Learn about Life in the 1920s

General Motors Executives to become Special Partners 1924

THE General Motors Corporation, which is controlled by the Du Ponts, has evolved a plan for making "special partners" of its leading executives.

President Alfred G. Sloan, of the Corporation, explains that "in a great structure such as the General Motors Corporation, where problems and operation are so diversified, where capital must be employed and plants operated in the best interests of the corporation as a whole, where new capital injected should be supplied where it will do the most good, it is important to find, develop and retain men to occupy important managerial positions, who are capable of assuming great authority and responsibilities that make these positions important." The General Motors plan, explains the New York Tribune, involves a complicated piece of corporation financing. The Wall Street Journal notes that the scheme includes the formation of a subsidiary corporation to be known as the Managers Security Corporation, by means of which the important managers of the company will be able to purchase General Motors common stock at a very low price, and will be able to share in the motor company's profits in excess of a specified minimum rate. The details are too involved for repetition here. The chief features of the plan in its general aspects, are thus briefly summarized in the news columns of The Wall Street Journal:

1. It gives important employees of the corporation an interest in common with the stockholders and enables them to view broadly and understand the policies necessary to coordinate the various ramifications of the business and thus secure proper return to the stockholders. This desirable result is secured at a minimum expense to stockholders.

2. It enables these employees by the investment of only $5,000,000 to secure an equity in common stock of the corporation at present valued at more than $33,000,000, which holds attractive possibilities of enhancement in value before the expiration of the plan.

3. It enables the Du Pont Co. to liquidate a substantial portion of its General Motors holdings under conditions which will not be detrimental to the value of the remainder of its holdings nor to those of other General Motors stockholders.

The president of General Motors, adds The Wall Street Journal, "pointed out that while this plan is designed purposely to apply only to the managing executives, the company also has an employees' bonus system and a savings and investment fund. The bonus system provides for reward of conspicuous service by an annual compensation in common stock. In the savings and investment fund any employee may deposit regularly a portion of his salary, the corporation adding 50 per cent. over a period of five years to every dollar deposited and paying interest at 6 per cent."

Source: The Literary Digest for January 5, 1924