Succession – 1962 to 1967
At the end of December, 1965, the Chicago office held its traditional year-end party at the Standard Club. A photo of the attendees was taken and has actually been viewed by the author, but has been misfiled or otherwise mislaid and thus cannot presently be published. When located, it will be mentioned and linked at about this location in the story. In the meantime, it may be of interest that the author identified a number of attendees at the part as listed in footnote (1) at the end of this chapter.
Succession – 1962 to 1967
Looking back to the six year period of 1962-1967, the primary development within the firm was the significant and long anticipated transition and succession in top management. James Becker, Irv Sherman, and Joe Levin, supplemented by David Stern before his retirement in 1954, and joined by Bill Mabie in 1961, comprised the firm's executive management team from the time James Becker became President in 1947, through late 1965.
On October 19, 1965, it was announced that Paul Judy (the author of this Chronicle) would return from New York to the Chicago office to become Chairman of the Executive Committee, and - known to the Advisory Committee - acting chief executive officer. He was expected shortly to assemble a new, young management team the decisions of which, for a probationary period, would be overseen and approved by an Advisory Committee (Becker, Mabie, Sherman and Flett). The building of a new management team will be described in various segments below leading up to the author's election as President and Chief Executive Officer as of January 1, 1968, by which date substantial change in the firm’s top management team was well underway.
Adoption of a Statement of Objectives
One of the concerns of Jim Becker, Bill Mabie, and particularly Vince Flett, in the midst of the management transition they were overseeing, was the absence of some unifying set of objectives to guide the successor management. To that end, they fashioned a statement of objectives for the firm which was proposed and adopted in a late 1963 Board meeting, and read as follows:
STATEMENT OF OBJECTIVES OF A.G. BECKER & CO., INCORPORATED
- To conduct our business in conformance with the highest standards of business ethics. This recognizes that the needs of our customers always shall receive our primary consideration and that we likewise at all times fulfill our responsibilities to all our associates.
- To continue to run an organization where integrity and ability are the only qualifications for employment and no position is denied anyone because of race, creed or color.
- To provide at all times for aggressive top management, centrally as well as in all divisions, with a planned program of introducing younger men into important positions in the operation, administration, and policy making areas of our business.
- To be regarded as one of the outstanding firms in the nation and the outstanding firm in the Middle West.
- To attain a consistent underwriting position just under the majors with the objective of becoming a major.
- To conduct an efficient business on a profitable basis for the benefit of employees and stockholders.
This statement was a helpful guide to the new management group being formed. As will be described, this set of objectives was succeeded in 1971 by a replacement statement of goals and objectives. They then became a guide to forward strategic thinking and discussion, and to annual operational and financial planning.
As noted earlier, the U.S. stock market overall rose a little over 350% in the postwar period from mid-1949 through 1961. Becker's entry into dealing in common stocks was very timely. However just as 1962 started off, there was a sudden market decline of some 27%, over a six-month period, followed by a steady rebound into 1966 of some 85%, with the market ending up 30% over December, 1961. Then another decline of 25% over a 10 month period took place through October, 1966, followed by a rebound of 32% over 25 months, bringing the market, at the end of 1968, up only 11% over the seven years involved, but with some fairly large ups and downs in the course of realizing that 11% gain.
During the same six year period, 1962 through 1967, short term interest rates, which very much effect the commercial paper business, were rising. Fed funds rates rose from a low in the 1-2 ½ % range to over 9% in late 1969, with a temporary dip of some 2% between November, 1966, and a year later. This six year rise was just a segment of a longer term 30 year trend in short term interest rates from a post WW II level of around 1% to over 19% in 1980. Thus, during most portions in this whole period, the inventory carry for commercial paper and other fixed income securities dealers was negative, punctuated by volatile rate dips with positive carry. However, it was generally a risky period for fixed income securities dealers. Taking on inventory in a favorable period of rate declines could be like skating on thin ice.
In terms of equity values during this six period, 1962-1967, the first four years witnessed the end of the post WWII bull market, with the Dow Jones index topping out at just short of 7,500 in early 1966. This peak was followed in two years by slightly lower, wavering values, and then a long 15 year slide with two rallies, ending in a sharp decline to about 2,000 in 1982, approximately where the market had been in 1950.
About this time in the firm’s history, the Communications Department under the request of the author and backed by Jim Becker and Bill Mabie, began to publish an Annual Report to Shareholders - for public distribution - along with an Annual Personnel Review - for internal consumption.
While the top management of the firm was in concerted transition between 1962 and 1967, it was during this period that a number of persons destined for future top management responsibilities were identified, promoted, and prepared for the positions they would later occupy. Also this period was noteworthy for a wide range of service and product developments - and other favorable and less favorable events that took place - all of which had significance to the firm's employees and share owners, both current and future.
In January, 1962, Becker as dealer-manager organized and marketed one of the early "exchange funds," working with the Federated Investors organization of Pittsburgh. The registration and offering of Empire Fund, Inc. was a pioneering effort primarily organized by Jim Lewis in the New York office. The objective of an exchange fund was to provide diversification to holders of highly appreciated, long held securities comprising a concentrated portion of their assets. This objective was achieved by bringing together a large group of such holders transferring their holdings into and forming a mutual fund organized for this purpose, the shares having been approved by the mutual fund manager as to quality, value, and diversification, in a prearranged plan, the investor taking back a block of the mutual fund's shares of value equal to their contributed shares. These exchanges were deemed to be tax-free; the transfer of the investor's shares into the fund was not a taxable event triggering a large capital gains tax. The shares of the mutual fund taken back took on the cost basis of the contributed shares, but diversification was achieved without a sale of the shares and reinvestment of the proceeds, and also the realization of a large capital gain and related tax.
The Empire Fund offering was followed over the next few years by the appointment of Becker as the dealer-manager of a number of exchange fund offerings by other mutual fund management companies. As was our practice when an innovative service took on scale, we organized the first Exchange Funds Department in the industry and hired Don Wehman to manage it. Moving forward, Becker received favorable recognition for its pioneering work and specialized know how, and more assignments followed.
By its nature, the exchange fund program provided a special opportunity for Becker brokers to contact and propose a valuable service to individuals with substantial personal wealth locked up in a large, long established, concentrated single security position. The activity permitted such contacts to be carried out on a unique and professional basis.
Incidentally, by mid-1965, contrary to many exchange funds, the Empire Fund was up 50% over its initial value in early 1962.
Commercial Paper Department: Disruption and Then Expansion
In August, 1963, John Friedlich, manager of the firm's commercial paper department, advised his uncle, James Becker, that he was leaving the firm, joined by his New York associate, Lew Glucksman, to establish a commercial paper business at Lehman Brothers. John made it abundantly clear that he and Lew intended to recruit other Becker employees, and to propose to Becker's issuers that they switch to Lehman, since it would be abundantly clear that Becker would be out of the commercial paper business.
