should be no attempt to conceal the nature of the transaction. To anyone acquainted with financial matters the distinction between putting money in a business and investing it for safety is too obvious to require definition. But to the ordinary employee this distinction not only is obscure but often is beyond comprehension. When the employer puts his stock participation scheme before his employees as a thrift plan or investment, there- fore, there is every probability that it will be taken at its face value until the real nature of the risk is called forcibly to the attention of the employees by untoward conditions. In creating the impression that a stock participation plan is in the nature of a thrift scheme the employer is not only assuming a grave moral responsibility for the savings of his employees but he is doing an act of very doubtful expediency. One experience such as the employee-stockholders of a certain large industrial company, for instance, have had since the war in the collapse of ^Copyrighted 1922 by Meyer Bloomfield and Daniel Bloomfield. AU rights strictly reserved (4) the value of their investments in a financial crisis, nullifies the educational value of encouragement of real investments of savings in a hundred sound thrift plans and shakes the confidence of people of slender means all over the country in investing their savings. A multiplication of such experience would surely tend to drive the pennies of the poor hack into their stockings. There is every reason to "believe that plans, properly presented in their true light, would prove of incalculahle service towards the realization of the ideal of co-operation between employers and employees and also of immense educational value in teaching the fundamentals of industrial economics. Taking Part in the Enterprise It is conceivable that if stock participation plans were presented in such a light that their failures would serve as object lessons of the financial risks of business instead of occurrences to be apologized for, and their successes always explained as periods when surpluses must be built up for the "seven lean years to come" the teaching would be normal and wholesome. But apart from such possibilities there is the immediate advantage of having employees feel that they are taking a real part in the proprietorship of the company and are in a position to participate in its successes. Wherever this spirit is implanted in a body of employees it is a poor manager indeed who cannot realize at least a fair proportion of successful years. Do Not Mix Stock and Bonus Provided the dividends on the stock are not mixed with and concealed by bonuses and other gifts from the company, so that a true measure of the success of the concern is apparent, this point can be brought very clearly before the employees. If bonuses are also given they should be kept quite distinct in order to allow the plan to tell its complete story to the stock- holders. This applies in the case of salaried officials as well as all ranks of employees, for a lesson to be fully understood must be presented in the clearest form possible and not be beclouded by side issues. When the Employee Leaves A complicated question always arises with regard to repurchasing the stock or refunding partial payments in case the employee leaves the service. When the stock has been given outright, as is done at the Dennison Manufacturing Company, usually a special class of stock for employees is created which has no market value. In such cases either cash is given for the stock or else it is replaced at an agreed ratio by another class of stock which is marketable, when the holder leaves the service. When marketable issues on the other hand are distributed either gratuitiously or for partial or complete payments it is merely a question of expediency whether it shall be repurchased by the company or not. If the employee has received his shares with full understanding that they represent an investment in a business venture there would seem to attach (5) to the plan no moral olDligation on the employer to "buy iDack the stock at par or at the original price if the market value has declined since the purchase. Certainly the company seldom will "be called upon to repurchase at the original price if the market value has risen. The payment of a honus to employees who have purchased or have "been given marketahle stock, and who hold it during the year, is sometimes thought to be necessary in order to induce the employees to continue to hold it. Strangely enough experience on this point indicates that employees more often sell in panic if there is a sudden drop in market value in order to protect their savings from further shrinkage, than sell on a rising market to realize profits. This merely proves more pointedly that employees usually consider stock purchase as an investment of savings and act accordingly. Analysis of the Plans 'For the purposes of this study, special information of ahout eighty-three plans for selling stock to employees has heen secured. These have "been classi- fied according to the "basis on which the employees secured the stock, whether at market value, par value, a discount from the prevailing rates, or as a gift. TYPE I.— STOCK SOLD AT MARKET VALUE Twenty-one plans have "been analyzed in which companies sell stock to their employees at market value. Only two of them were started "before 1918. In every case "but one, the railroads which have stock-selling schemes disposed of shares on this "basis. The New York Central Railroad Company, for instance, in offering its employees an opportunity to buy stock on easy terms, states that "inasmuch as all the stock issued is in the hands of the pu'blic, the company has none for sale, and will arrange for the purchase of the stock, ordered under the plan, in the open market." The various schemes on the whole follow similar lines. Usually an employee may participate regardless of his position, "but a short period of service is not infrequently required. The Hydraulic Steel Company of Cleveland stipulates three months, the Hilo Varnish Company of Brooklyn, five years. Three to six months is more common than any longer time. The Hydraulic Steel Company is unique in limiting the stock-'buying privilege to American citizens or aliens who have taken out first papers. Some companies extend it according to the "judgment of the management" (Standard Parts Company, Cleveland) or to "selected employees (Thomas Devlin Manufacturing Company, Burlington, N. J.). Procter & Gam"ble covers, in the more li"beral of its stock-selling plans, only those receiving pay under $2,000 a year and excludes salesmen and traveling repre- sentatives. Common stock is the usual type offered and a definite block of several thousand shares is often set aside for the purpose. (6) In these cases in which stock is sold at market value, a chief point made to the employees is the fact that they can pay for their purchases on the installment plan. A small initial payment may or may not be required. Thereafter small weekly or monthly deductions from pay are made until the stock is paid for. $1.00 per share per month is a figure often fixed. Interest is charged on unpaid balances and dividends credited against them, while the stock generally remains in the hands of the company until it is entirely paid for. The largest amount of stock which employees may "buy under these plans is usually prescribed. A number of shares may be fixed, varying according to wages or some such specification may be made as that the amount purchased shall not be greater than the annual salary. The limits permitted may be very low, as two to ten shares according to wages. Guarantees of Future Value Guarantees of future value are seldom found. The Gulf Coast Lines guarantee the maintenance of six per cent dividends while the stock is being paid for, the Thomas Devlin Company guarantees value during the same period, and Procter & Gamble offers to return the money paid in, plus six per cent inter- est if the stock falls below cost within six years from date of purchase. On the other hand, the New York Central expressly disclaims any guarantee as to future dividends or value. Arising from the necessity of keeping the control of the company in approved hands comes an occasional provision such as is found in the plan of the i'uller & Smith advertising agency of Cleveland, that an employee wishing to sell his stock must allow the company an option on its purchase at the cost to him plus ten per cent. Elaborate provisos are included in the plans as to the return of payments, if the employee leaves the company, dies, or wishes to discontinue buying shares before his purchase is entirely paid for. The clauses arrange for the return of all money paid in with a fair amount of interest - four to six per cent. Bonuses on Stock Purchases Some companies attempt to increase the desire of their employees to buy stock by giving special financial inducements over and above the dividends. Procter & Gamble, in their scheme for semi-skilled employees, make one of the