Concerned about loss of shareholder
rights and long-term investment returns, a cross-section of
U.S. institutional investors, state treasurers and labor unions
took out a full-page ad in The Wall Street Journal today urging
Tyco and other expatriate companies to "Come Home to
America" from their offshore tax havens.
"Ahh, Bermuda," says the ad. "A nice place
for a vacation…but should U.S. companies take legal
refuge there?"
The ad comes less than a week before Tyco International shareholders
are to vote on a petition to reincorporate the Bermuda-chartered
company on U.S. soil and only two days after a leading proxy
policy advisor recommended that shareholders vote in favor
of the proposal.
"What companies like Tyco really are seeking with their
sham offshore mail drops is legal shelter from their own shareholders,"
said Sean Harrigan, president of the California Public Employees'
Retirement System. "This ad is intended to demonstrate
to shareholders that expatriation has direct, detrimental
impacts for investors."
"Tyco and the others still have much work to do before
they restore investor confidence and increase shareholders'
legal rights. The only way for shareholders to truly hold
Tyco accountable is for the company to reincorporate in the
U.S.," said American Federation of State, County and
Municipal Employees (AFSCME) President Gerald W. McEntee,
whose union is sponsoring the Tyco shareholder resolution.
The ad, which appeared in eastern editions of the Journal,
noted that offshore incorporation also has economic downsides.
Support is building in Congress and in a growing number of
states, for example, to prohibit government contracts with
expatriate firms.
“This practice of expatriation has direct, detrimental
effects on shareholders,” said California State Treasurer
Phil Angelides, who is sponsoring just that type of legislation
in his state. "It represents – to millions of shareholders
– the type of deceptive corporate practice that has
shaken the financial markets, harmed taxpayers and pensioners,
and damaged our economy.”
On Tuesday, Institutional Shareholder Services (ISS) recommended
a vote in favor of the AFSCME resolution, because of its disappointment
in the board's failure to properly assess this very important
issue on shareholders' behalf. ISS is the world's most influential
provider of proxy voting and corporate governance services
to 750 institutional investors throughout North America and
Europe.
"California's educators expect accountability from their
pension fund and we expect it from the companies we invest
in," said Jack Ehnes, chief executive officer of the
California State Teachers' Retirement System (CalSTRS). "The
reincorporation resolution supported by ISS calls for Tyco
to step up and give us investors the accountability we need."
Connecticut State Treasurer Denise L. Nappier, another participant
in the ad, agreed: "Companies can no longer turn a deaf
ear to this issue. Shareholders rights are at risk when companies
incorporate offshore, and potential changes in tax law could
reduce even further the perceived advantages of overseas incorporation.”
In addition to several major labor unions, signers on the
ad included New York City Comptroller William Thompson Jr.
on behalf of the New York City retirement systems and New
York State Comptroller Alan G. Hevesi and the New York State
Common Retirement Fund.
Click here to see the ad that ran in the East Coast edition of the Wall Street Journal.
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