John's decision and message was an affront to Jim Becker. As his uncle, Jim Becker had brought John into the firm, first into the Corporate Finance area, and then put him in charge of Commercial Paper, endorsed his recent election as a Vice President, and more recently, supported his becoming a Director of the firm. Mr. Becker’s shock was heightened in that John Friedlich was A.G. Becker's grandson. Finally, this development was a bitter pill for Mr. Becker in light of his long standing, and seemingly close and cordial relationships, with many of the senior partners of Lehman Brothers.
Fortunately, the key employee in the day-to-day operations of the commercial paper department, other than Friedlich and Glucksman, was Jack Connor, who had joined the Chicago department in early 1960. Jack was immediately put in charge of those day-to-day operations. Most other department employees, including Pat Thackara, were taken aback by the actions of their bosses. They gave Jack their full support and allegiance. General oversight of the Department was promptly assigned on a temporary basis to John Colman; Bill Cockrum was relocated to New York to oversee commercial paper operations in that office, as Jack Connor’s deputy; and the author (Paul Judy), with the support of Chicago and New York Corporate Finance staff, and the senior officers of the firm, was assigned to coordinate intensive field contacts with all existing and prospective paper issuers. Dave Heller took over the banking of the commercial paper inventory and Joe Goeschl and Charlie Stuart focused on all the other aspects of commercial paper operations. In due course, it was clear that only one issuer was shifting its business to Lehman.
In fact, the actions of Friedlich and Glucksman energized Becker's seniors, the firm’s corporate finance staff, and almost every employee of the Department, along with some top salesmen in the Retail and Institutional Departments, to band together, work intensive and long hours, and maintain if not increase the regular flow of the commercial paper business without interruption - and with total competence and full enthusiasm. Personal visits were made to all key issuers, purchasers, and banking officers. FNMA was visited personally by Jim Becker; he was given full assurance of a continuing relationship. Jack Connor was shortly elected a Vice President, and was given continuing special support by John Colman and others in the Corporate Finance Division.
The whole development also led to the first discussion of a broader mission for the Department - the possibility of dealing in a range of other money market market and short and intermediate term instruments - certificates of deposits, bankers’ acceptances, short term municipal securities, short term securities of other government agencies, short and intermediate term corporate bonds, and the securities of the U.S. Treasury.
At Lehman, breaking into the commercial paper business was not easy. Since little progress was made in attracting loyal and quite satisfied Becker issuers, Lehman's progress depended on taking issuers away from Goldman Sachs and Salomon Brothers, and bringing new names into the market. In April, 1964, Lehman placed its commercial paper business into a subsidiary company with Friedlich as Chairman and Glucksman as President. In due course, the role of Friedlich was diminished and Glucksman went on in the the next few years to become Co-CEO, and then sole Chairman-CEO, of Lehman.
The bottom line of this defection was that Becker's client relationships overall were strengthened, banking and operating procedures were improved, the basis for a more organized new business effort was laid, and the way was opened for Jack Connor to bring into the department fresh talent, expertise, and leadership. To that end, Ray Ryan , who joined the New York corporate finance department in late October, 1963, was was moved over to the New York commercial paper department replacing Bill Cockrum who had completed his temporary assignment there. In early 1965, Ray was joined by Tom York. In the same year, Bill Kabacker rejoined the firm and reestablished a Los Angeles office initially devoted to commercial paper distribution, quickly backing the highly successful distribution work of Mac Skall in the San Francisco office, all during this period.
A further sign that the Becker commercial paper business was as solid as ever was the reappointment of the firm, in August, 1964, as the exclusive distributor of FNMA Notes, even though there was at this juncture very broad and heavy competition for this exclusive appointment. In it’s earlier term as exclusive FNMA distributor, Becker had distributed over $2 ½ billion of this agency’s Notes.
Weil, Pearson Acquisition
In May, 1965, Becker acquired the business of Weil, Pearson & Co. ("WP"), headquartered in Boston, and with offices in New York and Philadelphia. Earlier, Dick Mabbatt, the senior man in WP's Chicago office and formerly the Mayor of Lake Forest, IL, joined Becker's commercial paper sales force; after this event, the WP Chicago office was closed.
However small, Weil Pearson was a "granddaddy" in the commercial paper business- a predecessor firm was established in 1894, in Boston, just one year after A.G. Becker started his firm in Chicago. Through the years, Weil Pearson had retained some good, larger issuers, but mostly served companies of medium size. The staff, however, knew the commercial paper business and served a number of non-overlapping investor clients. The staff included key older marketing and ownership partners, who would be retiring, but also had some younger employees for whom a Becker affiliation offered a brighter future. A number of WP's issuers were viewed as candidates for investment banking services by Becker. WP's New York office was merged into Becker's. The goodwill in the Philadelphia and Boston financial and investment communities created by Weil Pearson's long presence was maintained and drawn on to support of the expansion of Becker’s institutional sales and regional stock exchange activities in those cities.
The WP absorption went smoothly in good part due to the planning and creativity of John Colman, acting as "in-house" investment banker. Very quickly, the Boston and Philadelphia offices were successfully marketing Becker's list of commercial paper issuers, and the firm’s institutional and regional exchange operations were quickly expanding. The capacity to distribute FNMA paper was substantially enlarged, and the ground work was laid for a continued expansion into a wide range of money market securities, intermediate term notes, and bonds.
By the end of 1967, the Commercial Paper Division was solidly under the national leadership of Jack Connor in Chicago, overseeing Jack Donahue as Chicago Department Manager, and Ray Ryan as New York Department Manager. Also, Ray Ryan had taken on the coordination of issuer development activities on a national basis (followed in due course by an even more intensive new business program - see later). Jack Donahue was assigned the extra duty of coordinating paper marketing in the regional offices with Chicago and New York. Talented personnel were being hired and promoted in all commercial paper department locations during this period.
As to short term interest rates during this 1962-68 period, rates were gently and steadily rising from 1962 to 1967, with the Fed Funds rate moving upward from about 2 1/2% to about 5 1/2%, and then falling back to about 4% in 1968. Looking forward a few years, the Fed Funds rate tightened in 1970, moving up to about 9%, fell back to the 4-5% area in 1971-72, rose again to about 13% in 1974, fell back to 5% in 1977, and then followed a precipitous rise to just short of 20% in 1979. Over the period of these sharp swings in the central money market rate, the new team at Becker performed quite successfully with a careful management of inventories, smart trading, expansive new issuer development, and comprehensive marketing.
Retirement Funds Evaluation Service
Throughout its history, the A.G. Becker organization had a pattern of product and service innovation. In 1964, one of the leading examples of this pattern was germinating in the mind of John Mabie, a leading broker in Becker's Chicago office. On his own, and in taking over relationships developed by his father who was now Becker’s President, John received credit for stock exchange commission business from various investment managers of pension funds at the request of officers of the corporations which were the sponsors of these funds, with whom John had contact. There were at the time a wide range of bases for the Treasurer of a corporation to ask pension fund managers to do business with Becker, or otherwise "redirect" commissions paid to the manager's primary broker to Becker, as was permitted by the various exchanges. John noted that hardly any such commissions related to something of direct value to the pension fund, or to the corporation which was making substantial annual contributions to the fund. He noted further that the corporation's contributions to its pension fund were in many cases very much affected by the favorable or unfavorable investment returns of the fund, thus requiring an increase in the corporate contribution, or permitting a reduction. This meant that there was a year-to-year change in the pension fund expense to the corporation, and thus its level of profit and earnings per share. How the pension fund was performing, and why, was - or should have been - a topic of keen and growing interest to corporate management.