most liberal of such offers. It credits a profit-sharing dividend of ten per cent of wages if the employee has had one year of service rising gradually to twenty per cent for ten years' service toward the cost of the stock. More often the bonus takes some such form as with the Hercules Powder Company which gives the employee who remains with the company, and holds his stock five years, |4.00 a share a year. The Trumbull Steel Company donates a lump sum of $7.00 per share to employees holding their shares for five years. The following "Co-Partnership Plan" of the Studebaker Corporation is typical of the more liberal of the methods by which stock is sold to employees at market value. (7) Studebaker Co-Partnership Plan In addition to the plans under which regular employees receive anniversary checks, annual vacations, pensions and life insurance, the directors offer this opportunity wherehy employees may hecome co-partners in the "business, and share to a still greater extent, as stockholders, in the profits resulting from its operations. The directors Relieve that a large increase in the number of employee-stockholders will develop the relation of co-partnership in its broadest sense. The plan is as follows: 1. Continuous service is necessary to entitle employees to purchase stock of the corporation under the liberal terms of this plan, although absence of thirty days or less due to sickness, vacations, suspension of operations, or leave of absence will not be regarded as interruptions of continuous service. Absences without leave, aggregating six full working days or more in employee's anniversary year, will operate as a rupture of continuous service. Employees who have been absent in the war service will not, thereby, affect their con- tinuous service record. 2. Employees who have been in the service of the corporation for three months or more may have common or preferred stock purchased annually for them by the corporation for their account, in an amount not exceeding three hundred ($300.00) dollars market value of the stock at the time of the purchase, and in the aggregate not exceeding five (5) shares of stock, but in neither case to exceed twenty per cent (205^) of their annual rate of earnings. 3. Applications for purchase of stock must be accompanied by an initial payment of ten per cent of the estimated purchase price, and the remaining forty per cent thereof, which is payable by employees, must be paid in four years in installments of one-fifteenth of the amount every three months after the date of purchase. 4. The corporation will fully absorb the remaining fifty per cent of the cost of the stock (provided employees keep up their payments and remain in its service continuously for four years) by crediting employees' accounts every three months with one-sixteenth of its half of the cost of stock purchased. 5. The following table (which for simplicity excludes interest charges and dividend credits) shows an example of how payments by employees and credits by the corporation will be made, assuming an employee bought one share of common stock on September 1, 1920, at a cost of $100 per share. (8) (On a percentage "basis this tahle will show the ajnount of quarterly payment and quarterly credit for a share of stock at any market price.) 50$f Payable by 505f Payable ' by Dates of Employee C lorporation Paymer its and redits $50 Total $50 Total of C] i Amt. Total i Amt. Total Sept. 1, , 1920 , 1920 , 1921 10 1.15th 1.15th $10.00 2.67 2.67 Dec. 1, $12.67 15.34 1.16th 1.16th $3.13 3.13 Mar. Ij $6.26 June 1 , , 1921 1.15th 2.67 18.01 1.16th 3.13 9.39 Sept. 1, , 1921 1.15th 2.67 20.68 1.16th 3.13 12.52 Dec. 1, , 1921 1.15th 2.67 23.35 1.16th 3.13 15.65 Mar. Ij , 1922 1.15th 2.67 26.02 1.16th 3.13 18.78 June Ij , 1922 1.15th 2.67 28.69 1.16th 3.13 21.91 Sept. 1 , 1922 1.15th 2.67 31.36 1.16th 3.13 25.04 Dec. 1 , 1922 1.15th 2.67 34.03 1.16th 3.13 28.17 Mar. 1, , 1923 1.15th 2.67 36.70 1.16th 3.13 31.30 June 1 , 1923 1.15th 2.67 39.37 1.16th 3.13 34.43 Sept. 1 , 1923 1.15th 2.67 42.04 1.16th 3.13 37.56 Dec. 1 , 1923 1.15th 2.67 44.71 1.16th 3.13 40.69 Mar. 1 , 1924 1.15th 2.67 47.38 1.16th 3.13 43.82 June 1 , 1924 1.15th 2.62 50.00 1.16th 3.13 46.95 Sept. 1, , 1924 1.16th 3.05 50.00 Total L $50.00 $50.00 6. Prom the above table it will be seen that should an employee withdraw from this plan on September 1, 1922, after two years participation, he would have paid $31.36, and his credit from the corporation would be $25.04, making a total of $56.40 against the original cost of the stock, viz., $100.00, leaving an unpaid balance of $43.60. He could pay this balance and receive his stock or, if he so desired, he could order his stock sold at the then prevailing market price and receive cash for the balance to his credit. If, for example, the stock was sold for $110.00 per share, he would receive $66.40, which would be the $31.36 he had paid, plus $35.04, consisting of $25.04 in credits from the corporation, and $10 in profit from the sale of the stock. 7. All stock purchased under this plan will be charged to emj^loyees' accounts at cost, and interest will be charged quarterly at the rate of six per cent per year on the unpaid balance of the purchase price, after deducting payments by employees, and credits by the corporation. All cash dividends (and stock dividends paid on the common stock) will be credited to the accounts of employees and the excess of dividend credits over interest charges will act as a reduction in the amount of the final payment to be made by employees in the last year. (9) 8. Stock certificates purchased for the account of employees will "be held by the corporation in its name until the expiration of the fourth year when, if payments are completed, they will he delivered to employees. 9. Fractional shares will not "be purchased for employees or delivered to them upon settlement of their accounts. 10. Employees will not "be allowed to assign or transfer their rights to stock undelivered under this plan, which rights are personal and contingent upon continuous service. 11. As participation in this plan is voluntary and in no way compulsory, employees may, at any time, withdraw from participation, in which event the credits by the corporation will cease as of the quarterly date preceding withdrawal, and will be forfeited altogether if the withdrawal is made inside of six months from the date stock was purchased. Employees who withdraw within six months shall receive the actual amount paid in by them, without deductions or additions. Employees who withdraw after six months may either (1) pay the balance due on the purchase price of their stock and receive stock certificate, or (2) authorize the sale of stock held for them at the prevailing market price, and receive in cash the balance due them, if any, consisting of the difference between the original cost of the stock, plus interest charges, and the payments by employees, credits by the corporation, dividends, and sales proceeds of their stock. Employees withdrawing from the plan shall not be permitted to renew participation within one year thereafter. 12. Employees who resign or are dismissed, or who fail to maintain their installment payments when due, will automatically be withdrawn from the plan on the same basis as above provided for voluntary withdrawal. 13. In the event of the death of a participating employee, his heirs or legal representatives may pay the balance due on his stock, either in full or in installments, and receive stock certificates, or may authorize its sale on the terms herein provided for voluntary withdrawals. 14. Should this plan be permanently discontinued as of December 31, 1921, uncompleted stock purchase transactions then outstanding may be completed by employees under the above terms. TYPE II.— STOCK SOLD AT PAR OR, TYPE III.