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-24On December 9, 1931, t h e management r e p l i e d as f o l l o w s :

{ T n u i s a m m r a

C n r p n r a t i i n t
•f
San Francisco, California,
December 9, 1931.

To the Stockholders

of

T RAN SAM KRICA CORPORATION:
A r o m m i t t w c a l l i n g themselves "Ass<iciated Transamerica Stockholders," sponsored by M r . A . P.
C i a n n t n i , have, through c i r c u l a r letters which your Board regards as inaccurate and misleading, criticized
the management of y o u r C o r p o r a t i o n and its policies and have asked for proxies.
I he recently elected members of y o u r B o a r d accepted their positions with the definite purpose of supp o r t i n g the management in c a m ing out the policies announced in the letter to stockholders dated Septeml>er
22, I ' M I , and .til ineinbeis of the B o a i d have u n q u a l i f i e d l y endorsed these policies.
^ our attention is called to the f o l l o w i n g :
( 1 ) I n the September letter, the present Board c l c a r l y stated its position and plans, which include the
complete separation of its controlled banks f r o m the other activities of Transamerica. Y o u r Board l>elieves
that it is unsound t o . l i n k , through a h o l d i n g company, the ownership and control of a bank with other unrelated activities, and that it is essential to the complete success of any bank that it should l>e o|>erated and
p u b l i c l y regarded as an independent institution without responsibility f o r , or connection with, any other
business. It was tor this reason that y o u r Board announced in Septeml>er the policy of confining the Corporation s investments in the banking field to m i n o r i t y interests not involv ing c o n t r o l l i n g influence. The eventual
separation of Bank of \ n i e r i c a N. T . & S. A . ( C a l i f o r n i a ) f r o m the control by Transamerica, in accordance
with thi" policy,
i 11 g i \ e the Bank complete independence in its lending and investment policies, which is
the oniv sound f o u n d a t i o n f o r a bank.
(2)
Y o u r B o a r d has d e t e r m i n e d that the C o r p o r a t i o n w i l l not dispose of any of its holdings
i n the stock of B a n k of A m e r i c a N . T . & S. A . ( C a l i f o r n i a ) , except i n accordance w i t h a p l a n w h i c h
shall h a v e first been a p p r o v e d by T r a n s a m e r i c a stockholders at a m e e t i n g called for the purpose.
( 3 ) T h e present management h;i- furnished to stockholders frank and adequate report* and audited
Statements «»t th«" condition and .ifT.iiis of the C o r p o r a t i o n which had never previously been made available.
In order fh it stockholders might be i n f o r m e d a* to the a*<.ct v.ilue of their investment, \ o i i r Board published
figures
in September showing t h e net
v a l u e s 4.f the C o r p o r a t i o n s holdings .ilier e l i m i n a t i n g all value
for good w i l l and p r o v i d i n g for necessary reserves.
< I i 1 he present management has m a t e r i a l l y reduced the heavy short-time debt of the Corporation
ii. « r i l e d f r o m the former a d m i n i s t r a t i o n .
I 5 I I lie i n t e r r u p t i o n of the payment of d i v i d e n d s was a necessary and conservative measure to conserve the Corporation's cash resources in order f u r t h e r to reduce such debt.
H»l \ o u r Hoard lias arranged for the merger of T h e Bank of \ m e r i c a N . A . ( N e w Y o r k ) w i t h The
N a t i o n a l Citv K i n k of New Y o r k , a» a result of which your Corporation's holdings in the former Bank have
been exchanged f>-r a substantial interest in T h e National City Bank, one of the leading banking institutions
in the country. ^ our Board believes this change w i l l m a t e r i a l l y increase the value of this investment.
( 7 ) Y o u r Board ha* returned to stockholders the f o r m e r seven-year proxies r u n n i n g to M r . G i a n n i n i
and hi^ associates, in order to restore to stockholders the freedom of voting to which they are entitled.
( 8 ) Y o u r P i rectors feel that the management has made definite progress toward p u t t i n g the affairs of
your CorfMiration on a sound and conservative basis.
(9)
A s a n y c o n t i n u e d controversy b e t w e e n shareholders is d e t r i m e n t a l to a corporation, y o u r
B o a r d has decided to a m e n d the b y - l a w s t o advance the next a n n u a l m e e t i n g f o r the election of
directors to F e b r u a r y 15, 1 9 3 2 (instead of M a r c h 3 1 , 1 9 3 2 ) , at w h i c h t i m e stockholders m a y determ i n e w h e t h e r they w i s h to support the present B o a r d or one chosen by M r . G i a n n i n i a n d his associates. T h i * change of date w i l l not invaJidate proxies already properly signed.
(10)
Stockholders are requested to indicate their support of the present B o a r d of Directors by
signing a n d r e t u r n i n g the enclosed p r o x y in the enclosed e n v e l o p e w i t h o u t delay. T h i s p r o x y , w h e n
signed, a u t o m a t i c a l l y revokes any p r o x y previously given, e v e n if such p r o x y be by its t e r m * irrevocable. N o p r o x y i* irrevocable. T h e last p r o x y »uper*ede* all previous ones.
(11)
I f . a f t e r reading thi* letter, y o u h a v e a n y doubt a* to w h a t action y o u t h o u l d take, y o u
are urged, in your o w n interest, to consult a n y b a n k or b a n k e r of standing i n y o u r c o m m u n i t y .




