Again this year stockholders of one of Washington's most prominent publically-owned companies will have to travel to Florida for an annual meeting that by all logic ought to be held in Washington.
Auto-Train Corp. is headquartered on K Street, NW, but has decided the Marriott in Orlando, Fla. is a more convenient place for its shareholders to meet on Aug. 2.
More convenient maybe than Louisville, Ky., where the company held its meeting two years ago, or than Sanford, Fla., where it was last year.
Auto-Train is not the first company to discover the benefits of meeting in the boondocks. International Bank of Washington has always held its meetings in Des Moines, its old home town, and meets there next Monday. Eastman Kodak's hometown may be Rochester, N.Y., but for years the annual meeting has been held in Flemington, N.J., which has fewer residents than Kodak has shareholders.
But a meeting away from home can help a company avoid embarrassing questions from shareholders who follow their local companies closely. And there are a lot of questions to ask.
Auto-Train executives would probably rather not be asked about the much-proclaimed 15 percent paycuts they took when the company was losing money badly last September.
That lasted about 7 1/2 months, the company's proxy statement reveals: "The board rescinded that reduction at its meeting on April 13, 1978." Three of the six members of the board that rescinded the cuts were the three executives involved: Eugene Kerik Garfield, chairman; Richard Goldstein, senior vice president and chief operating officer, and Philip Cruver, senior vice president.
Two months later, on June 15, the same board awarded new employment contracts - $125,000 a year for five years to Garfield, $65,000 s year for four years to Goldstein, and $65,000 a year for three years to Cruver.
And what happened to Auto-Train between September and March to merit that reward?
For the fiscal year ended Dec. 31, the company lost $2,536,000 on revenues of $17.7 million. It was the worst loss ever for Auto-Train, which has been in the red - and had the same management - since 1976.
For the first quarter of the new fiscal year, ended March 31, the company was back in the black, earning $685,000 profit.
But there's a catch to the quick turnaround. The company changed its fiscal calender year, which used to run from April 30, to match the calender year. The effect was to split off the months of January, February, March and April - when Auto-Train has always made money - from the losses of the previous year.
So instead of losing about $1.8 million in 12 months, the company lost $2.5 million in eight months and reported a turnaround of nearly $700,000 in the next quarter.
There's another detail tht can be picked up by reading Auto-Train's first quarter report to the Securities and Exchange Commission alongside its annual report to the shareholders.
During the first quarter an Auto-Train derailed at Florence, S.C. A charge of $217,000 for the derailment came out of the first quarter earnings.
But that apparently isn't all the derailment will cost. The company has a $1 million deductible on its insurance policy for such accidents. "Preliminary estimates indicate the deductible of $1,000,000 will not be exceeded" when the total cost of the derailment is known, it says in footnote J, paragraph 1 of the company's annual report.
Does that mean that much of the first quarter profits still could be wiped out by costs of the derailment?
Finally there's the matter of the SEC investigation of Auto-Train, disclosed in surprising detail by the company. In its annual report it said the probe concerns "among other things, lobbying efforts before legislative bodies and administrative agencies relating to the company; any payments to obtain favorable action or inaction of governmental instrumentalities relating to company; and compensations, benefits, services and other things of value from, or paid for by, the company for officers and directors.
Directly related to those questions is disclosure that Auto-Train paid $12,250 during the last eight months of 1977 for a limousine and chauffeur for its chairman. Stockholders have never been told about that before, although it was reported in The Washington Post over a year ago.
Auto-Train also fesses up for the first time about the company-owned Flordia condominium, which was recently sold. "On a few occasions, family members joined officers of the registrant in the condominium," the proxy statement says, noting it is company "policy to allow employees and their families to travel on the registrant's trains without charge."
By skipping the trip to Florida for the annual meeting - which they will have to pay for themselves - Auto-Train shareholders might have time to study the company's filing for other intriguing details.
Like the $500,000 insurance policy on Chairman Garfield. Or the $25,000 loan to Garfield from American Security Bank. That money was borrowed "at a time" the company was arranging a credit line with American Security, "But the loans were not contingent on each other" shareholders are assured.
There are also the well known dealings with board member Jerald Jarrard, who is president of Marriott Contract Food Services, a company that collected $613,000 from Auto-Train during the fiscal 1977 for meals served on the trains.
Also, there is the matter of legal fees of more than $250,000 paid in the last two years to the firm of Seymour Kleinman, who resigned last spring as corporate secretary and a board member.
Not revealed to shareholders by the company, however, are the links to its newest board member, who replaced Kleinman - Saul Feldman, director of the staff college of the National Institute of Mental Health.
Garfield, in a recent interview, acknowledged that Feldman is an old friend, but didn't mention that Mrs. Feldman is in charge of the boutiques which Auto-Train runs at its two terminals.
Should the company tell its shareholders that a director's wife is on the payroll? Maybe that question will be answered when the SEC investigation is completed.