— AT A DISCOUNT In a greater number of plans, however, the stock is sold to employees at par value or at a discount. As sales at par frequently represent a discount from the market price, the two types are closely allied and will be considered together. Information on forty-five such plans was received in the course of this investigation, only seven of which were started prior to 1918. (10) Some of the most extensive stock-selling plans fall into this group. The American Telephone and Telegraph Company sold, beginning in 1916, 279,281 shares of stock to 63,480 employees, under its first two plans at a little helow the market value. Its third stock purchase scheme, in May, 1921, offered a new issue at par. This company did not pay any sort of bonus. The Goodyear Tire and Rubber Company stated in June, 1920, that nearly 17,000 employees held $11,900,000 of company stock. It offered a bonus of $3.00 a share for five years to employees, over and above dividends on its first two issues of preferred stock. The United States Steel Corporation began selling stock to its employees in 1903, and was a pioneer in undertakings of the sort. According to the Commercial and financial Chronicle, up to 1921, 685,231 shares of preferred stock were sold to employees, their aggregate investment being $91,491,842. Many companies have followed the United States Steel Company also in paying bonuses for stock retention, this corporation giving $5.00 a share annually for five years. It has always offered its stock to employees at a few points below the market price. In selling employees "non-voting debenture stock" the Commonwealth Edison Company of Chicago and the E. I. du Pont de Nemours Co. have made novel depart- ures. But on the whole the features of this group of plans, in terms of payment, guarantees and financial aid by employees, closely resemble the stock-selling plans at which shares are sold at market value. Following is the 1920 announcement of the United States Steel Corporation together with that of the W. H. McElwain Company in which stock is offered at par under carefully worked out conditions. United States Steel Corporation Plan TO THE OFFICERS AND EMPLOYEES OF THE UNITED STATES STEEL CORPORATION AND OF ITS SUBSIDIARY COMPANIES: The corporation again offers to those now actually in the employ of the corporation, or any of its subsidiaries, the opportunity to subscribe for shares of Its common stock, not exceeding an aggregate total of 60,000 shares, under the following terms and conditions: First - All subscriptions shall be made upon the express condition and agreement that all questions concerning the said subscriptions, and the allotments and interests thereunder, shall be decided by the Finance Committee of the United States Steel Corporation in its discretion and such decision shall be final and conclusive upon all parties. Second - Subscriptions shall be for one or more shares of common stock at the subscription price $106,00 per share. Third - The following table shows the maximum number of shares which may be subscribed for by employees whose salaries or wages are within the respective limits stated, but employees at their option may subscribe for less than such maximum number of shares. (11) Subscriptions to Common Stock Employees rece Annual Salarie $795.00 or les 795.01 to $1 1,766.67 to 2 2,473.34 to 3 3,975.01 to 4 4,858.34 to 6 6,890.01 to 7 7,950.01 to 9 9,010.01 to 12 12,587.51 to 13 13,912.51 to 15 15,237.51 to 16 16,562.51 to 17 17,887.51 to 19 19,212.51 to 32 ivmg s of: s 766.66 473.33 975.00 858.33 890.00 950.00 010.00 587.50 912.50 237.50 562.50 887.50 212.50 860.00 Payment for Stock May sulDscribe for a Maximum Number of: 1 share 2 shares 3 shares 4 shares 5 shares 6 shares 7 shares 8 shares 9 shares 10 shares 11 shares 12 shares 13 shares 14 shares 15 shares Pourth - Payment of subscript ions shall "be in monthly installments to he deducted from the salary or wages of the subscriber. The first deduction will be made from April salary or wages. No installment shall be less than $2.00 per share and shall not exceed one-quarter of any one month's salary or wages. Installments exceeding the minimum must be in even dollars. Payment for the stock should be completed within three years. Interest at five per cent per annum will be charged on deferred payments. Dividends Fifth - Until payment of the subscription has been completed, any dividends paid on the stock subscribed for will be credited to the account of the sub- scriber as part of his payment. After the stock is issued to the subscriber, future dividends will go direct to him. Cancellations — Refund of Installments Sixth - (1) (2) (3) Subscriptions will be cancelled for the following reasons: By request of subscriber. By (a) voluntarily leaving the service, or (b) being discharged for cause, or (c) failing to resume employment when requested. (See Section Eleventh.) By discontinuing payments without the consent of the corporation for three consecutive months. The cancellation of a subscription forfeits all interest and benefits which the subscriber would have received if he had continued such subscription. There will then be returned to him the full amount of payments made on the subscription so cancelled with interest at five per cent per annum, no credit being given him for dividends or for the special allowance referred to in third paragraph of Section Seventh, and no interest being charged on deferred pay- ments. A subscription may not be cancelled in part. (12) Special Benefits Seventh - When the stock is fully paid for, it will he issued in the name of the subscriber. He may sell his certificate, but as an inducement for him to keep it while he remains in the service, the following offer is made, viz.: If he will keep the stock and in January of each year, for five years, com- mencing with January, 1921, will exhibit the certificate to the Treasurer of his company, together with a statement from a proper official that he has been continuously in the employ of the corporation or of one or another of its subsidiary companies during the preceding year, and has shown a proper interest in its welfare and progress he will for each of such five years receive a cash payment at the rate of $5.00 a share for each share of common stock. Subscribers who may not have fully paid their subscriptions by January in any year, will, if their subscriptions are still in force, and they have otherwise fulfilled all the conditions of continuous and faithful service as provided, be credited in their subscription accounts with the foregoing special allowance of $5.00 per share on their subscriptions for common stock. Additional Compensation Eighth - If a subscriber keeps his certificate and remains continuously in the service for five years, the corporation intends that he shall then receive a still further compensation, which cannot now be ascertained or stated, but which will be derived from the following sources, viz.: The special allowances referred to in Section Seventh, which, after a sub- scription is fully paid, are forfeited by: (a) Transfer of certificate from neime of a subscriber, whether intentionally or otherwise; (b) Voluntarily leaving the service, or being discharged for cause, or failing to resume employment when requested (see Section Eleventh) will be paid by the corporation into a special fund at the end of each year. This fund will be credited with interest at five per cent per annum and at the end of the five years* period, the total amount thus accumulated will be divided into as many parts as shall be equal to the number of shares of common stock subscribed for hereunder and then remaining in the hands of subscribers who shall have continued in such employ for the whole five years. The corporation will then by its own final determination in its discretion award to each subscriber whom it shall find deserving thereof as many parts of such accumulated fund as he shall be entitled to on basis of the number of shares then held by him under this plan. Death or Permanent Disability Ninth - If a subscriber dies or is permanently disabled while rendering faithful service during such five years' period, payment will be made to his estate or to him, as follows: (a) If his subscription is fully paid and he has received and not disposed of his certificate of stock, the corporation will pay a sum equal to $5.00 per share for each of the five years not then expired, and also a pro rata amount of the special fund arising from forfeitures, referred to in Section Eighth preceding, which may have accrued at the time of his death or disability. (13) (b) If his sulDScription has not "been paid in full, the corporation will pay the money theretofore paid in by him on account, together with the dividends paid on the stock subscribed for, the special allowance for the entire five years* period and a pro rata share of the amount of the special fund mentioned, less interest at five per cent per annum on deferred installments. (c) If at time of decease or permanent disablement, the subscription has been fully paid but certificate not yet delivered, the corporation will turn over the certificate, as first stated above, together with the additional payments mentioned in paragraph (a) preceding. Pensioned Employees A pensioner will not be permitted to subscribe, but any subscriber who is subsequently pensioned may continue payments on his subscription and when fully paid, he will receive the certificate for the stock subscribed for and the pay- ments referred to in paragraph (a) of Section Ninth, provided, however, that as soon as he shall have fully paid his subscription and received his certificate of stock, he will be treated as though permanently disabled and payments will be made to him in accordance with provisions of paragraph (a) Section Ninth. Beneficiary Tenth - A subscriber may name in his subscription as beneficiary the person to whom in the event of his death he desires the corporation to pay all ajnounts, in connection with his subscription, which would otherwise be payable to his estate. By written notice delivered to the Treasurer of the company by which he is employed he may substitute another beneficiary. The corporation, upon satisfactory proof of death, will, under the conditions of the subscription pay to such beneficiary