BY ORDER OF T H I . BOARD OF DIRECTORS
H i s t t v WVIKFR
( Kairrt,in

'

JAMF.3 A . H u I M M T J
President

(Era n s a m r r i r a

(Cnrjut r a t tint

San Francisco, C a l i f o r n i a ,
December 9, 1931.

To the Stockholders

of

TRANSAMERICA CORPORATION:

I n connection w i t h the enclosed letter to stockholders f r o m the Board of Directors w i t h reference to
) 'Associated Transamerica Stockholders," and in view of the attack upon the policies of the present management by this group, y o u r officer* take this o p p o r t u n i t y to communicate to a l l stockholders i n f o r m a t i o n which
we have already given to some in answer to i n q u i r i e s , and which we believe, w i l l make it clear that stockholders, for their own good, should support the present Board of Directors w h i c h is responsible f o r the
management ofHhe Corporation.

I.
y

I n its letter, y o u r B o a r d o f Directors states again the reasons f o r a d o p t i n g the p o l i c y of u l t i m a t e l y disposing of the shares of stock i n the banks controlled by Transamerica, namely that it is essential to the
complete success of a bank that it should be operated and p u b l i c l y regarded as an independent institution
without responsibility for, or connection w i t h , any other business. I n order that there may be no misunderstanding, we wish to emphasize, as previously announced, that no plan f o r disposing of T r a n s a m e r i c a ' s holdings of stock of Bank of America N . T . & S. A. ( C a l i f o r n i a ) w i l l be adopted w i t h o u t a vote o f the stockholders
of Transamerica at a meeting called f o r that purpose, nor w i l l Transamerica stockholders be asked to vote
on any plan u n t i l they have had an o p p o r t u n i t y f u l l y to i n f o r m themselves r e g a r d i n g it at the time of its
submission. Pending the a p p r o v a l of any such plan, the C o r p o r a t i o n w i l l not dispose o f any of its holdings
i n the stock of that Bank.
II.

I n the recent communication f r o m "Associated Transamerica Stockholder*.." reference is made, to
salaries and compensation o f officers. It i> proper to state the following..for the i n f o r m a t i o n of stockholder*:
(1)

The present officers of the C o r p o r a t i o n and its sub^idiar ies are r e c e i v i n g and have received d u r i n g

the period of the present a d m i n i s t r a t i o n onlv n o r m a l salaiies, common*urate with the duties and responsibilities of their respective offices.
(2)

The o n l y record o f payment of extraordinary compensation relates to M r . A. P. G i a n n i n i . although

he allowed the impression to be created that lie worked for l i t t l e or no compensation. I n 1<>27, the Board of
Directors of Bancitaly Corporation, predecessor of Transamerica, adopted a resolution a p p r o v i n g the payment to M r . G i a n n i n i , as President of Bancitaly C o r p o r a t i o n , of 5 ' , of the profits each year. T h i s arrangement was not continued after the f o r m a t i o n of Transamerica Corporation, but presumably based upon his
c l a i m to such a percentage of the profits o f Bancitaly C o r p o r a t i o n , there was placed to M r . Giannini*s credit
f r o m the cash funds of Bancitaly C o r p o r a t i o n or subsidiaries of Transamerica, d u r i n g the three year period
1927-1930 no less than Three m i l l i o n >cven hundred thousand d o l l a r s ( $ 3 , 7 0 0 , 0 0 0 ) .

T h i s sum doe* not

include the One m i l l i o n five hundred thousand d o l l a r s ( $ 1 , 5 0 0 . 0 0 0 V given at M r . G i a n n i n i ' s request by
Bancitaly Corporation to the U n i v e r s i t y of C a l i f o r n i a to establish the G i a n n i n i Foundation and for the building of G i a n n i n i H a l l , m a k i n g Five m i l l i o n two hundred thousand dollars ( $ 5 , 2 0 0 , 0 0 0 ) in all.

Of said

Thre** m i l l i o n seven hundred thousand d o l l a r s ( $ 3 , 7 0 0 , 0 0 0 ) , T w o m i l l i o n four hundred thousand dollars
( $ 2 , 4 0 0 , 0 0 0 ) was placed to his credit between December 30, 1929 and Januarv 21, 1 ( >30, a f t e r the stock
market crash and immediately before his retirement f r o m active service w i t h the Corporation.

