There was good news and bad news yesterday at the Marriott Corp.'s annual meeting of stockholders; a business extravaganza held appropriately at the Shady Grove Music Fair outside Gaithersburg.
The good news - an announcement that Marriott would begin paying cash dividends for the first time since 1959 - was greeted with the type of audience enthusiasm normally heard at the conclusion of Shady Grove performances.
And the bad news was greeted with understandable silence from the more than 1,000 stockholders. Company founder and chairman J. Willard Marriott was unable to attend the meeting because of an illness termed "not serious."
It was serious enough to keep his wife, vice president and director Alice S. Marriott at his bedside, however. Thus, both Marriotts missed the company's 50th anniversary annual meeting, an event celebrated in business reports and on film of a company the Marriott couple started here with a root beer stand 50 years ago.
The meeting was chaired by vice chairman Don G. Mitchell, who announced that Marriott's directors yesterday morning had switched to a cash dividend policy.
Although he conceded it was a "small" start - 12 cents a share annually, or 3 cents on a regular quarterly basis - Mitchell asserted, "In fact, we hope to increase it."
For about 20 years, Marriott has been paying only an annual stock dividend ranging from 2 per cent to 4 per cent and, in some years, (1960, 1965, 1968 and 1972). The last previous stock distribution was 2.5 per cent last March.
Cash dividends will replace the stock distributions starting with a payout of 3 cents on Jan. 15 to stockholders of record Dec. 30.
Mitchell said the delay to Jan. 15 will give the company time to organize its first processing of checks to 53,000 stockholders, many of whom live in the Washington area. Regular future payments are expected on March 15, June 15, Sept. 15 and Dec. 15 of each year, he added.
Although stockholders have been vocal in previous years about their desire for cash dividends, a few persons at yesterday's meeting expressed unhappiness at the fact they now would have to pay taxes on cash dividends. Marriott paid cash dividends for six years in the 1950s, but since then has followed a policy of conserving money to finance expansion of hotels and restaurants.
Today, said company president and founder's son J.W. Marriott Jr., in his report to the meeting, "with sales over $1 billion and cash flow beginning to exceed $100 million, we are big enough and strong enough to pay cash dividend as well as finance strong expansion plans - with our debt at a sound level."
At a meeting earlier this fall with Wall Street analysts who follow the company, there was a mixed response when Marriott asked their advice on whether to start cash payouts or continue to save cash for expansion.
Marriott emphasized yesterday that the new policy will no prevent the company from achieving its goal of 15 per cent annual growth in sales and profits.
In a report to the stockholders and in response to numerous questions. Marriott also made the following points:
None of the company's business is for sale. Although the previously troubled Sun Line cruise operations will not be expanded, profit contributions are expected to grow, he said.
He said the company is not "aggressively" seeking buyers for its Farrell's ice cream parlor chain, which recently posted a second consecutive profitable quarter after a period of losses.
A company spokesman said later that while he wouldn't rule out the sale of the division in future years. Marriott Corp. still must "completely" erase its operating problems before it would be "salesable."
With improved marketing for its two amusement parks near Chicago and San Jose. Marriott is "optimistic about the profit potential of these operations."
But Marriott expressed pessimism about his company's long-standing plans to build a third park in metropolitan Washington.
Howard County has rejected Marriott park plans twice in recent years. The company now is studying prospects for sites in a number of area counties including Howard, where some officials have said the latest rejection need not be interpreted as a negative decision on other sites.
In any event, a Marriott spokesman said, a theme park in this area now has been delayed until a 1981 opening at the earliest.
Stockholders yesterday approved proposals that will inaugurate an employee stock ownership plan for salaried workers and amendments to a deferred stock incentive plan, as well as an amendment that will require approval by two-thirds of Marriott stockholders for any merger or consolidation of the company.