McDermott has entered into a partnership with the American Federation of State, County and Municipal Employees Pension Plan (AFSCME) and the California Public Employees’ Retirement System (CalPERS) to assist in bringing about a resolution to the issue. Under the partnership agreement, McDermott will continue its review of restructuring alternatives related to the possible re-domestication, and AFSCME and CalPERS will have access to the analysis and provide feedback, according to a news release.
Further, the energy services company has agreed to place on its next proxy following resolution of The Babcock & Wilcox Chapter 11 proceedings, a management resolution that recommends re-domestication.
The recommendation will be made provided the company’s board of directors views such a move to be in the best interest of shareholders in the face of tax and cost considerations. In the event the resolution does not gain support by McDermott’s board and its management, the ballot issue will contain a 500-word statement from AFSCME and CalPERS.
“We acknowledge the importance of shareholder concerns on this issue, and we, too, are concerned about this. We believe it is in the best interests of our company and shareholders to diligently examine this issue,” Bruce Wilkinson, chairman of the board and chief executive officer of McDermott, said in the statement. “We have agreed to present and recommend a vote in favor of changing the company’s domicile to the United States, but it is contingent upon a variety of factors, including a tax neutral and otherwise favorable cost analysis by our independent consultants, the final resolution of The Babcock & Wilcox Chapter 11 proceedings and the approval of our board of directors,” he added.
AFSCME Pension Plan Chair Gerald McEntee announced his pleasure that McDermott is taking steps to move its corporate headquarters back to American soil. “Their commitment to undertake this full and complete review and their willingness to put this issue on the ballot is the first step in what we believe will be a responsible process that will lead them to coming home,” said McEntee.
CalPERS President Sean Harrigan announced similar approval with the deal. “We are satisfied that through this agreement we will get the kind of review and the access needed by shareholders to make the right decision.” Harrigan added that as a result of McDermott’s willingness to participate in this process, it is no longer necessary for AFSCME and CalPERS to continue to keep the shareholder resolution on the ballot during this proxy season.
In July of 2002, California State Treasurer Phil Angelides (See A Call to Action ), who also sits on the board of CalPERS and the California State Teacher’s Retirement System (CalSTRS), announced his desire to pull state money out of companies that leave the US for offshore tax havens, proposing a “blacklist” of 23 companies that have undertaken such moves to avoid taxes (See Cal. Treasurer Targets Firms Heading Offshore ).