Corporations: On the Run

For the two physical fitness enthu-siasts who run Monogram Industries Inc. of Los Angeles, big decisions are made on the run. In the late afternoon, Chief Executive Martin Stone, 39, jogs a measured mile with his dog, a golden retriever named Charles de Gall-Stone, while he reflects on the day’s corporate affairs. More often than not, Stone and Executive Vice President Harvey L.

Karp, also 39, will agree to make a multimillion dollar acquisition between handball games or during an after-lunch ten-mile walk-and-talk session. Out of this unorthodox exercise of brains and brawn has evolved an impressive track record in business. Since they took over Monogram six years ago, the two have sent sales hurtling from $6,000,000 to a current annual rate of more than $100 million. Three years ago, Monogram stock was selling at $4 a share.

Last week it closed at $138.

To accomplish this, Stone and Karp applied some basic business principles to once-floundering Monogram: they cut costs, fired unproductive employees, eliminated worthless products while bol stering a profitable line of recirculating toilets for aircraft. Stone had acquired this talent shortly after graduating from law school, when overnight he made a reputation — and a pile of cash — as a resuscitator of sick companies for Hous ton Fearless Corp. In 1954, the com pany split up, and he joined International Glass, a former division.

The company’s name was changed in 1958 to Monogram Industries to cover a rapidly growing hodgepodge of products. Stone wanted to eliminate some and focus attention on one or two products. His boss balked, so Stone quit.

Quick Surgery. At about the same time, Harvey Karp, who had joined Stone in a number of successful real es tate ventures, also left his job at Pathe Laboratories and took his family to Eu rope. “One morning in Rome,” recalls Karp, “I woke up and couldn’t think of a single new thing to do that day.

So I called Marty in the States, told him ‘I’ve had it here, let’s go back into business.’ He said ‘O.K.,’ so I headed home.”

In 1960, they paid $60,000 for 15% of California-headquartered Electro-Vision Corp., rid themselves of its lackluster movie-theater business, and began producing optical and cargo-handling equipment. Early in 1961, Stone’s old boss at Monogram offered to sell him and Karp a controlling interest in the company, which, as Stone had fore seen, was going bankrupt. In addition to sanitation equipment, Monogram was manufacturing temporary production holding devices used to attach unbolted metal sheets to the frames of jets, along with precision sheet metal and containers. A quick and drastic surgical job was essential if the company was to be saved. The container division was eliminated. Managers’ salaries were cut by 25%, and a bonus based on profit was substituted.

Stone and Karp drove hard to increase Monogram’s lead in the field of recirculating toilets, which return the chemically treated water to the bowl after the waste is filtered away. Monogram now supplies toilets for 15% to 80% of U.S. airliners (at $1,500 to $3,000 per unit), and most corporate jets ($750 to $1,250).

Walking Decisions. But while the sanitary divisions have grown rapidly, they presently account for only 9% of Monogram’s sales. This is because of a carefully continued acquisition program. Last year, after one of their ten-mile walks, Stone and Karp decided that Monogram, with about $12 million sales, should acquire Spaulding Fibre Co., maker of electrical insulating materials, with sales of almost $40 million. Two months ago, following another jaunt, they laid out $21 million for National Screw & Manufacturing Co., a leading producer of permanent fasteners. These divisions now produce 83% of sales, while sanitation, film and sound equipment, and miscellany make up the balance.

As for Monogram’s future, neither Stone, who has 53,000 shares of its stock, nor Karp, who holds 46,000, is about to relax. “In fact,” says the chief executive, “now the $100 million doesn’t seem very satisfactory at all. It’s the damnedest thing, but it ought to be easier to grow to $1 billion.”