Commissioner PURCELL, I realize that.

Mr. BROWN. It is indicated very strongly to me, and I think perhaps to the committee, that the action you took was for the purpose of stopping this practice that you describe as, to wit, "these representatives of management feathering their nests."

Commissioner PURCELL. I very carefully stated in that speech the exact limitation of the Commission's authority, being limited to prescribing regulations with respect only to listed companies, and being limited there only to prescribing regulations with respect to the amount of disclosure that should be made to stockholders so that they would be put in a position to take such action as they thought proper. Mr. BROWN. Of course, the stockholders have always had the right to find that out, whenever they wanted to, anyhow.

Commissioner PURCELL. Oh, surely.

Mr. BROWN. Without the necessity

Commissioner PURCELL. You know the difficulty of that.
Mr. BROWN. I beg your pardon.

Commissioner PURCELL. You know the difficulty of that.

Mr. BROWN. I never had any difficulty in getting any information. Commissioner PURCELL. Management controls the operations and have the facts and figures, and all.

Mr. BROWN. You talk about difficulty. Do you mean to say that if a stockholder writes to a corporation in which he owns stock and requests information as to the amount of salary and compensation that has been paid to the management, that the officers will lie to him or refuse to give him that information?

Commissioner PURCELL. No, Mr. Brown; they would not do that. Mr. BROWN. They will tell him the truth, will they not? Commissioner PURCELL. I assume so.

Mr. BROWN. All right.

Then all that a stockholder interested in his corporation would have to do would be to drop a penny postcard in the mail, or write a 3-cent letter to the company, to get all of the information you are making mandatory to be given him.

Commissioner PURCELL. Yes; if he knew what information to ask for and wanted to go to the trouble.

Mr. BROWN. If he were interested in the salaries or compensation being paid, he would certainly know what to ask for. If he would not know then, how would he know after he received one of these long voluminous reports.

Commissioner PURCELL. Which report are you referring to?
Mr. BROWN. Which are certainly confusing.

Commissioner PURCELL. Which report are you referring to?

Mr. BROWN. Any of them that are given.

Commissioner PURCELL. You mean that the proxy soliciting material is long and voluminous?

Mr. BROWN. Yes. I have some here that are quite long. Take one like this [exhibiting document]. It is just one. I will not, on the other gentleman's time, go into that now. I would like to go into the question of space with you, and will do so after awhile.

Commissioner PURCELL. I think we have some figures that are very interesting for you.

Mr. BROWN. I have some that should be very interesting to the Commission.

That is all.

Mr. HALL. I just wanted to bring this out, because I think this statement of yours in the speech puts you against management, and I do not believe your Commission was created with any idea of being against management, against stockholders, or against anyone else. Commissioner PURCELL. No.

Mr. HALL. You are to regulate, but no one who reads that statement, and no one can read your speech, unless they come to the conclusion— I have read it and I have tried to be fair-that you are against management.

Commissioner PURCELL. Against all management?

Mr. HALL. Well, generally; yes.

Commissioner PURCELL. I am very sorry you get that impression, Mr. Hall. It was not my intention. It is the first time I have ever heard it stated to me.

Mr. WINTER. Will you yield?

Mr. HALL. Yes.

The CHAIRMAN. Mr. Winter.

Mr. WINTER. Mr. Purcell, is it your idea that your Commission should promulgate rules and regulations that in any manner attempt to regulate the corporation's right to pass on salaries or bonuses? Commissioner PURCELL. No, sir; not at all.

Mr. WINTER. Then, why do you have such a rule as that in which you require the publication of it in the notice or information to the stockholders?

Commissioner PURCELL. So that the stockholders will know; so they will be told.

Mr. WINTER. What effect does that have upon the corporation? What effect does it have that would be wholesome to the stockholders? Commissioner PURCELL. What effect does it have upon the corpo

ration?

Mr. WINTER. Yes.

Commissioner PURCELL. It may have some effect resulting from stockholders' action.

Mr. WINTER. Why?

Commissioner PURCELL. Based upon that information.

Mr. WINTER. Why?

