Unprecedented Ingersoll-Rand Vote Shows Momentum is Building In Campaign to Get Expatriate Companies to Come Home to America.
WASHINGTON--(BUSINESS WIRE)--May 30, 2003
A cross-section of institutional investors, state treasurers and labor unions said today that an extraordinary shareholder vote at Thursday's Ingersoll-Rand annual meeting proves momentum is building in the campaign to get American companies to return to U.S. soil from their off-shore tax sanctuaries.
A resolution calling on Ingersoll-Rand to return from its Bermuda haven won 41.4 percent of the vote over the opposition of the company's management. Despite winning millions of dollars in defense and homeland security contracts from the federal government, Ingersoll-Rand has so far refused to join other expatriate companies, including Tyco and McDermott International, that have agreed to study a return to America.
"It's virtually unheard of for a shareholder resolution opposed by management to gather so much support in a proxy vote," said Jack Ehnes, Chief Executive Officer of the California State Teachers' Retirement System. "This is a clear and decisive statement from shareholders that Ingersoll-Rand must join the growing number of expatriate companies that have agreed to consider coming home to America. Those companies are beginning to realize reincorporation is essential to protect shareholder rights, to protect shareholders' investments and to meet their responsibilities to their country."
California State Treasurer Phil Angelides concurred: "Given the obstacles to mounting and running an insurgent shareholder campaign, particularly where Ingersoll-Rand management strongly opposed the measure, such a large vote to urge the company to 'Come Home to America' is a stunning sign of shareholder frustration over the odious practice of corporate expatriation.
"We are just beginning this fight," Angelides added, "and we are going to continue our campaign to bring these companies home."
"The proposal before the Ingersoll-Rand board is a continuation of our efforts - and is a signal to all companies that shareholders' voices will be heard this proxy season," added Gerald W. McEntee chairman of the American Federation of State County and Municipal Employees Pension Plan and president of AFSCME. "Ingersoll-Rand must stand up for America, come back home to the United States, restore shareholder confidence, and pay taxes like the rest of us."
The 41.4 percent vote represents a significant swing in shareholders sentiment in only two years. Ingersoll-Rand won 89 percent support for the legal move to Bermuda in late 2001.
The vote also demonstrates that doubt is rising rapidly among shareholders over the wisdom of companies reincorporating to offshore mailing addresses. A similar resolution won the support of 26 percent of Tyco investors in early March. After that vote, Tyco officials agreed to study a return to the U.S. McDermott International recently agreed to do the same. Last year, tool maker Stanley Works abandoned plans to move its headquarters to Bermuda in the face of opposition from labor unions and institutional investors.
America's leading proxy advisory firm, Institutional Shareholder Services (ISS), which had recommended a vote in favor of both the Tyco and Ingersoll-Rand, has said "a tidal wave" of pressure is building in the repatriation movement.
ISS noted that legislation to close tax loopholes is pending in Congress and that a growing number of states are beginning to consider and pass laws to deny state and municipal government contracts with companies that have incorporated offshore -- which ISS said in Ingersoll-Rand's case "could serve as a significant blow to the company's revenue stream."
"This unprecedented reincorporation vote indicates that investors are increasingly dissatisfied with the disregard these expatriate companies have shown for shareholder rights," said Richard L. Trumka, Secretary-Treasurer of the American Federation of Labor-Congress of Industrial Organizations. "Since the vote at Stanley Works, this issue has only gained momentum. This is a signal to other expatriate corporations that we will not just fade away."
Members of the "Come Home to America" coalition include the California State Teachers' Retirement System, California Public Employees' Retirement System and California State Treasurer Phil Angelides; American Federation of State County and Municipal Employees Pension Plan; Connecticut State Treasurer Denise L. Nappier and Connecticut Retirement Plans and Trust Funds; New York City Comptroller, William C. Thompson, Jr. on behalf of the New York City retirement systems; New York State Comptroller Alan G. Hevesi, and the New York State Common Retirement Fund; and the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO).
The shareholder resolution was co-sponsored by American Federation of State County and Municipal Employees Pension Plan and Connecticut Retirement Plans and Trust Funds.