Risk & Compliance

Proxy Season: PeopleSoft, Tyco, Safeway

At Tyco, just 5 percent of voting shareholders supported a resolution that would have drastically limited executive compensation.
Stephen TaubMarch 29, 2004

Voters in the United States will have to endure nearly eight more months of attacks, half-truths, and scare tactics before they go to the polls to select the next president and many other government officials.

It’s voting time already for most shareholders, however; spring is the height of the annual-meeting season for major public companies. Perhaps these shareholders don’t have much of a say regarding who serves as a director or what takeover defenses might be appropriate companies, but they can still express their feelings with non-binding resolutions.

For example, at PeopleSoft’s annual meeting last week, 53 percent of shareholders voting supported a resolution calling for the company to expense stock options. The proposal was sponsored by the American Federation of State, County and Municipal Employees (AFSCME) Pension Plan.

Tyco International, meanwhile, supported a resolution put forward by the Christian Brothers Investment Services Inc. calling on the conglomerate to develop a plan to reduce toxic releases from its factories and disclose more information about such pollution.

However, at Tyco’s annual meeting Thursday, an overwhelming 93 percent of shareholders voting rejected an AFSCME proposal that Tyco move its official headquarters to the United States from Bermuda.

In addition, just 5 percent of shareholder votes supported a resolution calling for executive salaries and bonuses to be capped at $1 million each per year and limiting other compensation. Tyco had argued that if it adopted this policy, it would have trouble attracting top talent.

Meanwhile, five pension funds have teamed up in an attempt to unseat three board members of grocery giant Safeway.

The pension funds — which hold chairman Steven Burd responsible for the erosion of $20 billion in the company’s stock value over the past five years — announced that they will withhold votes from Burd as well as board members William Tauscher and Robert MacDonnell at Safeway’s annual meeting on May 20.

“This action has everything to do with an ongoing union campaign against Steve Burd and absolutely nothing to do with legitimate corporate governance issues or his performance as CEO,” Brian Dowling, a Safeway spokesman, said in a statement.

Said New York State Comptroller Alan Hevesi at a Washington, D.C. press conference: “This is not ideology. This issue is about performance and performance alone.”