John discussed these observations with his sales manager, Roger Brown, and between them an idea, and a number of questions, emerged. Would it be feasible to measure the investment performance of a pension fund in some meaningful detail and report those results to the sponsor? Many such funds were managed by the trust department of one of the corporation's lead banks. Would the needed data be made available from such managers? Would these trust departments cooperate or be obstructive? How might the results be interpreted meaningfully? Would the results be compared to some fixed standard, or, say, to the relative results of other retirement funds? Could differences in results be due to the different levels of investment risk being taken and, if so, how would this be dealt with? If Becker developed a service in this area, how would the firm be paid, and would it be profitable? Could Becker set a “fee” for a performance evaluation and reporting service which fee would be paid in fixed commission dollars and in effect not “cost” the corporation anything?
Roger and John then turned to Stan Winter, one of the firm's leading research analysts, to determine what information would be needed, and what were the issues in measuring the investment performance of a pension fund. Stan put his mind and pencil to work and identified the ingredients needed to measure, and to "evaluate" and "interpret" such performance in sufficiently accurate detail for communicating to sponsors and for management decisions.
Given Stan's conclusions, Roger decided the project had merit but needed a manager to push it forward, flesh it out, take it through a testing period - and then, if further merited, oversee a full scale production, marketing force, and service delivery. John was familiar with the availability of David Peterson for this job. Dave had good organizational skills, was a numbers guy, had worked for Booz, Allen, and was now free. After thinking through the profile of the ideal candidate for this position, and interviewing Dave, Roger hired him. Dave joined the firm as an Assistant Vice President in March, 1965.
Over the balance of 1965 and and into 1966, the firm enlisted the early participation of some 20 corporate clients in gathering the data for their pension funds including working out the challenges and procedures needed to obtain this transactional data. Also, Dave dug into the formulas and software which needed to be created, the computer systems that would be required, the design of the reports, and the machinery needed to print and publish them.
The evaluation and product development process was soon extended toward some 100 clients with continuous feedback and successful results. With this achieved, Roger and David, who was elected a Vice President in January, 1967, decided the time had come to publicly announce the service. This announcement appeared in the March, 1967, issue of the Chicago Tribune, which article also mentioned a recent report of the SEC that the market value of the assets of US private and public pension funds was now some $85 billion and that annual contributions to these funds was approximately $7.5 billion per annum.
Dave's and Roger's initial thinking was to market the new service through the firm's general securities sales force. However, with some early experience, it was determined that the service required careful explanation, particular knowledge, and a unique follow up - a much more time consuming and specialized marketing process than could be added to the workload of a general securities broker.
To be successful, a dedicated sales force with special training was needed. Coupled with the front-end expense of developing the support system for the service, itself singularly complex and solely dedicated to the emerging service, the "expense investment" in the new service would be substantial. Even so, the firm's management promptly approved of the development plan.
Sales Force Development
In the meantime, Anthony (“Tony”) Cashen had joined the New York office in the early 1960s to assist his friend and fellow Cornellian, Steve Weiss, in his expanding discretionary account business of managing the assets of substantial individuals. Tony’s self-starting and managerial talents were quickly obvious to Jim Lewis who exposed Tony to the opportunity to revive the Albany office succeeding Buck Boyd. Tony jumped at that challenge, but within another short period he caught the eye of Roger Brown and Dave Peterson in Chicago as the person to develop the special, dedicated sales force which would be necessary to carry forward the now-proven funds evaluation service (“FES”).
Starting in late 1965 and continuing over some four years, Tony hired and oversaw the training of a highly-talented team of well-motivated, professional, and prospectively quite effective FES sales/service representatives. This group among others, in New York, included Stu Gassel, Roger Bransford, George Baxter, Dick Frodsham, Ken Sheppard, Dan Freelund, Bill Brock, and Chris Frankenhoff, and in Chicago, Bob Brehm, Stu Porter, Tony Wilson, Ed Burke, Chris Martin, Sam Newman, Al Pisterzi and Charlie Klimkowski.
In parallel with the development of a designated sales force, Dave Peterson hired and organized a large scale operations support team under the early leadership of Scott Morgan, Frank Meyer, Tony Mickiewicz, Henry Tan, and others, including John Turner and Bob George. They handled the receipt and input of significant amounts of investment transactional data, and the processing of this data through the Becker-designed computational programs on costly dedicated equipment, including the printing of extensive, professionally designed client reports. One of the department's early brochures can be reviewed here. The database aspect of the FES program was a predecessor to the “big data” projects of recent years.
By late 1967, the FES was “departmentalized” (under the title “Funds Evaluation Department”), and became an important profit center in the firm under the continued leadership of Dave Peterson. The Department had by now pioneered specialized investment performance reviews of joint union-management, state and local government, and endowment funds, as well as corporate pension funds. By this date, some 10% of all the assets of U.S. corporate non-insured pension funds were under FES review. Now broadly launched, the FES would in future periods become a significant profit center for the firm and, like the firm’s commercial paper business, an important contributor to the Becker's reputation and recognition among chief financial officers as an alert, innovative, and professional corporate financial services organization.
Private Investment Activities
A.G. Becker & Co. from its earliest days, as described in the Chronicle, as was the case of many old-line investment banking organizations, had a history of making private investments, either by the firm and/or by the firm’s partners. In the case of some firms, this was a primary activity, and the value of the firm’s investments accounted for a significant portion of the firm’s capital. For large scale, individual customer brokerage firms - so-called “wire houses" - such activities were de minimus. For other firms, the activity varied widely.
For Becker, private investing in the 1920s was integrated with the firm’s public financing of investment companies, and the firm made occasional private investments in later years as earlier described. Since the post-war period, after the firm entered the equity securities and stock exchange commission business, private investing by the firm was very occasional and private investing by the firm’s shareholders was discouraged because of possible conflicts of interest.
In the early 1960s, as earlier mentioned, Jim Becker and his associates initiated a program of broader employee share ownership. Very importantly, the firm arranged with The First National Bank of Chicago a financing program which permitted younger employees to purchase Becker stock with a 20% down payment and a five year interest bearing personal installment loan from the Bank, with the installment repayments being deducted monthly from the employee’s paycheck.
Also, during this period, Jim Becker exchanged his common shares for an issue of preferred stock, thus passing more equity gains above the preferred dividend rate to other shareholders. Also during this time, various senior elder employees were retiring and their stock positions were being redeemed in part out of new capital being provided by new younger shareholders - but on a personally leveraged basis. All these factors added to the overall shareholder and corporate risk of an otherwise risky business.
