Employees and opponents of the move had accused the company of confusing shareholders with conflicting advisories, particularly regarding the 401(k) plan. One letter incorrectly indicated that taking no action on a proxy would result in a ‘no vote.’
A second letter was sent out explaining that not returning a proxy would be counted in accordance with the plan’s trust agreement, which called for shares to be voted in the same proportion as all other votes cast. That vote was 85% in support and 15% against. The firm said the second mailing was an attempt to correct an unintentional miscommunication with the first letter.
Stanley CEO John M. Trani said that 3 million shares in the 401(k) plan were not voted and that the trustee then voted about 2.5 million of them in favor of the reincorporation. He said the Bermuda proposal was approved with a margin of about 425,000 votes and would have lost without the 401(k) plan shares voted by the trustee.
On Friday, Connecticut Attorney General Richard Blumenthal and Treasurer Denise Nappier filed a legal challenge to the vote, and both now say they will be watching the new vote carefully for any deceptive statements. Copies of letters sent to 401(k) plan participants included in the state’s lawsuit show that a second letter referred to a mistake in the first, according to the Associated Press.
On Thursday, the company said that 67.2% of all shares voted supported the change, slightly more than the two-thirds vote required. The reincorporation, which would not have affected employment at the company, was designed to reduce its corporate tax burden, reportedly by some $30 million.
Stanley CEO John M. Trani said Friday that although the company believed the vote was fair and appropriate, ‘even the appearance of impropriety is unacceptable.’
‘The shareholder vote was more than slipshod and incompetent,’ Blumenthal said. ‘Stanley purposely created confusion and deliberately misled shareholders – including its own employees.’
Stanley says it will hold a shareholders meeting as promptly as possible for the revote.