also included a study of stock in bank custodial accounts, prepared by Curtiss Martin, economic analyst with the Congressional Research Service, Library of Congress. REGULATORY AGENCIES HAVE NOT USED THEIR AUTHORITY TO REQUIRE ACCURATE REPORTS ON CORPORATE CONTROL The "Corporate Disclosure" hearings in 1974 and a preceding study by the General Accounting Office-which was published in Senate Doc. 93-62-had shown that regulatory commissions have sufficient authority to require regulated corporations to file accurate and detailed information regarding their major stockvoters, debtholders, corporate structure and the affiliations of their officers and directors. However, Congress provided additional authority in the Securities Act Amendments of 1975 (Public Law 94-29) which became law on June 4, 1975. That act adds to section 13 of the Securities Exchange Act of 1934 a subsection (f) which authorizes the SEC to require institutional investment managers-banks, insurance companies, investment advisers, self-administered pension funds, educational endowments and foundations--to disclose the value of the securities they manage, their voting rights to the stock and their discretionary power to buy and sell it. The SEC has not implemented the law. Nor has the SEC promulgated the model corporate disclosure regulations. Instead, the commission proposed a modified version of one part of the model, dealing with reporting of major stockvoters, then withdrew its own proposal. In contrast, after extensive formal rulemaking and informal conferences the Interstate Commerce Commission adopted comprehensive disclosure regulations in May 1977. They are practically identical to the model as regards debtholders, interlocks and corporate structure." The ICC deleted that portion of the model dealing with identification of major stockvoters and directed its staff to identify major stockvoters in the larger railroads. At the Federal Communications Commission two variations of the model were proposed by the Broadcast Bureau and the Common Carrier Bureau, in June 1975. They were docketed for Commission action in December 1977, but consideration was postponed. The Civil Aeronauties Board invited comment on the model regulations in June 1977. Other agencies whose staff participated in development of the model-Federal Energy Regulatory Commission (formerly the Federal Power Commission), Federal Trade Commission, Federal Maritime Commission, Federal Reserve System and Federal Energy Administrationhave taken no action on the model or alternative methods to enable the regulators, the Congress and the public to obtain more accurate and complete reports regarding ownership and control of regulated corporations. Furthermore, the CAB appears to have stalled out of its investigation, begun four years ago, of institutional investors' influence over airlines through voting rights, control of credit, interlocks and equipment leasing. And the FCC quietly turned off its investigation, begun in 1969, into ownership of broadcast companies by conglomerates. Thus there is no prospect that the 95th Congress will obtain from the regulatory agencies much better information on corporate ownership and control than previous Congresses had. To provide meaning 5 The text of the ICC regulations appears in Appendix D, p. 534. ful data regarding at least the largest corporations, and to demonstrate that it is possible to tabulate and aggregate voting rights in the name. of institutions empowered to vote the stock, the subcommittee in the summer of 1977 undertook the study here presented in cooperation with its contractor, Corporate Data Exchange, Inc., a nonprofit research and educational organization. The study was modeled on the methodology developed by Corporate Data Exchange, Inc., described on p. 21. Data in this study are as of December 31, 1976 unless otherwise noted. The methodology section describes the system used for noting holdings on a date other than December 31, 1976. Every effort has been made to double check data in this study. If any error is detected the subcommittee would appreciate notification. CORPORATIONS INCLUDED IN THE STUDY Part I reveals identifiable major stockvoters in 122 corporations whose common stock at the end of 1976 had a market value of $373.2 billion. That is 41 percent of the $909.8 billion market value of all common stock outstanding in the United States, including stock traded on the exchanges, sold over the counter or closely held. The names of 2,259 subsidiaries and affiliates of the 122 corporations appear in Appendix A, p. 293. By category, the 122 corporations include: 36 industrials. 23 transportation companies. 20 commercial banks. 20 utilities. 11 diversified-financial and insurance companies. 3 investment advisory companies. All but six of the 122 corporations are listed on the New York Stock Exchange. Of the six companies not listed, the stock in threeMellon National Corp., First Bank System Inc. and the Chicago Rock Island and Pacific Railroad Co.