Commissioner PURCELL. I do not know of any particular case. Mr. WINTER. Corporations generally pay their salaries in line with what a man is worth, or according to his ability, do they not?

Commissioner PURCELL. I am sorry.

Mr. WINTER. I say, corporations generally pay salaries to employees in accordance with what they are worth to the corporation, do they not?

Commissioner PURCELL. That is what they should do; yes.

Mr. WINTER. And publication of these salaries generally would not make any difference in the payment of those salaries?

Commissioner PURCELL. It might make a great deal of difference to the stockholders. They might think that the corporation managers were using too much of their money to pay to the officers

Mr. WINTER. That is the purpose for which you require it? Commissioner PURCELL. To put that information in their hands so that if they think it is too much, they can take some action. It is not within the jurisdiction of our Commission, as you have said, to tell

management how it shall operate, or to tell stockholders how they shall operate. It is merely to see to it that stockholders have all of the information in their hands upon which they can base a judgment and take an action. That is all we attempt to do.

Mr. WINTER. In other words, you want a thousand, 1,500, 2,000, or 2,500 stockholders in the corporation to have that information. You think that every corporation should be required to send out to each one of those in this proxy statement the salary that every man draws and if they want to increase that each year, every one of those stockholders should be consulted as to whether or not the salaries should be raised.

Commissioner PURCELL. No.

Mr. WINTER. That is the effect; that is what happens, is it not? Commissioner PURCELL. I beg your pardon, Mr. Winter, it is not. We tell all of the stockholders what the directors, all directors, are being paid. That is, we require the company to tell all stockholders what all directors are being paid. We also require them to tell the stockholders what all of the officers who get more than $20,000 a year are being paid and whether there has been any increase in that salary over the previous year's salary and if so how much; but we do not require the company to consult stockholders before increasing salaries.

Mr. WINTER. Just right there. If there be any increase, and how much, but you do not require the corporation to tell the stockholders why the increase was made?

Commissioner PURCELL. No; nor do we limit the corporation from telling the stockholders. The corporation is at liberty to tell the stockholders why the increases were made.

Mr. BROWN. Mr. Chairman.

The CHAIRMAN. Mr. Brown.

Mr. BROWN. I want to go back, just at the opportune time here, to discuss with you for a minute the size of these statements. Commissioner PURCELL. I will be very glad to.

Mr. BROWN. You seemed rather amazed when I said they were so large that the average stockholder could not learn what was in them without difficulty. Here is just a sample of one. It is a rather small one in comparison to some I have seen. I have some others.

Commissioner PURCELL. Which one is that you are showing; what company?

Mr. WOLVERTON. What difference does that make?

Mr. BROWN. It is a company listed on the stock exchange. However, I am going to name a few companies I have investigated myself. This information has not been furnished me by the companies and they are in no way responsible for my having it.

I have made a summary of 15 companies; 15 of the larger companies on the New York Stock Exchange, and it shows that exclusive of any extraordinary business to be considered at the meeting, the amount of proxy material has increased anywhere from two to four times what it was before this order went into effect.

Mr. WOLVERTON. Mr. Brown, will you yield for just a minute?
Mr. BROWN. Yes.

Mr. WOLVERTON. I assume that the evidence you have before you, which you wish to put before the Commissioner, originates because of the statement that was made by Mr. Purcell before this committee?

Mr. BROWN. Well, I want to come to that statement a little later, if

I may.

Mr. WOLVERTON. I thought maybe it would be a good thing to have it. Mr. BROWN. I want to ask about that statement later.

Mr. WOLVERTON. DO you want me to read it?

Mr. BROWN. I have it here.

I want to give you some facts and figures.

The American Telephone & Telegraph Co.-a fairly large company in the communications field-in 1941 had one and one-quarter pages in their proxy statement; in 1942 they had two pages; and in 1943, four and three-quarter pages.

The Atchison, Topeka & Santa Fe Railway, in 1941, one; in 1942, one; in 1943, two and one-half pages.

The Bethlehem Steel Corporation, two pages; two and a quarter pages; and eight pages.

You understand that I am reading the 1941 figures first, and the 1942 figure second, and the 1943 figure third.

