Pan American World Airways is considering a plan that would give its long-suffering shareholders a dividend payable in travel, Pan Am Chairman William T. Seawell told shareholders today.
The disclosure came toward the end of a lengthy shareholders' meeting notable for its repeated attacks on Pan Am's management and directors for the company's poor financial showing and failure to pay a dividend since 1969.
In answer to a question from a shareholder, Seawell said Pam Am had considered a travel-voucher plan similar to one introduced by Eastern Airlines earlier this year but rejected it because of its administrative costs and because it is taxable as income to the shareholder. In addition, a complicating factor is that 11 million of Pan Am's 71 million shares outstanding are held outside the United States, he said.
Seawall said Pan Am has come up with a modified proposal that its outside lawyers believe will be nontaxable to shareholders and meets the other objections. "We are actively pursuing this," Seawell said, adding that its lawyers have been instructed to make the appropriate filings to get a ruling on the plan. He said he expects to get a ruling withing two months. No further details were available.
The anguish of the dividend-starved shareholders -- who generally said they had bought their shares years ago at five and six times its current value -- was evident almost immediately after Seawell completed his report to shareholders. In it, he spoke of the difficulties that the airline part of the company is having, including continuing fuel-price increases, diminishing passenger traffic and the failure of Pan Am to achieve expected benefits from its merger with National Airlines, benefits Seawell now hopes to begin getting by the fall.
"Why is it that the little airlines are making a profit and this giant company isn't making a profit?" 82-year-old J. Warren Keel asked, starting off a litany of complaints that had Seawell standing before the shareholders almost five hours straight before he was able to adjourn the meeting, mercifully, at almost 3:30 p.m.
"P.E. stands for price-earnings ratio, not price-excuses or price-efforts," one shareholder joined in, to applause.
"Pan Am is in danger of becoming a flying Chrysler," Richard Ash said. "In my judgment, we should have kept the Pan Am Building and liquidated the airline," he said, referring to the sale of the New York landmark last year.
"Tell me how I can be a director," one shareholder said. "I think I can do a better job than what you have up there."