CORPORATIONS: Revolt at Kress

S. H. Kress & Co., founded 1896, was beginning to feel its years. While its five-and-ten competitors expanded vigorously into the suburbs and prospered in the postwar boom, Kress kept its stores in the downtown sections, saw sales of its 261-store chain slump from $176.2 million in 1952 to $158.6 million last year. Shareholders could do little to change management's conservative policies because the controlling stock—a 47% block—was held firmly by shy Chairman Rush Harrison Kress, 80. He owned 5% outright and traditionally was permitted to vote the 42% owned by the Samuel H. Kress Foundation, which has spent more than $100 million for art, medicine and education.

Last week the foundation's trustees rebelled, gave word that they will vote their own stock at the Kress annual meeting May 13. One big reason: Kress stock dropped from $50 in 1956 to $29 last week, and dividends were cut from $3 to $2, costing the foundation almost $1,000,000 a year in income.

R. H. Kress girded for an all-out proxy war, said management will solicit proxies from stockholders for the first time. But it will have to battle some of the brightest lights of U.S. business. Among the rebelling foundation trustees—appointed by R. H. Kress himself—are New York Stock Exchange President G. Keith Funston; Frank M. Folsom, executive committee chairman of Radio Corp. of America; and Harold H. Helm, board chairman of Manhattan's Chemical Corn Exchange Bank.

What the rebels want is to seat four new men on the company's seven-man board, and to put through a management survey of Kress to see how the chain can be made aggressive again. R. H. Kress opposed the management survey, charged that the revolt was a maneuver by competing F. W. Woolworth to take over Kress, since Foundation Trustee Helm is also a Woolworth director and had suggested a merger. This charge so piqued Helm that he resigned from the foundation.

In a showdown, Chairman Kress will have a hard time overcoming the rebels. Since they are a majority of the foundation's trustees, they have 42% of the stock in their control, will need only a small number of proxies from other stockholders to gain a majority.