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Published: Saturday, 3/31/2001

Area CEOs hope for no fireworks at '01 sessions

BY HOMER BRICKEY
BLADE SENIOR BUSINESS WRITER

He's ready for what he thinks may be the main question: “Do we have a future?” He also expects a shareholder to ask why the licensor of wastewater sludge-treatment technology hasn't grown since the early 1990s. “We are a company that has a future, and what's happened in the marketplace and in [the Environmental Protection Agency] is changing,” said Mr. Nicholson, perhaps practicing for his performance before shareholders.

He may get off more lightly than some chief executive officers. Shareholders of many companies this year are showing their muscle.

For example, shareholders of three of Ohio's biggest bank holding companies have to deal with proposals to sell off or merge their companies or to make directors more accountable to stockholders. Companies based in the Toledo area face other shareholder proposals, dealing with the environment and board elections.

But for most corporations, it's business as usual, and CEOs of companies based in northwest Ohio and southeast Michigan are hoping to again have no fireworks at the annual shareholder gatherings.

Companies have planned their meetings in a wide variety of venues - from corporate headquarters to auditoriums, banquet halls, hotel ballrooms, and country clubs. Two area-based manufacturers will meet in their lawyers' offices - Dana Corp., chartered in Virginia, will hold its meeting in Richmond, Va., and Chase Industries, Inc., of Montpelier, will hold its meeting in New York City.

In many cases, the most exciting shareholder questions probably will have something to do with the Internet or falling stock prices.

Even though some banks expect contentious annual meetings, some in this area expect the opposite - tranquil, even social, events. Exchange Bancshares, Inc., based in Luckey, will hold its annual meeting after a dinner at Eastwood High School in Pemberville. Chairman Marion Layman said he expects as many as 400 shareholders for the dinner.

Many area shareholders will need to make travel plans if they want to attend their companies' annual meetings. Sky Financial Group, of Bowling Green, will meet in Cleveland, and the major automakers are spread out - DaimlerChrysler AG's is in Germany, Ford Motor Co.'s is in St. Paul, Minn. (in the theater that is home to Garrison Keillor's popular radio show Prairie Home Companion) and General Motors Corp.'s is in a Wilmington, Del., hotel.

But one large company, with many area shareholders, is bringing its annual meeting closer to home. USX Corp., of Pittsburgh, parent of Marathon Oil Co. and U.S. Steel, will meet in Columbus. “Every once in a while we like to come to Ohio,” said Bill Kessler, a spokesman for USX. “There are quite a few shareholders in Columbus and in the Dayton-Springfield area, where Speedway [a Marathon unit in Enon] has its headquarters.”

One of Toledo's three Fortune 500 companies will not have an annual meeting, for the first time since it went public in 1952. Owens Corning, which filed a Chapter 11 bankruptcy in October to put a lid on its mounting asbestos-injury liability, said it will skip this year's annual meeting. There's a precedent for that: When Johns Manville, another asbestos maker, went through a Chapter 11 in the early 1980s, it eliminated shareholder gatherings.

One of Ohio's liveliest annual meetings this year could be the one planned by Huntington Bancshares, Inc., scheduled this month in Columbus. Five family trusts and individual investors from five states holding a total of 4.2 million shares pushed a ballot proposal calling on directors to hire an investment-banking firm to sell the bank holding company or merge it into another bank.

The proposal, outlined in the firm's proxy statement, says that “existing management appears unable to generate consistent sustainable earnings or revenue momentum,” and it complains of special accounting charges and “excessive employee turnover.”

In the proxy, Huntington's management urged shareholders to vote against the proposal, noting that Thomas Hoaglin, the new president and CEO, “is a seasoned banking executive with a proven track record.” Huntington also sent letters to its employee shareholders pointing out that the dissident shareholders represent only 1.7 percent of Huntington's 261 million shares, and it asked the employees to “thoughtfully consider” the issue before voting.

At National City Corp.'s annual meeting this month in Cleveland, a stockholder who owns 384 shares plans a proposal urging directors to “either sell or seek a merger of National City Corp. with another financial institution with a proven record of accomplishments.” In the proxy, the unnamed shareholder noted: “I am more than displeased with the steady deterioration of the market value of my holdings.”

Management's response was that “National City periodically retains investment bankers and other third-party advisers to make presentations to the board of directors concerning strategies for maximizing long-term shareholder value.”

A Colorado stockholder who owns 20,080 shares in KeyCorp asked shareholders at next month's meeting to vote for annual election of all directors rather than three-year staggered terms. In his proposal, he noted that 53 percent of Key's shareholders voted for the proposal last year, but the board “failed to recognize this mandate from its owners.”

Key's management urged shareholders to vote against the proposal, saying that the company needs long-term strategic planning and that electing directors by “classes” is a common practice that has been adopted by many companies, including 19 of 25 major regional banks and 63 percent of the firms making up the Standard & Poor's 500.

An area company facing that same issue is Cooper Tire & Rubber Co., whose annual meeting is in Findlay next month. A ballot proposal urges the board to replace three-year terms with annual elections for all directors. The proposal notes that a similar resolution passed two years ago but was not acted on.

However, Cooper responded in the proxy statement that more than 80 percent of shareholders approved the firm's bylaws that call for staggered board elections and that “a classified board will deter attempts to acquire control of the company.”

Dana Corp.'s shareholders will vote on the CERES principles, named for the Coalition for Environmentally Responsible Economies and aimed at energy conservation and environmental restoration.

“This is one of those things that come up every year,” said Gary Corrigan, Dana's director of corporate communication, adding that the measure is likely to receive only a small percentage of shareholder votes.

Many of Dana's shareholders will vote by phone rather than attempting to go to the lightly attended meeting in Richmond. Some other area firms also allow their shareholders to vote via Internet as well as the telephone. Among them: Owens-Illinois, Inc.; Cooper Tire; La-Z-Boy, Inc.; and First Defiance Financial Corp.

The accounting firm of Ernst & Young predicts in its recently published 68-page booklet Subjects of Interest to Shareholders that “shareholders are bound to ask about the company's current Internet presence and e-commerce plans for the future.”

Steve Staelin, managing partner in Ernst & Young's Toledo office, agreed. “I continue to believe that e-commerce is a major issue,” he said.



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