Given these various considerations, the Executive Committee wisely decided in the early 1960s that, as a matter of policy, the firm would not make any private, unmarketable investments. In a related matter, John Colman, now head of the firm’s Corporate Finance Division, and backed fully by the author, reporting to him as head of the New York Corporate Finance Department, decided - at about the same time, and as a matter of corporate finance division policy - that we would not take on any assignments to raise venture capital funds. We concluded that this was a task (1) at which we were not very competent; (2) about which we did not know the investors/market for such funds; and (3) for which the firm would not be available as a side-by-side investor. As such, efforts spent on such projects would typically be a waste of our time.
With this background, in Appendix-6, the author tells, in some detail, the very interesting stories of Becker’s private investment activities, starting in 1964 and carrying into the 1970s and 1980s.
Proving in part that for all policies there may be exceptions, and looking back on the seven year period 1967-1973 during which investment account gains from 1965 investments forward were being harvested, the aggregate of these gains before taxes was almost $29 million, and after taxes, was just under $23 million. These after tax gains accounted for a little over 60% of the firm’s aggregate net income for this seven year period and significantly increased the firm’s capital and book value per share during those years.
For the six year period 1974-1979, the aggregate realized and unrealized gains on investment securities before taxes was an estimated $8 million and after taxes about $6.5 million. A good portion of these gains would have been attributable to the firm's investment in Becker Communications Associates (“BCA”), and described in Appendix-6 .
The archives hold little information about the financial status or results of the investment securities account after 1979. However, in the assets of the top holding company, as of October 31, 1981 and 1982, the investment securities account held both marketable and non-marketable securities valued on each date at a little under $22 million, substantially higher than for any prior period. The implications of this number cannot be determined in the archives or from anyone’s memory.
In 1971, given that the firm’s capital was now sufficient, and in the hands of younger employees, some private investing could be prudently pursued. At the time, two investment programs were already underway, and the firm had created an individual, family, and institutional clientele interested in private investing through and with the firm. With this in mind, management decided to group these activities in “Private Investment Services Group” under the oversight of Bill Cockrum, located in Los Angeles. The oversight of the PISG activities was just one of a number of managerial responsibilities assigned to Bill, as described elsewhere.
As suggested, the subsidiary story of Becker's Private Investment Program is laid out in Appendix-6
Research and Institutional Sales
During the six year period 1961-1967, the Research and the Institutional Sales Departments were in great flux. Demand for insightful, expert, industry-specialized research was growing rapidly especially from major investment institutions. Mutual funds were faced with accelerating inflows of funds outstripping internal trading and buy-side research personnel. Dependence on Wall Street was high but very competitive. In responding to this demand, Becker’s internal organization was in flux - in some ways highly professional, and in other ways, falling short.
At the end of May, 1962, Larry Kahn resigned as head of the Research Department, having served for eight years after being recruited by Jim Becker and Vince Flett in 1954. Vince took on the temporary oversight of the Research Department but shortly passed on that responsibility to Harry Weber who earlier had taken on, from Dave Dattelbaum, general sales management for the NY office, as well as heading up the firm’s growing block activity. The Research Department in the meantime had enjoyed an influx of new talent including Frank Kiser, Bob Wilson, Claude Wilson, Al Shapiro, Bill Earle (who took over the New York staff management), and Roderick (“Rory”) O’Neil (who took over the Chicago staff management). Don Hahn, with his technical analysis talents, joined Chicago in 1964. Jane Brett, who left the firm in early 1961, rejoined a year later. In May, 1966, Jane was appointed Acting Director of Research, but resigned a few months later to join another firm strictly as a senior analyst. In the meantime, Stan Winter left Becker to form his own investment counsel business; Rory O’Neil left to join Manufacturers Hanover Bank as head of Research (and later moved on to Travelers Insurance as Senior Investment Officer); and Robert Wilson moved to Retail Accounts and then departed to become a personal investor (and in that capacity acquired a national reputation).
In August, 1966, the Research and Institutional Sales Departments were again combined administratively under Jim Lewis, and in early 1967, Leo Bailey was brought into the firm as Director of Research, coming from the Prudential Insurance Company where he was head of common stock research. Leo began immediately to recruit and motivate talented analysts specializing in a number of industries, and bringing a new sense of direction and consistency to the firm’s research program. Don Hahn’s work in Chicago continued to broaden the growing reputation of the department.
In parallel, the firm’s institutional sales activities in all offices were combined into one department under Jim Lewis overseeing Ken Nelson, Hal Warendorf, and Harry Weber. Both the Research and the Institutional Sales Departments added talented personnel under the new central management leadership. In particular, cross trading and block positioning grew rapidly, as did the institutional activity in the San Francisco and Los Angeles offices.
At about this time, the John Langum dinners were reaching the height of their popularity, being held systematically in the nation’s major cities and very enthusiastically attended and received by a growing number of top institutional investment and chief financial officers. The dinners were much in the tradition of David Friday’s work for Becker in the late 1920s and early 1930s. Later, Don Hahn’s technical market analyses and presentations were similarly highly regarded. To enhance the communications of research ideas and insights to the general sales force, a program titled “Research Fortnightly” was developed, involving regularly scheduled teleconferences between research personnel and brokers in all offices. The idea was soon applauded for its timeliness and effectiveness.
National Retail Sales Growth
During this six year period, Roger Brown, who was appointed National Manager of Retail Sales in 1963, continued to lead this division and oversee and foster continued substantial growth in the recruitment, training, and sales activity of the firm’s general brokers, well exceeding 100 brokers by the end of the period. A major achievement by Roger was bringing along a cadre of sales managers including Don Pearson (see later), Burt Weiss and John Levy in New York (becoming in 1967 sales manager and assistant sales manager, respectively in New York), Larry Novac and Jack Arneson in Chicago (Chicago sales management team), assisted by John Rogers, along with various managers in branch offices. In addition, Roger continued to oversee the fledgling Retirement Funds Evaluation Service being developed by Dave Peterson, who Roger had hired in early 1965. As noted earlier, the Funds Evaluation Department was established in 1967 to encompass the rapidly expanding FES under Dave Peterson’s leadership.
During this period, very regretfully, Roger oversaw the closing of the Albany, Indianapolis, and Roseland offices (Rockford having been closed earlier), and termination of retail sales efforts in the San Francisco office. Fortunately, the Roseland sales teams (which had been under the management of Bob Pearson, succeeding his father) joined the Chicago office with a space expansion to accommodate them. The Milwaukee office was maintained with expanded space under the management of Wally Krier who succeeded Harry Leadingham. In the Albany office, Tony Cashen had succeeded Buck Boyd as manager, but shortly, with the office closing, Tony returned to the New York office to head the Eastern area marketing of the funds evaluation services, and then promptly as National Sales Manager, and became a key contributor to the forward growth and success of these services.
Toward the end of the period, under the training and guidance of the national sales management team, the retail sales force began to focus on the development of existing and new clients with substantial resources, increasingly drawing on Becker-researched ideas, and moving clients more toward planned and diversified portfolios. Upon request and after a careful review, selected brokers were permitted to maintain or establish discretionary accounts with the written agreement and consent of the client.
