Hollywood Park Units Are Merged
Despite opposition from Marje Everett, the track’s former chief executive officer, shareholders of Hollywood Park approved a reorganization plan Monday that will merge the company’s two corporations.
With a vote of 70% of the shares needed, the merger passed with 2% to spare. Hollywood Park Operating Co. and Hollywood Park Realty Enterprises now become one entity, Hollywood Park Inc. Previously, shares in the two companies had been paired on the stock exchange.
Everett, who resigned as board chairman and CEO in February, made what is believed to be her first appearance at the track since then. She told the shareholders at their annual meeting that a merger would be a mistake, noting that Santa Anita still operates with two separate corporations.
Another shareholder, Ted Goldberg, said that the merger could be costly because Hollywood Park would no longer enjoy a tax status that enables the company to deduct dividends paid to shareholders.
In the track’s proxy statement, it was estimated that the merger will save the company about $500,000 a year in administrative costs, directors’ fees and other expenses.
“We feel that a merger is the best way to build the company,” said R. D. Hubbard, who replaced Everett as board chairman of the operating company. “It will enhance the value of the stock. We were never in the real estate business anyway. Our only asset is the race track.”
Hubbard categorized as untrue rumors that the merger would eventually lead to Hollywood Park going private.
“We plan to keep the track public and restore the value on our investments,” he said.
The shareholders approved the appointments of 14 directors: Hubbard, Harry Ornest, Tom Gamel, John Forsythe, J. R. Johnson, Howard W. Koch, Bob Manfuso, Bruce McNall, John Newman, Allen Paulson, Kjell Qvale, Lynn Reitnouer, Herman Sarkowsky and Warren B. Williamson. Under the old two-corporation structure, there were 24 directors, some of whom held posts on both boards. None of the 14 approved Monday are new to the company.
Hollywood Park’s annual report for 1990 showed that the track’s revenues declined $10 million from 1989. The operating profit last year was $9.6 million, up $1.4 million, and earnings showed a loss of $3.2 million, compared to a loss of almost $11 million in 1989. The track’s 1990 dividend of 40 cents per share was the first one paid since 1987.
Without the battle for control between Hubbard and Everett, which cost the company $9.4 million in proxy expenses, the company’s earnings would have shown a gain of $6.2 million in 1990. Because he won the fight, Hubbard was reimbursed more than $4 million in expenses.
Everett, who declined a lifetime settlement of $150,000 a year when she retired, is the company’s third-largest shareholder, after Hubbard and the Ornest family. At Monday’s meeting, she questioned why the track has leased an apartment for Hollywood Park executives at a cost of $130,000 a year.
“This is ridiculous,” Everett said. “For about 20 years, I worked here and took no salary and no expenses. The shareholders should not have to pay for this.”
Hubbard said that he and two other track officials use the apartment.
“I don’t accept any compensation, either,” he said. “When I start taking a salary, then I’ll pay for my own lodging.”