all amounts in connection with the subscription which would otherwise be payable to the estate of the subscriber. When the bene- ficiary has been named the subscriber's estate shall have no claim to any such amounts, unless the beneficiary should die before the subscriber, and in that event payment will be made to the subscriber's estate. Suspension of Employment Eleventh - Subscribers whose employment has been suspended by reason of the temporary closing of a plant, and who shall continue ready and willing when required to resume their service, will not be deprived of the special allowance of $5.00 per share per year during such suspension, although they may have accepted employment during such suspension. As presumptive evidence of willingness to resizme employment, the corporation will accept (1) from the holders of fully-paid subscriptions, the exhibition of the original certificate in January of each year, and (2) from the holders of partly-paid subscriptions, the retention by them of their subscription during the preceding year. The above period of suspension will not be counted as part of the three years limited for the full payment of the subscriptions, and during such sus- pension monthly payments will not be required, though if so desired by the employee they may be continued. In case of the death during such suspension of any such subscribing and continuing employee, his estate or his beneficiary will be entitled to the seone benefits accruing to his subscription as if he had died while under employment. (14) Failure to present the original certificate as provided, or the withdrawal of a partly-paid subscription, or the failure to resume employment when requested, will constitute a relinquishment of all benefits referred to in this circular. If a plant or office is permanently abandoned and a subscriber at such plant or office does not continue in the service at another plant or office of the corporation or a subsidiary company, settlement of his subscription accounts will be made as provided in case of pensioned employees. Section Ninth. Twelfth - Subscriptions will be received until February 29, 1920. and allot- ment made as soon thereafter as possible. By order of the Finance Committee, UNITED STATES STEEL CORPORATION, Richard Trimble, Secretary. W. H. McElwain Company Plan* Announcement to Employees William H. McElwain founded this business in 1894 and associated with him as partners a small group of men who had faith in his policies. The partnership was succeeded by a corporation, as the size, extent and complexity of the business made this form of organization necessary. It is impossible to go back to the earlier days of actual partnership. It is possible, however, to develop in the greater institution of today the factors that make the relation of partners the closest relation in business life. These factors we need in every department of the business. With this need in mind we are giving every employee who has for six months been a member of the McElwain team an opportunity to purchase the Second Preferred Stock of the company - to become a joint owner in the McElwain enterprise. He may own an interest in the McElwain factories, the McElwain distributing houses, the McElwain organization, and the McElwain goodwill. He may receive dividends from his financial investment in the business in which he participates. We believe that the employees of the company will welcome this opportunity, and that the response will be general. What is the stock? Second Preferred Stock of W. H. McElwain Company. Par, $50 per share Regular dividends 6^ ($3.00 per share) annually. Extra dividend limited to 3$f ($1.50 per share) annually. In normal times, therefore, the stock pays divi- dends aggregating 9^ ($4.50 per share) each year. Price $50 per share, plus accrued and unpaid dividends. The company has a large capital, is conservatively financed, and has never failed in twenty-five years to earn a fair profit. Its First Preferred Stock pays only 7^ and is owned by investors. The stock now offered (Second Preferred Stock) has in the past been owned principally by managers, superintendents, foremen, salesmen and other executives. They continue to own their stock. The management will set aside a block of new stock, exactly similar in every respect, for sale to employees of the company. An employee may subscribe for himself or his immediate family. No other subscriptions will be accepted. The right is reserved to withdraw this offer at any time. First Preferred and Second Preferred Stock have no voting rights except on certain contingencies like a failure to pay dividends on First Preferred Stock, when both classes become entitled to vote. *The company has been merged with the International Shoe Co. and plan withdrawn. (15) The company cannot, of course, agree to iDuy back its own stock from employees who purchase it. The company will, however, endeavor to assist any employee, who finds it necessary to sell, in finding a customer among other employees. If you desire to join the group of men and women, over four thousand in number, who own the McElwain business, please fill out and sign the attached application and hand it to the person in your plant who is designated to receive applications, with the amount of money required. You will receive a receipt which must be surrendered when the certificate of stock has been prepared and is ready for delivery. Any employees who wish to purchase stock, but are unable to pay for it in full at once, should talk with their foremen on the subject. J. PRANKLIN McELWAIN, Por the Board of Directors. June 21, 1920. NOTE - Regular dividends are payable as follows: 1 1/2$^ ($0.75 per share) on the first days of February, May, August and November. Extra dividend is paid in June of each year. It consists of one-fourth of the net earnings of the fiscal year ended May 31, remaining after the payment of 1^ on Pirst Preferred Stock and 65^ on other classes of stock. Such extra dividend must not exceed 35^ in any year. Including regular and extra dividends, 9^^ has been paid on Second Preferred Stock in every year since the organization of the company, except 1915, when 7 1/2^^ was paid. TYPE IV.— STOCK GIVEN TO EMPLOYEES A much greater diversity of features is found when plans which make a gift of stocks to employees are analyzed. Per this study special information was obtained regarding sixteen such plans. Gifts of stock are generally made as part of a bonus or profit-sharing system or in close relation thereto. The schemes vary from very simple out- right donations to complex systems of industrial partnership. Henry A. Dix & Company, manufacturers of house dresses in New York, set aside $100,000 of common stock in April, 1920, to be distributed as an annual bonus to selected managers, department heads and foremen. Ten per cent dividends were guaranteed, and the bonus was paid one-fifth in cash and four-fifths in stock. Another simple plan is that of the E. I. du Pont de Nemours Company, which makes awards in stock for "continuous service, in inventions, unusual ability, industry or loyalty." Class A awards are for especially distinguished service of this nature, Class B for less achievements among employees who have worked for the company two years or more. The Pittsburgh, Butler and Harmony Consolidated Railway and Power Company is reported to have created a trust fund of $1,000,000 in its common stock, the dividends from which were to be divided equally among its four hundred employees. The voting power of the stock was to remain with the president of the company, but the employees were to be permitted to elect three directors to the board. It was believed that in order to make each man's dividend as large as possible an incentive would be created to keep down the number of employees. (16) As an illustration of a complex scheme for gifts of stock, the project of the Larkin Soap Company of Buffalo, N, Y. , may "be instanced. In July, 1919, this firm announced that its directors would select employees who had "a sustained interest in the business" and had "demonstrated their value" and divide them into groups. On receiving a favorable vote from ninety per cent of their group, they would "become eligible to share in the distribution of $10,000,000 of common stock. Each could hold stock to the amount of a tenth of his annual salary times three years less than his years of service with the company. After a seven per cent dividend on the preferred stock was paid and provision was made for expansion of the company, buying in of common stock and the regular dividend on it, any remaining profits were to be divided equally between the original owners of the business and the employee- stockholders. On leaving the company, except to retire, an employee must, at the option of the firm, sell it his stock for cash, take its six per cent six months note for it or exchange it for second preferred stock. The Dennison Manufacturing Company has a somewhat similar plan in its "industrial partnership" stock. The following explanation by the company of