Despite heavy pressure from union groups and large public pension funds (See CalPERS Tells Tyco To Come Home to US ), the non-binding measure was overwhelmingly rejected by 73.6% of the shareholders at the company’s annual meeting held in Bermuda, according to a Wall Street Journal report.
Tyco’s new management had been very reluctant to give up its tropical headquarters. The company argued that its new board, which is now composed of an entirely new cast compared to the last annual meeting, has not had time to evaluate the issue. Additionally, the conglomerate is concerned about the impact on its low tax rate. Tyco moved its incorporation to Bermuda in 1997 when it merged with security-alarm concern ADT Ltd. It maintains operational headquarters in New York City and in New Hampshire.
Approving Executive Severance Payments
However, Tyco’s latest shareholder meeting was not without surprises. The measure to require shareholder approval of executive severance packages passed with support from 57.7% of the shareholders. The yes vote came despite opposition by Tyco’s management.
The move came after heavy criticism against the company last year for paying more than $44 million in severance to former chief financial officer Mark Swartz. Swartz and former Tyco Chief Executive Dennis Kozlowski were later charged with pillaging the company of $600 million in unauthorized compensation and illicit stock sales. The two have maintained their innocence and entered not guilty pleas.
Voters also decided to keep PricewaterhouseCoopers LLP as the company’s auditor.
The remaining four shareholder-sponsored proposals all withered under the tropic sun. The closest vote on those four came on a proposal to require a nonexecutive chairman at the company, which received 33.1% support.