How to Run One

Hired as president and chief executive officer of the New York Central Railroad in 1954 by the late Robert R. Young, Old Railroader Alfred E. Perlman was given a $100,000-a-year salary and a fat option to buy 32,000 shares of Central stock at 19 7/8 But Bob Young did not believe in contracts, would not give Perlman one. Last week the Central's directors acknowledged Perlman's success in improving the road's equipment and operations, after six years on the job signed him to a long-term contract. The terms: for the next seven years, until he is 65, Perlman, who now gets $125,000, will receive $100,000 a year. For the following seven years he will be paid $50,000 a year as a consultant to the Central. He has exercised options to buy 12,000 shares of Central stock, has sold 9,000.

Since Perlman took over the Central, the road has reduced its long-term debt by $96 million (to $729 million), cut its passenger deficit from $42 million in 1953 to $24.8 million last year, piled up earnings of $1.29 per share in 1959 (double the previous year). Last week the Central's directors declared a 25-c- dividend, the second this year.

To modernize the road, Perlman is setting up an electronic control system for the major routes on the Central's 10,450 miles of track, has built three electronically automated freight yards. This year he plans construction of two more electronic yards, which cut switching time in half, speed shipments by as much as a day. Under Perlman, the Central has also introduced a coordinated rail-highway service that uses trailers and flatcars for specialized hauling.

In the future, Perlman says, he hopes to build the Central into a "transportation company rather than a railroad." To do this he will need the approval of Congress, which now restricts railroads from diversifying into other transportation fields. But Perlman is confident approval will come. As a step toward diversification, the Central has agreed to buy $5,000,000 worth of notes from the Flying Tiger Line, the nation's largest all-freight air carrier, hopes to coordinate a surface-air service.

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