its system is quoted because of its clear explanation of the underlying philosophy of the plan, and because it represents a ten years* experiment and development. Dennison Industrial Partnership Plan "The chief motives which led us to re-incorporate the Dennison Manufacturing Company in 1911 in the form of an Industrial Partnership were, first, to provide a better means of distribution of whatever profits there might be in excess of a fair return on capital; second, to make certain that the voting power would always remain in the hands of those intimately acquainted with the company's affairs. Prom the early days of the company, stock had been offered to employees at a figure below its. actual value, but this plan proved insufficient, unsatisfactory and unfair in many ways. "At the time of the change our company had only one kind of stock, which was each year tending more and more to pass out of the hands of those connected with the business. A part of the profits had each year been withheld from dividends in order to provide for the growth of the company, and, therefore from time to time there had been a distribution of the surplus in the form of stock dividends. The company had passed the stage where the capital invested in it was at greater risk than the normal business risk, and its financing therefore, required no more than a normal return to capital. Whatever more than this was earned by the organization, neither the needs of the concern nor the demands of justice required to be distributed to the stockholders as such. On the other hand, two considerations pointed to increasing danger in the future. Pirst, the constant spectacle of all fruits of extraordinary efforts on the part of the managers, foremen, or salesmen, being turned over to people who were almost strangers to the company, could only result in a progressive weakening of enthusiasm and loyalty. Second, the steady increase in the propor- tion of stock held by people unacquainted with the business, pointed to the time when the voting power must inevitably be used for some other purposes besides the permanent good of the company itself. As a measure of safety for the future, then, the form of incorporation was changed. (17) "The common stock was all converted into a first preferred stock, carrying a fixed cumulative dividend, with preference in assets and dividends, but no rights to accretions. The amount of this stock and the rate of dividend were chosen to represent a fair return on the capital at that time invested in the concern. It was then provided that if there were any profits remaining after these dividends had been fully paid, these profits should be invested in the business and against them issued yearly a stock which we call Industrial Partnership stock. "Because this Industrial Partnership stock had been earned by the efforts of the organization, not by the mere investment of capital, it became necessary to determine to whom this stock should be issued. In other words, who were the real profit earners in the organization? An analysis so thorough as to deal almost individually with cases of more than two thousand employees led us to the conclusion that profits depended almost solely on such men as sales managers, senior salesmen, department heads, foremen and the like. "The further task then remained of providing means of specifically designat- ing each year who these individuals were. Originally we used as a criterion the amount of pay received by each and their length of service. Eventually the tremendous changes in the value of the dollar, and more especially the irregular application of these changes among various classes of employees, entirely destroyed the salary line as a true dividing line between those of our employees whose effects upon profits were important and appreciable and those whose effects upon our net profits account were remote and heavily conditioned by the policies of the management. Principal employees are now limited to those who have had five years or more of service and whose position with the company requires the exercise of managing ability and control over methods of manu- facturing or marketing, such as an executive, department head, principal foreman, chief clerk, branch manager, or principal salesman; or whose work shows the use of a high degree of imagination, tact or business judgment -- those qualities upon which we believe the constant earning of profits to depend. To the directors is left the application of this rule but the industrial partnership stockholders may from year to year pass votes further defining the directors* methods of choosing. These men are classed as principal employees and to them the industrial partnership stock is issued, if their combined efforts have earned profits in the previous year. To distinguish the relative profit earning power of each one of the men in this class, it was clear that the relative salary was a fair guide, and the stock is therefore issued to them in propor- tion to the salary they received the previous year. "In its main outlines this describes the distribution of our profits for the future -- a fixed, sufficient, and cumulative dividend for capital, and all profits in excess of that amount each year to the men who earn those profits. Several qualifying provisions safeguarding this or that point can be found in the agreement of association and by-laws. "Since its establishment the results of the Industrial Partnership plan have been as follows: Number or Shares Principal Distributed Employees March, 1913 15,122 167 March, 1914 18,604 211 March, 1915 12,779 218 March, 1916 12,884 228 March, 1917 43,752 260 March, 1918 19,015 288 March, 1919 30,740 320 March, 1920 57,363 364 10^. Average cash dividend rate on outstanding Industrial Partnership stock DENNISON MANUFACTURING COMPANY \ (18) I Gifts of Stock Gifts of stock are frequently limited to the more responsible employees, or to those whom the officials deem especially worthy of recognition. The Boston Consolidated Gas Company, which has distributed a "bonus in the form of preferred stock for about fifteen years, limits its gifts to selected employees who "show regularity, intelligence and energy" and have worked for the company at least six months, during the past year. In the year ending June 30, 1920, 839 out of 1,357 employees were reported to have qualified. The president of the Harvard Knitting Mills, which has for two years given a share of profits as "certificates of ownership," has recently complained that only about forty per cent of the beneficiaries have manifested the increased energy and zeal which was expected. It is worthy of note that the mill shares profits in this way with all who have a service record of a year or more. In this connection a comment of the Studebaker Corporation on its various incentive plans may be emphasized. In reply to a question as to "pitfalls to be avoided," a representative of the company answers: "The plan must be strictly adhered to in order that men may not expect to receive these benefits as a matter of course. In other words - the man must realize that there is an obligation upon him which he must discharge in order to merit the benefits set forth." SUMMARY The effectiveness of the plans, discussed in this survey, depends very largely on the way in which they are presented to the employees. It also depends on the number of shares the employees as individuals hold. Those plans which place only two or three shares in the possession of an employee hardly can be expected to create much enthusiasm. The experience of companies with such schemes is that the appeal is strong and the results valuable with the salaried officers and those who can under- stand the full significance of the ownership of stock. With the rank and file, however, it has proved difficult to make the men realize that the sheet of paper really means ownership and a voice in the management of the company. It is interesting to note that in England in 1919 there were forty-three new "co-partnership plans" as they are called in that country, in 1920, forty and in 1921 only three, while five of the 1919 plans and one of the 1920 creations were discontinued. There seems to be a slowing up in the extension of this kind of employee participation in that country which is explained by some as being the result of unsuccessful experiences on the part of those who have experimented with the schemes. Possibly, however, the slowing up of this movement in England may be due to business conditions and should not be taken as indication of a change in attitude until it has proceeded further. PreWous refwences to subject, page* 119, 155, 158. 170, 195. 230. 325. 241, 258. 271. 311. 324, 330. 337. 347, 369. 374. 383. 414, 415. 423, 439, 453. 454. 481, 492. 499. 500. 505. 508. 541. 553. 587. 603. 714, 742, 848. 884. 