John Pogue/American Stock Exchange/SEC Matter
On or about 9:30 on Friday, August 26, 1967, the author was at his desk on the 18th floor of Two First National Plaza in Chicago, when his secretary entered and advised him that there was a man from the SEC in the lobby wishing to see him. The author invited the SEC man to come in. After displaying his credentials, he promptly explained that he was in the office to investigate Becker’s involvement in the trading of Western Equities (“Westec”) shares on the American Stock Exchange and would like immediate access to our records. He expected our prompt cooperation. The author asked him to wait outside for a moment while he phoned Bill Morrison, of Gardner Carton, our then General Counsel. The situation was summarized for Bill. He said to give the SEC representative our full cooperation in whatever he requested, and that the SEC had the power to make and implement such a request. Thus commenced the “Pogue/AMEX/SEC” matter.
It emerged rather quickly that the Westec stock had not opened on the day before (Thursday, August 25) due to an imbalance of sell orders, and that the ban on trading had been extended to the current day. Evidently, Westec’s President, Ernest Hall, had earlier taken a loan against shares he owned with the view to lending these funds to colleagues to finance their purchase of Westec shares, but that these shares had not been paid for. There were also a number of Westec acquisitions in process in which the consideration consisted of Westec shares and which thus hinged on Westec share values for satisfactory completion. There were also questions being raised about Westec’s accounting policies. The SEC instigated its investigation into all these matters on Friday, the 26th, with the view that, for various reasons, there may have been an effort to manipulate the market value of Westec shares. According to newspaper reports, a number of brokerage firms were involved and being visited by the SEC, but Becker was not listed. On Tuesday, the SEC suspended trading in Westec for 10 days.
In a quick review of the firm’s recent orders and trades in Westec shares which were handled by John Pogue, a retail broker in the Chicago office, and which emanated from Westec executives, it was clear that Becker had some participation in the matter under investigation, and that John Pogue was highly involved. Given this conclusion, early on the following Monday morning, the author met John as he entered the office for work, explained our position and concerns to him, escorted him to his desk to pick up any personal items he had stored there, and escorted him back to the elevators, advising him that his employment with Becker was terminated.
We retained special counsel to represent us, and during the following months, the AMEX and SEC investigation were pursued. It came to light that certain Westec executives, especially Hall, had financed their ownership of Westec shares with borrowed money. Declining share values had put these loans underwater. The share owners were being called for more margin and in fact they hoped (rather foolishly) by concerted and manipulative trading to increase the value of Westec shares such that their loans would be adequately covered by higher market values. Also, there was the hope of “saving” a number of acquisitions which depended on the market price of Westec shares. In due course, compounding the situation, Westec declared bankruptcy in late September.
It was relatively clear that at least some orders for and transactions in Westec coming from Becker, apparently were based on an intent to affect the share price, and thus it could be said that Becker was facilitating manipulative trades. Becker was sued by a customer. Some months later, after discussion and negotiation with the SEC and AMEX, Becker was reprimanded for “lack of supervision” and fined - to the best of the author’s memory - $100,000.
The matter was all settled in due course, but the whole event was a wake up call for the author and colleagues in sales management. We concluded that we needed a person with authority and expertise to be the firm’s Chief Compliance Officer, among other duties. As will be covered in the next time period, in January, 1968, John A. (“Jack”) Wing joined Becker as a Vice President and General Counsel to assume such duties.
Corporate Finance Expansion
Continued New Business
Under John Colman’s and successors’ leadership, the Corporate Finance Division continued to grow and develop new relationships and competencies in the 1962-1967 period. Among the commercial and industrial companies with whom the firm established new business relationships and carried out some form of corporate finance services during this period were Halo Lighting; Wolverine Shoe; the Milwaukee Braves; Beeline Fashions; Franklin Reality; Iowa Southern Utilities; Asgrow Seed; Methode Electronics; Boise Cascade; Indiana Telephone; Leaseway; Pennsylvania Power & Light; Breskin Publications; Star Tank & Boat; E.R.Moore; Voishan; The Seng Company; Emporium Capwell; Gamble-Skogmo; Regensteiner; Exchange National Bank; Scrivner-Stephens; Macleod Stedman Ltd.; Board of Admissions of the Lutheran Church in America; Southwestern Electric; Alabama-Tennessee Natural Gas; Western Pocahontas Corp.; Syracuse Supply; Mohawk Data Sciences; Data Products; Evans; Marshall Wells Realty; American Community Stores Corp.; Duplex Products; and American Reserve Corp.; along with various sponsors of exchange funds.
Transactions for clients retained before 1962 included Ashland Oil; Marquette Cement; Premier Industrial; Hammermill Paper; Mansfield Tire; and Universal Cyclops Corporation.
Finance Company Specialization
While in Chicago, but more fully developed after his move to the New York office in 1962, the author, with the encouragement of his boss, John Colman, saw some unique potential in arranging private debt and preferred stock placements for a range of companies in the consumer and sales finance field. Although there were very large companies in this field - such as Household, Beneficial, CIT, Commercial Credit, and Associates - there were, at the same time, many regional and sectional companies that had a creditworthiness meriting term loans from insurance companies, now interested in such loans. This was also a field in which specialized operational knowledge, particularly detailed credit analysis and evaluation, and operations and management judgment, were available to anyone who chose seriously to study and understand these companies – to be a “student” of them. In addition, Becker had some commercial paper clients in this field, and could, with good credit analytical support, broaden the number of issuers and outstandings, since paper of these issuers offered attractive yields. The firm had some staff persons, especially Bill Cockrum, and later bright, new recruits like Bob Henkle, Milt Walters, and Barry Friedberg, to name a few, who were willing to dig in, learn in depth about finance company operations, and extend the team’s marketing capability and analytical competence. The “producing” staff was backed by an exceedingly good team of credit analysts, including Brad Neubaur and Lou Moss, and later Dave Simpson, who helped establish and expand a systematic and basically conservative credit analysis procedure and culture. All these people working together, with additional employees joining the group in the next period of review, established Becker’s national reputation in this field. (1)
Among the finance companies which the firm served in this 1962-1967 period were Franklin Finance (the author’s first client); Industrial Finance & Thrift; Interstate Securities; Commercial Securities; Federal Services Finance; Government Employees Corp.; Stephenson Finance; Economy Finance; Colonial Acceptance; Civic Finance; Local Loan; Public Finance; Sun Finance; Signal Finance; Caribbean Finance; Southern Discount; Union Investment; Dixie Acceptance; and Credithrift. As will be described later, the Finance Group in due course broadened and extended its capabilities and services well beyond the finance company clientele.
Story of a Difficult Situation: A Freeze Up
During this period, an interesting development took place in the world of funding small finance companies. In a completely casual and unexpected way, on a Friday evening, the author learned that the members of the commercial banking group providing the lines of credit to one of Becker's finance clients, with about $4 million of outstanding commercial paper, were about to cancel their credit lines. The apparent reason for this action was that the client's loan portfolio had been hit by some substantial but unauthenticated losses. Promptly that evening, the author alerted the Credit Department leadership of what was learned, and over the weekend some of the firm's top credit people arrived in the client’s offices on Saturday afternoon and stayed over into Sunday. Late Sunday afternoon, in a telephone conference meeting, it was the best judgment of the team that the credit issues at the client, though significant, were known, non-recurring, and could be absorbed; that long term loan covenants of the company were not violated; and the client was “money good” and could recover and be back to normal in a few months - providing its bank credit lines and open market access could be maintained.