Ml of -aid

Three m i l l i o n seven hundred thousand d o l l a r s ( $ 3 , 7 0 0 , 0 0 0 ) has }>een w i t h d r a w n bv, or paid upon the order
of, M r . A. P. G i a n n i n i , except an u n p a i d balance of Seven hundred ninety two thousand dollars ($7**2.000)
which in September of this vear M r . G i a n n i n i demanded and whieh the present Board of Directors, on the
advice of counsel, has refused to pay. The Board has sought the advice of eminent counsel, regarding the
 payments made to M r . G i a n n i n i .
legality of the


III.
T h e recent c o m m u n i c a t i o n of " A s s o c i a t e d T r a n s a m e r i c a S t o c k h o l d e r s " refers to the r i g h t of stockholders to f u l l i n f o r m a t i o n r e g a r d i n g the a f f a i r s o f t h e i r C o r p o r a t i o n .

It w i l l l>e remembered that d u r i n g

M r . A . P. G i a n n i n i ' s a d m i n i s t r a t i o n , when he held seven-year proxies f r o m holders of a m a j o r i t y of the
stock, stockholders were f u r n i s h e d w i t h o n l y the most meager reports w h i c h d i d not e x p l a i n the C o r p o r a t i o n ' s
financial position.

T h e management w h i c h succeeded M r . G i a n n i n i d e t e r m i n e d to change these methods.

One of their first acts was to e m p l o y Messrs. Ernst & Ernst, c e r t i f i e d p u b l i c accountants, to make a t h o r o u g h
study of the C o r p o r a t i o n ' s a f f a i r s . A f t e r r e c e i v i n g the report of these accountants, the B o a r d of Directors
issued to stockholders their f u l l statement dated J u l y 12, 1 9 3 0 , w h i c h was the first official statement adequate
to enable stockholders to f o r m t h e i r o w n o p i n i o n s as to the value of t h e i r p r o p e r t y . A t the same p e r i o d the
B o a r d o f Directors caused the shares of the C o r p o r a t i o n to be listed on the New Y o r k Stock Exchange, w i t h
w h o m they entered into an agreement to p u b l i s h a u d i t e d a n n u a l statements to stockholders.

IV.
T h e spokesman f o r the " A s s o c i a t e d T r a n s a m e r i c a S t o c k h o l d e r s " calls attention to the decline i n the
market value of T r a n s a m e r i c a stock w h i c h had progressed f a r d u r i n g M r . G i a n n i n i ' s r e g i m e and has continued d u r i n g the a d m i n i s t r a t i o n of the present management.

Some o f the causes of this decline are as

follows:
(1)

T h e decline f o l l o w e d the nation-wide decline o f security prices and especially of the shares o f

investment companies.
(2)

The absence of accurate i n f o r m a t i o n r e g a r d i n g the C o r p o r a t i o n d u r i n g the f o r m e r a d m i n i s t r a t i o n

resulted in s u r r o u n d i n g the stock w i t h mystery w h i c h doubtless c o n t r i b u t e d to its rise d u r i n g the years of
generally r i s i n g prices, but operated i n c o n t r a r y fashion to b r i n g d o w n the p r i c e of the stock when the market
turned.
(3)

The fact that when the entire market began to decline at the end o f October, 192**, the C o r p o r a t i o n

undei M r . G i a n n i n i ' s d i r e c t i o n m a i n t a i n e d T r a n s a m e r i c a at a high and a r t i f i c i a l level f r o m which it fell
r a p i d l y when the support was removed. D u r i n g the f o u r weeks e n d i n g October 2 8 , 1929, over $68,(XX),000
was expended by the C o r p o r a t i o n in the purchase, on balance, of over 1,0°K),000 shares o f T r a n s a m e r i c a
stock at an average cost ot over j*(>2..~>0 per share.

This p o l i c y o f a t t e m p t i n g to h o l d the p r i c e of Trans-

america >t«H'k, w 1 it'll the prices ot .ill other securities were d r o p p i n g r a p i d l y left the C o r p o r a t i o n at the end,
of 1929 w i t h a serious reduction in q u i c k assets and w i t h large indebtedness. A n o t h e r result of that a r t i f i c i a l
and costly attempt of Transamerica to peg the market value o f its o w n stock was to give speculators and
market operators an o p p o r t u n i t y of selling their stock to the C o r p o r a t i o n at h i g h prices, w h i l e l o y a l stockholders. u n i n f o r m e d of the s i t u a t i o n , suffered great losses. Those who sold d u r i n g this p e r i o d profited, w h i l e
those who remained l o y a l shared i n the loss to the C o r p o r a t i o n r e s u l t i n g f r o m the purchases of T r a n s a m e r i c a
stin k. F o l l o w i n g the stock market crash in the f a l l of 1929, the C o r p o r a t i o n faced a difficult f u t u r e . It was
at this point that M r . G i a n n i n i retired.

