By a majority vote, shareholders sanctioned a proposal that would result in the issuance of a new class of common stock to reflect the economic performance of its tobacco assets, to be called the Carolina Group. The proposal was put forth last October.
Opposition to the move came most vocally from the Hotel Employees and Restaurant Employees International Union (HERE), which reportedly holds some 5,000 Loews shares in its retirement funds. Institutional proxy advisor Institutional Shareholder Services (ISS) had weighed in against the initiative, as had the State of Connecticut Trust. The California Public Employee Retirement System (CalPERS), the nation’s largest public pension system, had expressed concerns as well.
HERE had been pushing for a spin-off of Lorillard, claiming that there were no assurances that the proceeds of the tracking stock would flow to shareholders. In addition, HERE said Loews had not offered any rationale to shareholders on how the company planned to use those proceeds, according to a Reuters report.
The creation of the Carolina Group and the anticipated issuance of Carolina Group stock would not change Loews’ ownership of Lorillard. While Carolina Group shareholders would not have an ownership stake in Carolina or Lorillard, they would be stockholders of Loews and would be entitled to 1/10 of a vote per share in Loews Corp.
Aside from Lorillard, Loews also holds majority stakes in CNA Financial, Diamond Offshore Drilling and watchmaker Bulova. It also owns and operates Loews Hotels.