955. iMUtrUl Rclstltai, BlOOSfieid ■ Ubtr Mf Cfl TYPE L SOLD AT MARKET VALUE CONCERN Date Pl&n £stablished American Maltiinraph Company May 1, 1920 American Snicar Refluinx Ca. Dec. 10, 1918 Dec. 20, 1919 BLIGIBILITT (Requiremeuts) None None i, Joseph Knopf A Sonn, Ine. (Rochester, N. Y.) 1919 90% subscribers Gulf Coast liines (New Orleans, Texas ft New Mexico Railway Coiupan^') Feb. 1, 1921 Hilo Tarnish Corporation (Brooklyn, NY.) May, 1920 3 months' ii*>rvice STOCK OFFERED Common 12,500 shares ($250,000) Common Preferred None 5 years' service Hydraulic Steel Co. May, 1920 45% subscribers Lehifh TaDey R. R. Co. June 22, 1920 New York Central R. R. Co. Sept. 15, 1921 75,000 employees Pittsburgh Coal Co. 1901 15,0ai« Plan Established ET.IGIBLLITT (Beqnlrements) STOCK OFFEKED TERMS OF BEDEMPTION TERMS OF PAYMENT CONTRIBUTION OF FIRM REMARKS Tnimbiill Steri Co. Oct, 1920 5,000 employees, 1,500 subscribers Common [40,000 shares, $1,- 000,000 subscribed] Bonus of $7 per share to em- p 1 o y e e « hold- ing stock until Jan. 1, 1925 Par is 25. Sold at 27.50 Wheeling Steel Corporation Aug., 1920 Common [1-40 of outstand- ing common sub- scribed — 10,300 shares— $824,000] Minimum $3 per share monthly. Maximum 25% of monthly salary. Payments deducted from salary Bonus of $4 a year to those re- maining with firm 6% charge on unpaid balances. Dividends cred- ited Hercules Powder Co. (WUmington, DeL) 1920 1,700 employees None Preferred 2 to 5 shares, according to salary. Minimum $3 montlily per share. Maxi- mum 25% of salary Payments returned less 5% interest on unpaid bal- ances Bonus of $4 a year if held for 5 years 5% interest on unpaid balances Hibernia Bank and Truitt Co. (New Orleans) 224 employees 45 subscribers Maximum 5 shares, $10 down, $5 per share monthly 5% interest on unpaid balances Standard Parts Company (Cleveland) 1918 2,322 employees 60% subscribers [Judgment of management] Common 10% down, $3 per share monthly Befund on leaving firm Fnner ft Smith (Cleveland) 1916 80 employees 20 subscribers [Judgment of directors] 10% down, personal note, with interest at 6% Must give firm option of rebuying at sale price plus Dividends credited against unpaid balance Thos. Devlin Mfir. Co. (Burlington, N. Y.) [Selected employeesj $1000 to each employee. Paid for at $2 per week. Certificate issued for each $100 paid In event of death, unpaid balance plus 6% returned Guarantee against loss while stock is being paid for Dividends on whole $1000 received while pay- ments are being made Illinois Central B. B. Co. None Monthly deductions from salaries Los Ansreles Gas & Electric Corporation Feb. 1, 1921 1,500 employees 50% subscribers None ^ % cumulative preferred Maximum 5 times month- ly salary. 4% years to pay Interest credits aver- age 9.3% while payments being made Proctor ft Gamble Co. (Cincinnati) Jan. 26, 1920 Jan. 26, 1920 Jan. 26, 1920 Any employee (ex- cept salesmen and traveling representa- tives) with maxi- mum salary $2,000 Employees who have subscribed and paid up as above Employees not eli- gible under profit- sharing plan Common $100 savings cer- tificates, exchange- able for common stock Common Maximum, annual salary. Payments minimum 1-12 of 5% monthly and all profit- sharing dividends Maximum 5 certificates a year. Minimum payments, 5% of salary monthly Maximum 1 year's salary, not to exceed $3000 $5 down, payments at any time within 6 years Holding less than 1 year — payments returned plus 6% ; over 1 year — stock (or may offer to company at market price) On leaving or on demand, payments returned with 6% interest If stock falls below cost within 6 years, firm returns cash plus 6% interest, if employee remains in service (maximum $3,000) Profit - sharing dividends of 10% first year to 20% after 10 years Stock delivered as fast as paid up after 1 year's participation 6% interest paid. Cer- tificates non-transferable Dividends credited. In- terest on unpaid balances 4% if 15% of stock Is paid in each year, 6% if less Southern California Edison Oo. 1917 90% subscribers 7%% of salary deducted 8% dividends. 6% in- terest on unpaid bal- ances Copyright 1922, Meyer Bloomfleld and Daniel Bloomfleld — ^All rights strlcfly resenred TYPE II. SOLD AT PAR CONCEBN Date Plan Established ELIGIBILITY (Bequirements) STOCK OFFEBED TEBMS OF PAYMENT TEBMS OF BEDEMPTION CONTBIBUTION OF FIBM BEMABKS Canada Cement Co., Ltd. (Montreal) None Common Preferred 7% [1 share preferred to 3 shares common] Amounts in discre- tion of Board of Di- rectors Minimum, $1 per share monthly * 5% interest on unpaid balances.Dividends cred- ited. Stock held until paid up, 5 years' serv- ice and 2 years after al- lotment. Par is 100 Commonwealth Edison Co. (Chicago) July 1, 1909 5,0(X) employees 2,360 subscribers 1 year's service Non-voting debenture 3 or 5% of salary, paid within 4 days of pay day Payments, less expenses, returned if not paid regu- larly Amount deposited with compound interest at 5% used to buy stock after 5 years Cleveland Twist DriU Co. Dec. 14, 1918 5 years' service "Note and certifi- cate of participation" Sold in $10 or multiple thereof May require 6 months' no- tice 6% interest paid semi- annually on payments r Craddock-Terry Co. (Lynchburg, Va.). Second Preferred Weekly or monthly pay- ments for not more than 1 year If sold before specified date, must offer to firm at par plus 6% from date of last dividend No interest on nnpaid balances. Dividends re- ceived while stock is being paid for Eastman Kodak Co. (Rochester, N. Y.) July 10, 1010 2 years' continuous service Common lO.OOD shares ($1,000,000), donnt- ed by Mr. Eastman and same amount of- fered by company Maximum 2% of salary. May pay from dividends or as convenient For acts prejudicial to firm, certificate may be an- nulled and payments re- turned minus interest Purchases subject to approval of Mr. East- man, or firm, according to the stock Edmonds Shoe Co. (Milwaukee) Dec., 1010 7% preferred Weekly payments allowed 3% additional interefit - Elflrin National Watch Co. (Elgin, 111.) Jan., 1921 (a)— Under 5 years' service — 4 shares (b)— 5 to 15 years — 6 shares (c) — 15 to 25 years — 8 shares (d) — Over 25 years— 10 shares Amount of bonus mini- mum payment in January. Monthly payments of $10 Leaving firm, employee must offer it stock at par plus increase in book value No interest charged on un- paid balances Dividends credited Par is 25 Goodyear Tire and Bobber Co. (Akron, 0.) Nov.. 101!) 15,000 subscribers April 1, 1920 June 2, 1920 1,496 subscribers [1921— $12,000,000 stock owned by employees] None None Preferred (Over $5,000,000 subscribed) Preferred 7% ($5,000,000) 3 share blocks Preferred — 2 Common — 1 ($582,700 sold) Maximum 20 shares. $1 weekly or $4 monthly per share Same as alcove 25% down, balance June 25, 1920 Payments returned on re- quest with 4% interest Same as above 3% bonds for 5 years to employ- ees holding stock and in service Same as above 5% interest on unpaid balances. Par is 100 Same as above None W. H. McElwain Co. (Manchester, N. H.) June 21, 1920 [Discontinued upon merger with International Shoe Co.] 6 months' service Second Preferred [No vote ordinarily] Full payment with sub- scription Firm will try to find an- other employee to buy Stock sold at par (50) plus accrued and unpaid dividends. Regular div- idend 6%. Extra divi- dend 3% Copyright 1922, Meyer Bloomfleld and Daniel Bloomfield — ^AU rights strictly reserred TYPE n. SOLD AT PAR— Continued CONCBBN Bate Plan E«tablUtied BI.IGIBII/ITT ( Bequlrements ) STOCK OFFBRED TERMS OF PAYMENT TERMS OF REDEMPTION CONTRIBUTION OF FIRM REMARKS Liggett tt Meyers Tobacco C«. March, 1920 Common and Com- mon B [21,496 shares offered] T.lbby. McNeill ft liibby (Chicago) June, 1920 6 months' service 640,000 shares (140- 000 on deferred pay- ments) 10 to 50 shares. 2 years to pay Par is 10 Midvale Steel * Ordnance Ce. Nob* Monthly payments, mini- mum $4, maximum 25% of salary. Number of shares fixed by monthly wage. Maximum 20 Par is 50 New Enirland Power Co. (Worcester, Mass.) Jan. 30, 1920 None Preferred Monthly payments $2 per share. Maximum, one-fifth of monthly salary Payments returned plus 6% interest Annual bonus for holding stock — $1 first year to $4 the seventh 6% interest on amount paid in until stock is paid up; then regular dividends Rochester Folding Box Co. (Rochester, N. Y.) 76% subscribers None "Employees' Pref- erence Stock" [1000 shares offered and subscribed] 10% down, $2 per share weekly Death — Firm will buy for $110 Retirement— Will buy for $130 Others leaving firm must sell at $101 8% dividends before any are paid on other stock, and share profits after all dividends are paid. 8% on all cash paid in Strathmore Paper Co. (Mittineague, Mass.) July 1, 1920 6 months' service "Employees' — pre- ferred 7% cumulative [$500,000 offered, $10 a share] Maximum $2,500. Weekly payments allowed, mini- mum $1 Must be offered to firm on death or leaving, 30 days' option at $10.30 Service dividend — 1 to 5 years — 1% yearly 5 to 10—2% 10 to 15—3% 15 to 20—4% Over 20 or retired —5% Special stock, no vot- ing rights Niagara Falls Power Co. Jan. 30, 1920 600 employees 92% subscribers 6 months' service Common 25 cents per share weekly Payments returned plus 4% interest quarterly 6% annually, plus amount equal to dividends, over 4% on same shares of common stock [Extra compen- sation