Stock From His Own Hide to Hook the Best Fish

“A word here about the company's farsighted arrangement, unique at the time, to gain maximum benefit from stock options as a lure for the best talent without diluting the stock of the shareholders. It came about partly by accident. In the agreement with Lehman Brothers, Tex had ear- marked a part of his personal stock to be used for the express purpose of inducements ( Tex held the largest and controlling share of stock, followed in order by Ash and Jamieson ap- proximately on a 2-1-1 basis ) . Thus Tex would be in a posi- tion to face any future criticism of stock options by share- holders (which has occurred as recently as 1966) by the unanswerable rebuttal that the shares involved were coming out of his own hide. And further, that since he was disposing of his own property in the best interests of the company, the details and terms of each transaction were nobody else's business. The advantages of such flexibility, he could also point out, in baiting the right hook for the right fish, were obvious when compared with the inflexibility of the custom- ary stock option plans which must meet the approval of shareholders.”

“The facts, as Tex saw them after leaving Howard Hughes, were these. There was room in the market which Hughes had tapped for at least one more blue chip company similarly oriented in advanced technology, especially in electronics. Most of the smaller electronics companies that had begun rushing into the field would ultimately be eliminated or ab- sorbed; thus he must think from the beginning in terms of an enterprise capable of extremely rapid growth toward blue ribbon status. Such an enterprise could be created by the purchase of one solid, profitable company for a building block toward internal growth. Other companies could be acquired if necessary in order to buy time, which would be of the essence, but only if they were integral to Tex's master plan. A final fact of which he was certain, after his experi- ence at Ford and Hughes, was that the cream of executives, scientists, and engineers must be hired as rapidly as possible, and could be, not through high salaries but through the inducement of generous participation in responsibility, and in the fruits of potential victory via stock options. In sum, the market was there, in electronics and related technologies, with a tremendous growth potential, for a man who knew what he was doing and how to move fast.”