^
V.

T h e charge that the f a l l in the value of T r a n s a m e r i c a <=tock is due to m a n i p u l a t i o n and sales by persons
associated w i t h the present management i* not true. Y o u r C h a i r m a n wishes to p o i n t out to stockholders that,
since he became y o u r chief executive officer he has been the largest h o l d e r of T r a n s a m e r i c a stock and that he
has never sold a single share of his holdings or in any way speculated in the stock, d i r e c t l y or i n d i r e c t l y .

VI.
T h e "Associated T r a n s a m e r i c a S t o c k h o l d e r s " refer to the div idend p o l i c y d u r i n g M r . G i a n n i n i ' s regime
and the reduction and later the suspension of d i v i d e n d s , w h i c h occurred p r i o r to the election of the present
Board. T h e d i v i d e n d p o l i c y d u r i n g M r . G i a n n i n i ' s regime was made possible by the appreciation in securities generally d u r i n g an exceptional p e r i o d of r i s i n g prices. Such d i . i d e n d p o l i c y was bound to end upon the
advent of the periinl of r a p i d l v d e c l i n i n g prices which Iwgan in the f a l l of 1929 and has continued u n t i l the
present time. M r . G i a n n i n i ' s retirement coincided w i t h the l»eginning of the p e r i o d of d e c l i n i n g prices, since
w h n h tune the p r i n c i p a l s o u n e , and indeed almost the o n l y source, of income for d i v i d e n d s has been the
current income of the C o r p o r a t i o n ' s investments.

Y o u r Board's decision to i n t e r r u p t the payment of d i v i -

dend" was •» wise and necessarv measure to conserve the C o r p o r a t i o n ' s cash resources in order to p r o v i d e for
the reduction of the Corporation's large floating debt, chiellv caused, as pointed out above, b> the large purchases of T r a n s a m e r i c a shares at high price* d u r i n g M r . G i a n n i n i ' s regime.



VII.
The suggestion thai y o u r B o a r d of D i r e c t o r s is disposing of the C o r p o r a t i o n ' s assets unwisely i« incorrect. T h e merger of The Hank of A m e r i c a N . A . ( N e w Y o r k ) w i t h The N a t i o n a l C i t y Hank of New Y o r k ,
w h i c h ha* recently been consummated by v i r t u e of an o v e r w h e l m i n g vote of the shareholders of both banks,
is most beneficial to T r a n s a m e r i c a stockholders. As a result of this merger, Transamerica now owns, in place
of 63 <T i of the stock of T h e Bank of A m e r i c a N . A . ( N e w Y o r k ) , a very substantial interest m The N a t i o n a l
C i t y Bank,.one of the largest banks of the w o r l d . T h i s merger should m a t e r i a l l y increase the value of this
investment. Based on r e l a t i v e d i v i d e n d s c u r r e n t l y p a i d at the t i m e of the merger it w i l l result i n a m a t e r i a l
increase in the income f r o m this investment.
VIII.
It is true, as stated b y the " A s s o c i a t e d T r a n s a m e r i c a S t o c k h o l d e r s , " that the asset values given in the
c i r c u l a r of the present B o a r d u n d e r date o f September 2 2 d i f f e r f r o m the book values published two years
e a r l i e r . T h e change is due to the fact that the C o r p o r a t i o n ' s investments in controlled banks and other subsidiaries had been p r e v i o u s l y c a r r i e d at the cost thereof at a time when prices were m a t e r i a l l y higher than
today, w h i l e the revised statement on w h i c h the letter of September 22 was based, gives the net asset value of
the subsidiaries regardless of their cost and after e l i m i n a t i n g a l l value f o r good w i l l and p r o v i d i n g substant i a l reserves. The latest statement was made in this f o r m in o r d e r that stockholders might have reliable and
unvarnished i n f o r m a t i o n r e g a r d i n g the net asset value of their investment.

IX.
The Board of Directors aims to i m p r o v e the c o n d i t i o n of the properties in their chargr and to place the
enterprise on a sound and conservative basis.

Definite progress has already been made in that direction

which should make possible the resumption of diridends as soon as general conditions will permit.
Stockholders are earnestly urged, in their o w n interest, t o support the present B o a r d of Directors
o f t h e C o r p o r a t i o n , a n d t o sign a n d r e t u r n the encloeed p r o x y , w i t h o u t delay, i n the enclosed
envelope.
I f , a f t e r r e a d i n g this letter, y o u h a v e a n y d o u b t as to w h a t a c t i o n y o u should take, y o u are
urged* i n y o u r o w n intereet, to consult a n y b a n k or b a n k e r of s t a n d i n g i n y o u r c o m m u n i t y .




Y o u r s sincerely,