ends when stock is issued) Par is 100 Swift * Co. [Employees' Stock Investment Plan] 10,000 subscribers ; [Employees' Stock Savings Plan] June 2, 1919 13,000 subscribers None None Treasury Stock 1 to 50 shares [As many as can be paid for in 2 years] 10% down, 6 months' note at 5% Interest 1 to 5 shares, according to salary. $1 weekly per share 8% dividends begin at once Copyright 1922, Meyer Bloomfleld and Daniel Bloomfleld— All rights strictiy reserved TYPE n. SOLD AT PAR—Continued CONCKRN Dat« Plan Bstablished EUGIBIL.ITT (Reqairements) STOCK OFFEBED TEBMS OF PAYMENT TEBMS OF REDEMPTION CONTBDBUTION OF FIBM BEMABKS American Ia France Fire Kn^ine Co. (Elmira, N. Y.) Sept. 1, 1920 3 months' service Preferred non-as- sessable cumulative 7% stock [7,500 shares] Maximum 30 shares. Minimum $1 weekly or $4 monthly per share. Two- year limit to pay Payments returned plus 5% interest. Stock must be sold to firm at 120 plus accrued dividends 10% of amount of subscription. $3 per share yearly for 5 years if stock is re- tained and "prop- er interest" shown 5% interest on un- paid balances. Dividends credited. Par is 100 E. I. Dn Pont de Nemours * Co. Nov., 1920 [revised plan] 35% subscribers 1 year's service Non-voting: 6% deb- enture stock Installment payments ar- ranged for Rate of "serv- ice payments"*— 1 to 2 years— 1% 2 to 4 years— 2% 4 to 7 years— 3% 7 or over — 4% "Guarantee par 100" Extra "participating payments" if net earn- ings are over 8% ; 8 to 9%, 1%, etc. 12 or over —5°/ Great Northern BaUwaj Co. (St. Paul) 1900 Maximum salary $3000 3 years' service 11,880 shares $10 shares in "Great Northern Employees' Invest- ment Co., Ltd." Firm bears ex- penses of man- agement Cleveland Worsted MiUs Co. 1905 5,000 employees 1 year's service 5°/ down. Personal note with 5% interest If sold within 3 years, company has option at 105 Penton Pnblishinir Company (Cleveland, 0.) 1917 200 employees 72 subscribers 2 years' service Second Preferred guaranteed 8% stock [2,000 shares, 375 subscribed] Allotment according to salary. Maximum 10% of salary. 10 equal monthly payments Fund of 10% of outstand- ing stock maintained for taking it up 6% Interest on unpaid balances Boss Mannfactarinir Ca. (Cleveland, O.) 1915 190 employees 00% subscribers 1 year's service Common 1 year's service 5 shares — $1 weekly 2-10 shares— $2 weekly 3-20 shares— $4 weekly Payments returned plus accrued dividends 10% dividend guaran- teed for 5 years; cred- ited on unpaid balances National Carbon Company (Cleveland, O.) June 9, 1916 None Common [5,000 shares] According to salary pay- ments in 3 to 5 years. Min- imum 1% monthly, maxi- mum, 1-3 In 1 year Payments returned plus 4% interest $5 per share yearly for 5 years Dividends credited. 4% Interest on unpaid bal- ances Crane Co. (Chicago) None ;^0.000,000 cumula- tive 7% preferred of- fered ["Large amount sold"] Monthly payments "Rebates based on length of serv- ice" Dividends begin at time of subscription General Electric Company 30,000 subscribers None Employees' 7% in- vestment bonds, se- ries of 1921 ($10, $50, $100, $.500, $1,000) 50 cents employee's subscription stamps, 20 exchanged for $10 bond. Maximum $1,000 $10 bonds, cash Others: 50 weekly pay- ments, 10 monthly or quar- terly. Maximum $1,000 Must be returned for re- demption within six months after leaving firm Copyright 1923, Meyer Bloomfleld and Daniel Bloomfleld— All ri^lits strictiy reserved TYPE n. SOLD AT PAR Concluded CONCBBN ]>at« Plan EstabUshed EI^GIBILJT¥ (Requirements ) STOCK OFFBKED T£BMS OF PAYAfKNT T£BMS OF B£D£MPTION CONTRIBUTION OF FIRM BEHfARKS Pilgrim Steam LAundry Co. Oct. 18, 1921 313 employees 3 months' service 2,000 shares Minimum, 2 shares, may be paid at once, or part down, and minimum, 50 cents per share weekly. 1 year to pay up Payments returned on leaving before paying up. Firm has option on repur- chase at "fair and reason- able price" No dividends until paid up. Sold at 25 American Trtephone * Telesrraph Co. May 1, 1921 [See other plana, Type III] 6 months' service 1 share for each $300 of annual salary. Maximum 50 shares a year. $3 month- ly per share from salary Payments returned with 4% interest quarterly if subscription agreement is sold or pledged, 8% on death, 6% on leaving or withdrawal Par is 100. Interest at 8% quarterly on pay- ments ; no dividends while paying Deere * Co. (MoUne, lU.) INov. 1, 1919 1 year's service 7% cumulative pre- ferred [5,000 shares] Maximum 25 shares (also annual salary). $2 monthly per share Payments returned plus 5% interest $3 per share an- nually Dividends credited. 5% interest on unpaid bal- ances Tellinff-Belle Temon Co. American citizenship 1 year's service Common 1 year's service— 6% of year's salary 2 years' service — 6% 3 years' service — 7% 4 years' service— -8% 5 years' service — 10% 10°/ down, 10% monthly Payments returned plus 6% interest 6% interest on unpaid balances. Dividends credited. Par 20 Noyes Bros. * Cutler, Inc. 6 months' service For executives only $100,000 "Managers' stock" (amount fixed an- nually) Maximum amount, annual salary. $5 or $20 per share weekly " $1 par, issued in vary- ing amounts Boyerofters (East Aurora, N. Y.) 1919 300 employees 50% subscribers Preferred 20% down, 11 or $2 weekly 8% dividends. Par 50 > C. Jk O. Cooper Co. 500 employees [Plan withdrawn] ^ Preferred (500 shares) Minimum $5 monthly. Maximum 25% of annual salary. 2 years to pay up. Stock callable at par plus accrued dividends. Payments returned plus 7% interest $3 per share an- nually for 5 years, in cash, or collect- ed on unpaid stock Par 100. 6% interest on unpaid balances. 7% dividends credited • Copyright 1922, Meyer Bloomfleld and Daniel Bloomfleld — ^All rifrhts strictly reserved TYPE in. SOLD AT A DISCOUNT CONCERN Date Plan Established American Telephone * Telegraph Co. Jan. 1, 1915 78,500 eligible 34,000 subscribers March 1, 1916 [See later plan, Type II] American Woolen COk May, 1921 ElilOIBIIilTY ( Requirements ) 2 years' service 2 years' service None Boston Woven Hose ft Rubber Co. Jan. 1, 1918 1,400 employees Brier Hill Steel Co. (Yoangstown, O.) Dec. 14, 1920 Samuel Elman Co. (Schenectady, N. T.) Feb., 1920 200 subscribers General Eleeirie Co. Nov., 1920 B. F. Goodrich Co. July 1, 1920 Minimnm salary $1,200 2 years' service None None 2 months' service 3 months' service STOCK OFFERED 33,000 shares Common Common [500 shares yearly for 5 years] Common (15,000 shares) Common Common TERMS OF PAYMENT $2 per share monthly $3 per share monthly. 1 share for each $300 of salary. Maximum 10 shares $1 per share weekly. Maximum 20 shares Allotment according to salary and length of serv- ice. May take 50% of allot- ment. 10% or 5% of salary deducted 5 to 45 shares, according to salary (under $1,500, 5 shares). 50 cents per share monthly deducted from wages. Maximum payment 25% of wages. 3 years to pay up 10% a yeaih- weekly annual payments or $1 per share weekly or $4 monthly. 1 to 10 shares 1 share for each $300 of annual salary. 25 cents weekly or $1 monthly per share. 4 years to pay up TERMS OF REDEMPTION Payments returned plus 4% interest Balance paid in returned with 5% interest on demand or on leaving firm. 6% in- terest allowed in event of death Payments returned on de- mand or on leaving firm plus 5% Interest. [In some cases plus part of differ- ence between purchase and market prices] Balances paid in returned plus 5% interest Payments returned on leaving firm; stock must be given up Payments returned plus 7% interest on demand or on leaving firm Payments returned plus 6% interest CONTRIBUTION OF FIRM $12.50 per share after 5 years' ownership and •'proper interest shown in firm's welfare" Bonus for em- ployees remaining with firm and holding stock : 1 year — $1 per share 2 years— $2.50 etc. 5 years — $3 Bonus for em- ployees remain- ing with firm and holding stock: 1 year — $1 per share 2 years — $2, etc. 5 years — $5 REMARKS $6 discount. Dividends credited. 4% interest on unpaid balances $9 11& discount. Sold at Dividends credit- ed. 4% interest on un- paid balances Dividends credited. 5% interest on unpaid bal- ances. Sold at 66.50 Stock not property of employee for 5 years. Dividends credited. 5% interest on unpaid bal- ances. Sold at 4/5 of market price Dividends credited. 5% interest on unpaid bal- ances Sold at 27. No guar- antee of future divi- dends or value of shares "Value $100 a share" — sold for 80 Dividends credited. In- terest charged against unpaid balances. Dis- count of 20 (from 136 to 116) Dividends credited. 6% interest on unpaid balances [Price fixed by company] Copyright 1922, Meyer Bloomfleld and Daniel Bloomfleld — ^All rlirhts strictly reserved TYPE m. SOLD AT A DISCOUNT— Continued CONCERN Date Plan Established ELIGIBILITY (Requirements) STOCK OFFERED TERMS OF PAYMENT TERMS OF REDEMPTION CONTRIBUTION OF FIRM REMARKS Imperial Oil, I.td. (Toronto) April, 1920 6,000 employees 1 year's service Definite amount at regu- lar intervals for 12 months (a) — Depositor less than 2 years — cash or stock plus 6% (b) — 2 to 5 years — stock plus 6% (c) — Over 5 — stock plus firm's contribution 50% of employ- ee's deposits Market price 125-135. Sold at 75. Price fixed annually I^hlsh Coal * NaTlgation Co. Jan., 1921 None 2.500 shares Under $1,300 yearly, 2 shares, over $1,500 5 shares. Minimum $5 monthly Payments returned plus 4% $2 annually for 5 years if stock is retained and employee remains with firm Dividends credited. 