---is traded over the counter. One is listed on the American Stock Exchange (Investors Diversified Services Inc., which is controlled by the Kirby family and Alleghany Corporation.) The stock in United Parcel Service of America Inc. • The 20 banks and 20 utilities were the largest corporations (ranked by assets) in their categories in both 1975 and 1976. The 23 transportation companies include the 20 largest. plus three smaller but major railroads. The industrials include 30 which were among the 37 largest industrials in both 1975 and 1976. (Western Electric, which ranked 18th both vears, is not included because it is wholly owned by American Telephone & Telegraph.) Six other major industrials were studied primarily to obtain comparative data on competitive companies. Eight of the retailing companies were among the 10 largest in their category in both 1975 and 1976. One was among the top 10 in 1975 only. Marcor (ranking 7th both years) is not included because it is wholly owned by Mobil Corp., which is included among the industrials. Nine of the diversified-financial and insurance companies were among the 11 largest diversified-financial companies in both 1975 and 1976. One was among the 11 largest in 1975 only. The other company in the diversified-financial and insurance category is Connecticut General Insurance Corp. Its subsidiary. Connecticut General Life, rauks seventh among the largest life insurance companies but is the largest stock company in the life group. Five of the life insurance companies larger than Connecticut General Life are mutually owned and the sixth (Aetna Life) is a subsidiary of the largest diversified-financial company (Aetna Life and Casualty) which is included in this study. Most large investment advisers are not publicly-owned stock corporations, usually being privately-held companies or, occasionally, partnerships. However, three of the 12 largest investment advisory firms are stock companies and we have included them among the 122 corporations under study. Within major investment advisory complexes they rank (by market value of assets managed) No. 1. No. 7 and No. 12, according to Vickers Guide, Investment Company Portfolios. (Common Stock.) (T.P.S.) and the voting stock in Keystone Custodian Funds Inc. are not traded. being held primarily by the companies' management officials. Keystone's nonvoting stock is traded over the counter.) The 122 corporations under study are listed alphabetically in table L which follows: TABLE I-122 Corporations studied (with book and market value of stock, Dec. 31, 1976) General Electric Co.... General Motors Corp General Public Utilities Corp... Great Atlantic & Pacific Tea Co., Inc. TABLE I.-122 Corporations studied (with book and market value of stock, Dec. 31, 1976)—Continued 12, 605, 793 22, 468, 035 1, 077, 629 U 3, 533, 827 4, 137, 024 I 1, 861, 911 R Great Western Financial Corp DFI Gulf Oil Corp.. 955, 598 12, 749, 287 447, 614 293, 619 1, 704, 656 354, 626 350, 385 5, 626, 698 291, 703 42, 062, 742 941, 523 3, 190, 890 131, 948 7, 870 R 1, 441, 793 4, 939, 104 Kroger Co.. R Lockheed Aircraft Corp--. Manufacturers Hanover Corp. 457, 795 322, 480 I 166, 700 DFI 584, 102 105, 071 463, 864 1, 165, 372 B 428, 982 Mellon National Corp- 127, 951 Merrill Lynch & Co., Inc. 568, 342 DFI 632, 072 887, 740 T Mobil Corp. 396, 367 539, 100 I $ 9, 130, 380 6, 879, 015 Morgan & Co., J. P. B 1, 455, 548 2, 176, 650 470, 699 335, 866 Norfolk & Western Ry. Co.. T 1, 083, 716 984, 676 813, 692 686, 887 Northwest Airlines, Inc... T 665, 744 Northwest Bancorp 642, 779 B 519, 774 Occidental Petroleum Corp. 723, 697 I 1, 305, 276 1, 366, 824 3, 372, 834 Pan American World Airways, Inc.. 352, 152 Penney, Inc., J. C... Pepsico Inc.. Ι Philadelphia Electric Co.. Phillips Petroleum Co... Ι Procter & Gamble Co.. Public Service Electric & Gas Co.. RIULIU 1,916, 600 2, 049, 129 211, 445 3, 394, 313 752, 982 1, 953, 520 1, 860, 742 1, 238, 863 2, 720, 341 5, 062, 199 2, 357, 470 7, 732, 302 2, 083, 738 1, 356, 448 1, 277, 700 2, 006, 407 Reynolds Industries Inc., R. J. I 2, 112, 817 Rio Grande Industries, Inc.. 3, 136, 650 T 205, 113 Safeway Stores, Inc... Santa Fe Industries, Inc.. 849, 050 1,638, 398 1, 128, 445 5, 936, 924 713, 774 4, 591, 182 85, 533 1, 302, 498 1,035, 374 494, 802 11, 005, 914 567, 432 5, 573, 308 U 2, 318, 423 1, 215, 326 2, 067, 412 2, 010, 965 1, 866, 353 T 949, 992 966, 006 905, 324 7, 007, 013 6, 972, 829 6, 146, 705 8, 747, 226 2, 651, 000 3, 163, 440 See footnotes at end of table. TABLE I-122 Corporations studied (with book and market value of stock, Dec. 31, 1976)—Continued 1 Category designation: B-Bank; DFI-Diversified--financial and insurance; I-Industrial; IAC-Investment advisory company; R-Retailing; T -Transportation; U-Utility. 2 Book value of stock primarily from May and July 1977 issues of "Fortune," which defines stockholders' equity as the sum of capital stock, surplus and retained earnings. Market value of stock primarily from May 15, 1977, issue of "Forbes." PRINCIPAL CATEGORIES OF INVESTORS Before describing the types of investors whose voting rights in the 122 preceding corporations are shown in this study, general remarks regarding the categories of investors in U.S. corporations may be useful. Voting rights to about half of the stock in U.S. corporations are held by banks and trust companies, foreign investors, investment companies, insurance companies, foundations and educational endowments. The rest of the stock is widely held by individuals and organizations such as private investment companies, brokerage firms, fraternal and religious organizations and hedge funds, which generally are partnerships formed for investment purposes of a speculative nature. Many individual stockholders do not bother to exercise their voting rights, which in most instances are infinitesimal alongside those of institutional investors. The Soviet-style election typically held by corporations--with a single slate of directors and an auditor, sharplyrestricted communications among voters and procedural impediments to provision of choices for them-does not induce participation, especially when one institution can outvote thousands of individuals. Public records regarding the voting rights to the stock held by individuals, private organizations and foreign investors are sparse, except in those instances where a block of stock is of sufficient size to require filing of a report to a regulatory commission or is held by an officer or director of a company subject to reporting requirements. Pension funds nominally comprise the largest category of stock |