We decided that, early on Monday morning (the next day) we would (1) go to each holder of the client’s commercial paper and repurchase it (anticipating that each holder would sell their position to us); (2) promptly visit with the top banker at the client’s lead bank, informing him of our weekend analysis and intent to purchase all the client’s outstanding commercial paper that morning, as an indication of our judgment and confidence; (3) work with the client over coming weeks to confirm our weekend analysis and to lay out a plan to remedy the existing situation and avoid this type problem in the future; and (4) keep the banking group informed of our observations. The banking group leader, and through him all the participating banks, agreed with our plan by midday.
At the opening of business, we did commence to purchase all the client’s commercial paper (every holder sold to us). Earlier that morning, the author met with the Chairman of Becker’s lead bank, at O'Hare. The Chairman just arriving from a trip, explained the whole situation, and requested that the bank purchase, before the day’s end, all the client’s commercial paper that Becker would then own, with the view that, otherwise, that position might be determined by the NYSE to be a “non marketable” investment, and therefore be a substantial deduction from Becker's regulatory capital. The author assured the bank that we had a moral but not a legal obligation that the bank would not realize any loss in connection with this matter. The Bank proceeded with the purchase and it was concluded by mid-afternoon.
Within a month to six weeks, with our assistance, the finance client was clearly back on its feet, results and trends were favorable, bank funding was continued, and the market for the client’s commercial paper was undisturbed. We bought back the client’s paper from our lead bank, as expected, and began to place the client’s paper in the market in the normal course. Everyone took a deep breath of relief as the whole drama came to a favorable conclusion.
During this six year period, the Corporate Finance Division expanded its “merger and acquisition” business by deals with included Carnation’s acquisition of Contadina Foods; Premier Industrial’s acquisition of J. I. Holcomb; Gamble-Skogmo’s acquisition of Aldens; Scrivner-Stevens acquisition of Boogaart Supply; Federal Services Finance’s acquisition of Interstate Securities; John Blair’s acquisition of American Printers and Lithographers; Mohawk Data Sciences acquisition of Anelex; Alloys Unlimited acquisition of Northern Metal Products; General Acceptance's purchase of the assets of New Hampshire Finance; Upjohn’s acquisition of Asgrow Seed; Iseca’s acquisition of Waltham Watch; Liberty Loan’s acquisition of Automobile Banking; and Novo Industrial’s acquisition of Barnett International.
Corporate Finance Changes
As to the Division's management, in 1965, with the author’s departure from New York to Chicago, William Cockrum, a newly elected Vice President who joined the firm’s Chicago Corporate Finance Department in 1961 and moved to the New York office in 1963, was appointed Manager of New York Corporate Finance. In Chicago, John Griner was appointed Assistant Manager to John Colman for the Chicago Department while John Colman remained the overall head of the Corporate Finance Division. In late 1965, John became a Visiting Lecturer at the Harvard Business School involving weekly part time duties in Cambridge. In mid-1966, John was appointed Director, Office of International Monetary Affairs of the State Department, and moved to Washington, DC. With his departure, Kingman Douglass took over temporarily as Manager, but soon left to join Glore, Forgan, upon which move John Griner was appointed Manager of Chicago Corporate Finance. With the Colman departure, Jack Connor took over temporary oversight of the Corporate Finance Division along with his duties as head of Commercial Paper. By late 1967, the expansion of the commercial paper business required Jack’s full time attention and the author took over the oversight of the Corporate Finance Division on a temporary basis.
During this period, the Corporate Finance Division lost the services of John Stodder, John Jachym, Bill Saunders , Kingman Douglass, and Ed Jennett (who was only with Becker for three years). At the same time, the firm was building a younger, highly trained, increasingly specialized cadre of highly competent business school graduates dedicated to building professional relationships with chief and senior financial executives and providing specialized, expert and timely services. In some cases, senior officers and selected retail brokers were bringing assignments, contacts and opportunities to the department. The group of recruits was dedicated to substantially advancing the corporate finance business of Becker. These new faces included not only those persons earlier mentioned but also Dan Good, Bob Karlblom, Claude Wilson, Dave Heller (see later), Warner Rosenthal, Bill Woods, Richard Storey, John Bacon, Don Kirby, Charles Reed, and Jim Valeo, among others.
Exchange Operations and Trading, Syndication, and Municipal Bonds
Perhaps the first basic change in the firm’s organizational and management structure made by the author (as acting Chief Executive Officer) was announced in December, 1965. For some time, the following departments or groups, which had the common denominators of industry relationships, contractual dealings with other securities firms, special regulations, securities market making and brokering, and special communications, among other features, had separate and uncoordinated management. These were the Trading, Syndicate, Municipal Bond, and Exchange Fund Departments, the firm’s New York, American and Regional stock exchange activities and personnel, and the firm’s rapidly growing correspondent dealer and reciprocal businesses. The decision taken was to group all these activities into a Division with the title “Investment Dealers and Markets” and put Don Pearson in charge as Manager. Don graduated from the University of Illinois in 1949 and worked in sales management for construction contractors until 1953, when he joined his father in opening the Roseland office. He became a top producer and transferred to the Chicago office as Assistant Sales Manager of the retail operations, and then promoted to Sales Manager in 1962. Don was to take over the new division starting February 1, 1966 and absorb the various departmental units in stages through June. Larry Novak succeeded Don as the Chicago Retail Sales Manager with Jack Arneson as Assistant Manager.
The new Division got off to a good start. In midyear the firm absorbed S.R. Arias, Inc., a small but highly profitable brokerage firm which cleared through Becker for many years and which officed one floor above our New York office. Salvo Arias, with a large book of substantial clients, was elected a Senior Vice President and brought along two associates all joining our New York sales force. Bob Arias, son of Salvo, had been a NYSE floor broker for some years and he became Becker’s first employee floor broker on the NYSE. Shortly before this, we initiated our own employee floor brokers on the American Exchange, with Peter Orloff joining us, backed up by Joseph DeMartino, who moved down to the ASE floor from New York P&S, and later, Lou Miceli. Later, Richard Sartori would join the firm as a Vice President and manage the NYSE floor execution services. Also, during this time we expanded our specialist book and personnel on the Midwest and Pacific Coast exchanges.
In the Trading Department (primarily a dealer and market maker in up to 100 over-the-counter stocks), early in the period, Larry Marr (Chicago) was appointed National Manager, backed up by Ted Robinson (New York) as Eastern Manager. With Larry Marr’s retirement, Don Dwyer joined the firm to take over the Chicago Department and Ted Robinson became National Manager while continuing as head of the New York trading desk. Later on, Mark Gleason would join the Chicago operation. Results for the Trading Department in 1967 were excellent.