The Commonwealth Edison Co., three-quarters, three-quarters of a page; and two and three-quarter pages.

The Commonwealth & Southern Corporation, one and a quarter; one and a quarter; and two pages.

The Consolidated Edison Co. of New York, one and three-quarters; one and three-quarters; and six and a quarter.

The E. I. du Pont Co., one; one and a half; and five.

General Motors Corporation, two; two; and eight and a half.

New York Central Railroad, one and three-quarters; one and threequarters; and five.

Pennsylvania Railroad Co., three-quarters; three-quarters; and

four.

Socony Vacuum Oil Co., three-quarters; three-quarters; and three and three-quarters.

Southern Pacific Railway, two and a half; two and a quarter; and three.

Standard Oil (New Jersey), one; one; and five and one-quarter. Union Pacific Railway, one-half; one-half; and two and a half. United States Steel Corporation, one and a half; one and a half; and seven.

In other words, the total of these 15 companies, Mr. Purcell, was 2034 pages of proxy statement in 1941; 22 pages in 1942; and 704 pages in 1943.

Now, the average length, if I can figure correctly, of the proxy statements of these 15 companies in 1941 was 1.4 pages; in 1942 1.5 pages; and in 1943, 4.7 pages.

Now, those average a little better than three times as much.

Mr. HALL. And, on a rising market.

Mr. BROWN. Yes.

Mr. WOLVERTON. Those extra pages were sent to each stockholder. Mr. BROWN. Yes.

Mr. WOLVERTON. How many stockholders does the A. T. & T. have? Mr. BROWN. I am not certain of the number. Perhaps you can tell that, Mr. Purcell; the number of stockholders of the A. T. & T.

Commissioner PURCELL. I do not have that number. I think it is in the neighborhood of 600,000.

Mr. WOLVERTON. And, do you know the number of all of the companies that you read?

Mr. BROWN. No.

Commissioner PURCELL. A. T. & T. six-hundred-and-thirty-someodd-thousand.

Mr. WOLVERTON. I assume from those illustrations you use, that it would run into several millions, and maybe that is the cause of the shortage in paper that this committee has been studying.

Mr. BROWN. All in the face of the paper shortage. That may be partially responsible for it.

The CHAIRMAN. I cannot understand why a printer would be objecting to that.

Mr. BROWN. It shows how altrustic we are, Mr. Chairman.

Commissioner PURCELL. You have the feeling that four and a half or five, or whatever it is, pages devoted to the business of the American Telephone & Telegraph Co. is going to be onerous for a stockholder to read?

Mr. BROWN. Oh, no; oh, no; but you must remember that this is in addition to the annual statement that is furnished these stockholders, and all other information that is sent these stockholders. Commissioner PURCELL, I understand.

Mr. BROWN. This is a rather closely drawn legalistic document that is not very easy to understand, even by members of this committee. Commissioner PURCELL. Well, the Commission is not responsible for that.

Mr. BROWN. No; we are not responsible for understanding it; and neither are we responsible for drawing it.

Commissioner PURCELL. I beg your pardon.

Mr. BROWN. I can understand very easily that sometimes a man is able to draw a report that no one can understand.

Commissioner PURCELL. Perhaps I should say that we are not responsible for that.

Mr. BROWN. Now, could these proxy-soliciting statements that I have just mentioned here for the year 1943 be placed on one side of a postal card?

Commissioner PURCELL. Could they for any company for 1943?

Mr. BROWN. Any one of these 15 companies I have mentioned. Could you print that information on the side of a card, a postal card? Commisisoner PURCELL. Oh, no. Of course you have pointed out the number of pages taken to print the material.

Mr. BROWN. You could not do that?

Commissioner PURCELL. No; that is right.

Mr. BROWN. Now, Mr. Purcell, I do not want to be either unkind or facetious. But I remember sitting here in the committee when we had these proxy rules up last year, and I want to quote your words at that

time:

Unless there is some extraordinary business to come before the meeting of the corporation, the proxy material required by these rules can get gotten on one side of a card.

Commissioner PURCELL. That is correct.