Success with Largesse

The year-end bonus of cash is not as popular as it used to be, partly because of labor's taste for bigger contractual fringe benefits and partly because of management's growing preference for more sophisticated executive incentives. Even so, the Bureau of Labor Statistics figures that U.S. manufacturers are paying production workers more than $600 million in year-end bonuses this season. Many millions more will go to executives and office help in such places as Detroit, where auto vice presidents often get bonuses equal to twice their salaries, and Wall Street, where 1964's record stock-trading volume means many bonuses of five to eight weeks' pay for brokerage house employees.

Next week, Merrill Lynch, Pierce, Fenner & Smith Inc., the nation's largest stockbrokers, will pay a record $9,700,000 cash bonus to 8,650 employees, 22% more than a year ago and an average of $1,121 each. Their checks will range from a flat $75 for employees with six months' to a year's service up to 14 weeks' pay for 20-year veterans. Elsewhere across the U.S., year-end fiscal cheer varies from the $10 Philadelphia Electric Co. gave its 9,300 nonexecutive workers to the average of $375 that Scio Pottery Co. of Scio, Ohio, handed 1,010 workers a fortnight ago. Chicago's prospering Abbott Laboratories, the pharmaceutical makers, paid a record $1,211,000 bonus to 4,000 nonexecutive employees last month-a 29% increase from 1963. Chemical Bank New York Trust Co., the nation's fifth largest commercial bank, is adding a bonus of 10% to each employee's first $5,000 of salary, plus 7% on the next $5,000 and 4% on anything above that.

Few companies have enjoyed greater success with largesse than Cleveland's Lincoln Electric Co., the world's largest maker of arc-welding equipment. With its sales up nearly 15% this year to $100 million, Lincoln distributed a $12.8 million "incentive bonus" to its 1,582 employees. That makes an average of $8,190 per employee and sets a record even for a company that has dispensed $126 million in bonuses over 31 years. Lincoln's chairman James F. Lincoln, 81, credits the bonus-which lifts his typical employee's annual income to $13,000-for everything from high productivity to low absenteeism. Although Lincoln gears its bonuses to individual efficiency, it pays a basic wage of $2.80 an hour (average for the Cleveland area) and guarantees 32 hours a week of work year-round. As a result, morale and output are so high that the firm cut prices on all its products in 1964, is able to sell its 300-amp. welder for 20% less today than it did 25 years ago. Not even cheap-labor Japan can meet the prices that Lincoln's bonuses help make possible.

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