Don also clarified and strengthened the managements of the trading and municipal departments and gave a fresh evaluation to the syndicate manager position occupied by Frank Lockwood since early 1962. At the end of 1967, Sam Yonce replaced Frank Lockwood as National Syndicate Manager, continuing to work closely with Art Curtis in Chicago, who was enjoying his 40th year with Becker.
Don also took command of the Municipal Department situation fostering the hiring of some good people including John Dancey, Bob Rudolph, Mike Brookins, among others, and reenergizing some old hands. Despite adverse markets, the Municipal Department began to achieve excellent progress and profitability by the end of the period.
By early 1967, it was becoming apparent that span of oversight of the new Division was too broad, and that the “exchange operations”group - including the very “tight” back-office system supporting the correspondent and reciprocal business connected with the firm’s floor brokerage and specialist operations on the NYSE, ASE, and five regional exchanges - needed separate, intensive and developmental management. To this end, the Division was split forming the Trading, Municipal and Syndicate Division (including industry relationships) and the Exchange Operations Division (the balance of the former division’s components).
The new Exchange Operations Division encompassed all specialist operations and floor brokerage services, correspondent and reciprocal dealer services, and wire room and order desk services. In aggregate, this new division contributed important profits to the firm. The new Division was placed under the management of David Heller. Dave joined the Chicago Corporate Finance Department in late 1961, transferred to work as Vince Flett’s assistant in mid-1962, and under Vince’s mentoring, over the next five years studied, helped improve, and became a student of all facets of the firm’s operations and activities making up the new Division.
Becker continued to develop and improve the back-office support given its growing stock exchange business now fully supported and serviced by the MSE Clearing Corp. Becker was the largest client of MSECC. However, because Becker had a wide range of other securities activities in which it dealt and traded as principal, and which did not settle through an exchange and clearing house, a completely separate set of operations systems had to be maintained and procedures steadily improved. All these activities were grouped in the Operations Division. In 1963, Joe Goeschl moved to New York and became head of that Operations Department. Soon thereafter, the Finance functions of the Division were split out as a separate organizational unit. In late 1963, Russ Urquart resigned, and Jerry Beebe became Becker’s Comptroller. In mid-1967, with the death of Andy Baird, Dave Heller was elected Treasurer, and in late 1966, Al Kopin joined Becker from Arthur Andersen to head firm-wide operations, and in time would succeed Dave Heller as Treasurer. During this period, the firm established an Internal Audit group headed by Ted Kowalski who reported to an Audit Committee of the Board. Ben Witt took over all EDP operations. A formal program of systems and procedures analysis was initiated.
These and many other moves put Becker in an especially favorable position when high trading volumes took place in mid- and late-1967. The daily volume of trades exceeded 10 million shares, setting new records daily. Even with shortened trading hours, the back-offices of many firms couldn’t handle the volume and lost control. The situation was exacerbated by the need to transfer paper certificates, still the practice at that time. Looking back, it is pleasing to note that the Becker Operations Division was able to handle the record-breaking transactional volume of 1967 with a minimum of disruption, low error count, and high efficiency.
During this, former, and subsequent periods, despite the systematic, constant streamlining of operations and related accounting functions in the securities business, incorporating a wide range of electronic applications, there was no substitute to having on board a cadre of employees with long experience in basic back-office principles and procedures for the securities business. For many decades, Becker was blessed with having in its employ a group of long experienced, culture-setting, back office employees including (with the year each joined the firm) Charlie Sachweh (1917), Fred Link (1918), Charlie Stuart (1918), Les Denning (1920), Herb Elsholz (1920), Hal Ahlberg (1921), Ray Egger (1925), Vince Furlong (1929), Don Fleming (1920), Fred Carboni (1934), and Joe Summers (1934). A salute goes to these people. They were the old-timer core of Becker's "professional" accounting and operations capability built up through the years. Note, too, that seven of these key employees worked under the guidance of Abraham Becker.
Most of the training within the firm took place by participating in actual experiences, and mentoring and critiquing thereafter. Employees selling securities were of course required to take training from external sources in preparation to becoming registered representatives. Some departments, especially operations, had regular internal training programs in light of the very specialized procedures which were required.
In late 1965, the firm held a four-day out-of-office management training conference for over 50 management and supervisory personnel focusing on managerial styles and organizational culture. The sessions were intensive and included sensitivity training involving frank, personal feedback. The sessions proved to be helpful in shaping a common standard for desirable managerial behavior, a common glossary for discussing management style and effectiveness, and more openness among managers including regular feedback.
Another specialized training program was later offered to persons engaged in presentations and generally speaking before groups. Employees from many divisions qualified for this training and it was considered quite effective. This training, and its legacy, the firm's various specializations, and the national advertising program, may altogether have had some part in the widespread public speaking by and quotations of Becker people which took place in late 1960s and into the 1970s and 1980s.
Advertising and Public Relations
In early 1965, the firm initiated a brand new advertising program designed to raise the awareness of the firm A free lance copywriter, Ben Laitin, working with a relatively new, small, and very creative agency, Draper Daniels, managed the program. The campaign initially was directed to Chicago media viewers, but shortly into 1966, the campaign was extended to the East and then across the nation. The whole program was carried out from early 1965 through mid-1969 and was highly effective in its purpose. This campaign, and the firm's overall external communications program, is reviewed in more detail in Appendix C-5.
Also in 1965, the firm initiated the publication of the “A.G. Becker Guide to Publicly Held Corporations in the Chicago Area.” Each page of the binder-bound Guide provided a brief business description, recent financial results and condition, officers and directors, and other information on some 290 publicly traded corporations in the Chicago area, including portions of abutting states. The Guide was free and quickly became a “must,” desk top item for a wide range of professional and business people, not only in the Chicago area, but around the nation. The Guide was principally the brain child of Marilyn Scholl who also oversaw the editing and publication of the Guide for many years. (2)
In mid-1967, the firm distributed and/or made available to all clients a small pamphlet summarizing the Becker services to individuals, institutions, corporations, and investment dealers. As will be noted, the pamphlet also included the firm's balance sheet as of April 28, 1967 and showed $13.5 million in stockholders’ equity. The pamphlet was the first step in a plan of the author regularly and publicly, and as soon as feasible, to publish the firm's financial results through an annual report.
At the end of 1961, the firm had offices in Chicago, New York, San Francisco, Albany, Milwaukee, Rockford, Indianapolis, and Roseland. By the end of 1967, the offices in Rockford, Roseland, Indianapolis and Albany were closed. Offices in Boston and Philadelphia were established with the acquisition of Weil, Pearson. During the period, Bill Kabacker, who started with Becker as a messenger in the Chicago office in the late 1920s, returned to the firm to establish a credit securities sales office in Los Angeles (Becker's original office in Los Angeles was opened in the early 1920s and closed during the depression).
Throughout the period 1962-67, the "Becker Bulletin" was distributed daily to all offices and covered the evolving development and growth of firm.