4% interest on unpaid bal- ances. Sold at 65. Lincoln Motor Co. (Detroit, Mich.) April 1, 1920 None Class A (5% cumu- lative, generally no vote) Allotment by Ann. $5 per share down. $1 mini- mum per share monthly Payments returned with balance if stock is sold Par Is 50 Sold at 40 Schnlte Retail Stores Corp. Dee. 1, 1920 None Common ^8,000 shares) 40 — ^Ist year 46— 2nd year 52 — 3rd year 58— 4th year 64 — oth year Sold at 40 10% dividends guaran- teed for 4 years Standard Oil Co. of New Jersey Jan. 1, 1921 1 year's service Common Regular deposits into fund held by trustees (max- imum 20% of salary) Payments returned on demand or on leaving firm, plus 6% 50% of employ- ee's deposits Price fixed annually 1921—155 Par is 25 United States Steel Corp. 1903 225,000 employees 66,311 subscribers None Common (1903 - 1909 pre- ferred. 1909 - 1916— both) [186,600 shares sub- scribed] 1 to 15 shares, according to salary. $2 per share monthly minimum. Maxi- mum 25% of salary Payments returned plus 5% interest $3 yearly for 5 years Sold at "Usually a lit- tle less than prevailing market price." Divi- dends credited. 5% in- terest on unpaid bal- ances Wheeling: Steel Corp. (Wheeling, W. Va.) AprU 1, 1920 None Common (8,000 shares) 1 to 15 shares, according to salary. From $3 to 25% of salary per share month- ly. 3 years to pay up Payments returned plus 6% interest $4 yearly for 5 years Sold at 80. Dividends credited, 6% Interest on unpaid balances Atlas Powder Co. (Philadelphia, Pa.) 1920 None Preferred Maximum, 30 to 40% of annual salary $2 yearly for 5 years Sold at 91. 5% inter- est on unpaid balances, computed monthly Dutchess Bleacheries, Ine. (Wappinger Palls, N. Y.) 1920 None 7,000 of the 27,000 outstanding shares $10 down and $1 weekly per share Sold at 40, or 20% be- low market. 6% inter- est on unpaid balances Cleveland Hardware Co. 1912 (revised 1918, 1919, 1920) 2,500 employees 3% subscribers "Executives and employees in respon- sible positions" 10 semi-annual payments Payments returned on leaving. Firm may rescind contract and return pay- ments New contract drawn for each sale. 6% in- terest on unpaid balances CopyTlg:ht 192S, Meyer Bloomfleld and Daniel Bloomfleld — All rights strictly reserved TYPE m. SOLD AT A DISCOUNT— Concluded CONCERN Date Plan £stabUshed KT.IOIBII.ITY (Requirements) STOCK OFFERED TERMS OF PAYMENT TERMS OF REDEMPTION CONTRIBUTION OF FIRM REMARKS YooavstowB Sheet * Tabe Co. "Selected manage- rial employees" Common 10% down, 90% during 2 years Payments returned plus 10% dividends Bmployees agree to remain with firm for 2 years. Dividends cred- ited. 6% interest on un- paid balances E. I. da Pont de Memours A Co. 1920 2 years' seryice Non-voting deben- ture (9,000 shares) 3 to 6 shares, according to salary. Minimum, $3 per share monthly Payments returned with stock bought, less interest due (}uarantee of f9 dividends for 5 years to employ- ees holding stock 5% interest on unpaid balances. Sold at 93 American RoUiay MiU Co. 1020 1 year's service Common 1 to 130 shares, according to salary. $1 minimum per share monthly. 4 years to pay up Payments returned with 6% Interest Par Is 50. Sold at 47. Dividends while paying applied to discount and 6% interest on unpaid balances TYPE IV. GIVEN TO EMPLOYEES CONCERN I>ate Plan EsUblished ELIGIBILITY (Requirements ) STOCK DISTRIBUTED TERMS OF REDEMPTION REMARKS Baker Mtg. Co. (Eransville, Wis.) 1S09 150 employees 4500 hours' service. Must not bave sold any stock Common [1768,000 from 1900 to 1919] Stock left on deposit with firm. Firm may buy if employee works for competitor, works for an- other for 5 years, or goen into business for himself After paying 5% dividends and 10% sinking fund, profits divided 50-50, and distributed in proportion to earnings, 90% in stock. Brooklyn Sdison Co. Dec. 12, 1910 3100 employees 32% subscribers 2 years' service Profit-share certain percentage of wages. Re- ceives after 2 years' service — % dividends 3 years' service — V^ dividends 4 years' service — % dividends 5 or more— full dividends Stock credited for 3 years. Credits forfeited if discharged for misconduct or leaving without month's notice. Allowance for exceptional cases (death, etc.). Boeton Consolidated Gas Co. 1,357 employees 839 subscribers "Selected employees, at least 6 months' service" Preferred Stock of Mass. Gas Co. r$761,612.26 in 14 years] Shares not to be sold without approval of directors Profit-sharing dividends credited toward shares of stock nennlson Mfg. Co. (Framingham, Mass.) (a) 18 years of age, 2 years' service (b) 7 years' service and $1200 salary or 6 years and $1500, or 5 years and $1800 "Employees' Industrial Partnership Stock" "Managerial Industrial Partnership Stock" Must be turned in on leaving firm for cash or 2nd preferred (1 share for 10 of I. P.) I. P. stock distributed according to length of service. I. P. stock loses votes if preferred stocks are in arrears four years Averajre cash dividends on I. P. stock, 9%% I. P. stock issued at par, 10. Non-assignable and non-transferable Copyright 1932, Meyer Bloomfleld and Daniel Bloomfleld — ^AU rights strictly reserved TYPE IV. GIVEN TO EMPLOYEES— Continued CONCERN Date Flan Established ELIGIBILITY (Requirements) STOCK DISTRIBUTED TERMS OF REDEMPTION REMARKS Glen-Geiy Sbale Brick Co. (Reading, Pa.) If employee dies within 10 years, firm will buy back stock $100 share given each employee annually for 10 years. Dividends paid on $100 first year. $200 sec- ond, etc. Harvard Knitting MIUs (Wakefield, Mass.) Jan. 1, 1920 800 employees 1 year's service "Certificates of ownership" Holdings cashed on discharge. Within 1 year If leaving volun- tarily 50 /o of profits credited to "employee- partners," half-paid In cash, half in certificates paying "a high rate of interest" Henry A. Dix * Co. (New York) April. 1920 Managers, department heads and foremen Common ($100,000) 10% dividends guaranteed. Annual bonus 20% cash, 80% in stock International Harreoter Ca. Jan. 1, 1920 Jan. 1, 1920 (a) Executive and man- agerial positions. 1 year's service (b) Non - executive workers. 1 year's service Common Preferred 7% cumulative Extra compensation of 20% of all profits over 7% paid yearly, half in cash, half in stock 40% as above, half in cash, half stock. May use cash bonus to buy preferred stock. Smaller pay- ments allowed to accumulate to $100 with 7% interest I4wkia Co. (Buffalo, N. Y.) Joly, 1919 Chosen by directors for interest shown. [Must be 21 years old, American citizen and in service 3 years] Common (110.000,000) On leaving firm (except retire- ment) must (a) sell stock to firm, (b) take 6% note of firm for 6 months, (c) exchange for 2nd preferred if firm desires Employees eligible receive stock equal to one-tenth of annual salary times number of years less 3 he has been employed May also buy common stock to 20% of annual salary M. liOwensteln Mi Bona, Inc. (New York) July 1, 1920 3 years' service. "Others who in firm's judgment merit reward" First Preferred ($100,000) Stock held in trust until Oct. 1, 1922. Forfeited if employee leaves firm before date. Delivered to es- tate if he dies, or to woman marrying. New HaTon Gas Uflit Co. April, 1907 625 employees Approval of executive officers and board of trus- tees. 7033 shares issued, 3394 retained by employees still with firm Request that stock be offered to firm first if sold 8% profit sharing quarterly in form of credit changed to stock as soon as large enough. 50% re- duction if profit-sharing dividend is taken in cash. Ptttsbnrgli, Bntier * Harmony ConsoL Bailway * Power Ca. 400 employees None Common ($1,000,000) Stock held as a trust fund. Dividends divided equally among the employees. Voting power of stock remains with president of company, but employees elect three directors Beaay Electrie Co. (Anderson, Ind.) April, 1920 "140 of the older em- ployees" • $140 to $170 shares of General Motors stock, to be delivered in 1 year. Annual bonus to older em- ployees /ohn B. Stetson Co. (Philadelphia) 1902 25% subscribers - 6000 shares On leaving firm, receives as much as par value has accrued Paid for by profit-sharing dividends In 5 years, IJ®°.£S?? *? x*'""' '®' ^® y®*'8 (employee receiving the dividends) Copyright lft», Mejer Bloomllold sad Daniel Bloomfleld— AU rights strictly resenrod COLUMBIA UNIVERSITY LIBRARIES . This book is due on the date indicated below, or at the jexpiration of a definite period after the date of borrowing, las provided by the library rules or by special arrangement with the Librarian in charge. >ATE BORROWED DATE DUE 9Hti9im DATE BORROWED DATE DUE J J 128 (661) 50M COLUMBIA UNIVERSITY LIBRARIES 0041407334 Bloomfield & Bloomfield Stock participation plans for •tA^_saa4iB MAR 2 81994 /^5// OO^^r ^ # ir ,/^:2ik-l ml ^- END OF TITLE