Retirements and Deaths
During the six years through the end of 1967, the firm lost by retirement the active leadership and participation of Andy Baird, Fred Carboni, Herb Ekstrom, Kent Sykes, Harold Wood, Bill Davis, Buck Boyd, Joe Levin, David Dattelbaum, Elmer Hassman, Al Pearson, Charlie Ritter, Charlie Sachweh, William Mabie, Irving Sherman, Herb Schaffner, and Vince Flett, who was elected a Senior Vice President in anticipation of retirement in March, 1968. John Colman’s services were also lost by a leave of absence to serve in Washington.
Top Governance Groups: Board of Directors and Executive Committee
At the end of 1962, the Board of Directors of A.G. Becker & Co. was composed of fifteen persons as follows (unfortunately the archives have no photo of this group) Andrew M. Baird, James H. Becker (Chairman), Roger O. Brown, Maurice J. Cann, John C. Colman, David N. Dattelbaum, H. Vincent Flett, John Friedlich, Joseph J. Levin, William D. Mabie, Alwin L. Pearson, William L.Saunders, Herbert T. Schaffner, David G. Skall, and Harry F. Weber, Jr.
As of April, 1964, the Board of Directors was composed of the following persons (once again, the archives do not have a photo of this Board): James H. Becker (Chairman), Irving Sherman, Joseph Levin, Andrew Baird, Herbert Schaffner, David Skall, Maury Cann, William Mabie, Vincent Flett , John Colman, Kingman Douglass, Roger Brown, Harry Weber, Paul Judy, John F. Connor, David Heller, James P. Lewis, and Donald Pearson.
A late 1965 photo of the Board of Directors (John Colman and David Dattelbaum being absent) appears here Seated left to right: Vince Flett, Bill Mabie, Jim Becker, Paul Judy, Irv Sherman. Standing (left to right): Roger Brown, Herb Schaffner, Mac Skall, Jack Connor, Jim Lewis, Harry Weber, Don Pearson, Maury Cann, and David Heller.
The Board of Directors as of April 29, 1966, was composed of: James H. Becker, Chairman; William D. Mabie, President; Irving H. Sherman, Vice Chairman; Paul Judy, Chairman of the Executive Committee; David N. Dattelbaum, Senior Vice President; Vincent H. Flett, Vice President and Secretary; David B.Heller, Vice President and Treasurer; and the following Vice Presidents and Directors: Roger O. Brown, Maurice J. Cann, John Colman (absent), John F. Connor, James P. Lewis, Jr., Donald E. Pearson, Herbert T. Schaffner, Malcolm Skall, and Harry F. Weber Jr.
At the end of December, 1965, the Chicago office held its traditional year-end party at the Standard Club. A photo of the attendees was taken and has actually been viewed by the author, but has been misfiled or otherwise mislaid and thus cannot presently be published. When located, it will be mentioned and linked at about this location in the story. In the meantime, it may be of interest that the author identified a number of attendees at the part as listed in footnote (3) at the end of this chapter.
With the election of Paul Judy as President and Chief Executive Officer in December, 1967, effective January 1, 1968, and the retirement of Messrs. Mabie , Sherman, Schaffner, Dattelbaum , Cann, and Flett, (in March, 1968), coupled with the election to the Board of John Mabie, Dick Gilder, Steve Weiss, and Ken Nelson, the Board of Directors at the start of 1968 was composed of James H. Becker, Chairman; Paul Judy, President and Chief Executive Officer; David B. Heller, Vice President and Treasurer, and the following Vice Presidents and Directors: Roger O. Brown , John F. Connor, James P. Lewis, Jr., Don Pearson, Malcolm Skall, Harry F. Weber Jr., Richard Gilder, Stephen Weiss, Ken Nelson, and John Mabie. A December, 1967 photo of this group of active and former Directors appear here. Other photos of the Board, or gatherings of the Board and former Directors, during this period, are in the archives, with approximate dates: 1968-9. 1970. 1973. 1974. 1980.
Growth in Personnel
At this time, the Executive Committee was composed of Paul Judy (Chairman), Roger Brown, Dave Heller, Jim Lewis, Don Pearson, and Jack Connor. Some other photos of the Board, or gatherings of Directors and former Directors, during this period are in the archives, with approximate dates. 1968-9 1970,
As noted earlier, the firm entered the 1962-67 six year period with 470 employees up 70% from the 275 existing at the end of 1955, or a net growth rate for that period of some 9% per annum. For the six year period 1962-67, net employee growth (additions less resignations, retirements, and dismissals) was about 310, up some 66% for the period. This resulted in some 780 Becker employees on December 31, 1967, or a net growth rate for this period, again, of about 9% per annum.
As noted earlier, in 1947, A.G. Becker & Co. was owned by 14 employees, and by 1961, this group had expanded to 24. Moving forward another six years, to the end of 1967, and reflecting the plans and objectives of James Becker and his senior colleagues, the group was expanded to 67 employees.
Despite the ups and downs of this six year period 1962-1967, the financial results of the period were quite satisfactory. As noted earlier, the firm ended 1961 with a new worth of $7.3 million, revenues of $10.4 million, and profits of about $1.2 million. Over the next six years, the firm's revenues and earnings continued to grow, as shown here. Revenues increased some threefold to $32.7 million, and profits for the six year period totaled some $7.9 million, of which $4.3 million was earned in 1967. Net worth grew to $12.2 million. Net asset value per share grew from the earlier reported December 31. 1961 value of $18.93 to $100.90 as of October 31, 1961. (Adjusted for subsequent stock splits and stock dividends, these amounts were, respectively, $.85 and $4.59).
As noted earlier, Annual Reports for these years are available in the list in Annual Publications.
(1) Little did any of those involved in the firm's finance company specialization in 1960 and forward, know that in connection with the emergence in America of consumer installment credit, and the formation of entities to extend it, in the 1920s as earlier reported, A.G. Becker & Co. was a leader in recognizing, promoting and financing these new enterprises.
(2) With the acquisition of Becker by Merrill Lynch in 1984, the Scholls purchased the Guide and with the support of a sponsor carried forward its publication for some years.
(3) The names of employees that the author could identify in the photo of the 1965 Chicago Office Year-end party at the Standard Club, by alphabetical last name, are as follows: Hal Ahlberg, Andy Baird, James Becker, Jerry Beebe, Neal Breskin, Roger Brown, Art Calson, Maury Cann, John Colman, Jack Connor, Jack Donahue, Col. Donoghue, Herb Elsholz, Vince Flett, Henry Freedman, Burt Friedlander, Phil Greer, John Griner, Don Hahn, Elmer Hassman, David Heller, Wally Hintz, Paul Judy, Marvin Letwat, Joe Levin, Bill Mabie, John Mabie, Tom McCausland, Russ Meyer, Lon Moellentine, Ken Nelson, Larry Novac, Bill Osborne, Don Pearson, Tom Pick, John Pogue, Charlie Ritter, John Rogers, Herb Schaffner, David Scholl, Marilyn Scholl, Charlie Strauss, Kent Sykes, Bob Wieczorowski, Stan Wirt, and Harold Wood (46).