Hot issues few for area firms

4/1/2007

MANY chief executive officers will squirm during their corporate annual meetings this spring as companies face an onslaught of hundreds of shareholder proposals aimed at capping CEO pay, forcing more disclosure, and requiring directors to stand for election every year.

However, most companies based in northwest Ohio and southeast Michigan have avoided such hot-button issues in recent years, after a glut of controversial ballot issues in 2004.

Only a few promise to give shareholders an entertaining sideshow.

The most contentious could be the April 25 annual meeting of Tecumseh Products Co., the Michigan maker of compressors and small gasoline engines whose board this year ousted Chairman and CEO Todd Herrick.

Mr. Herrick is fighting back by nominating his own slate of potential directors and planning to vote the stock owned by his family and family-controlled foundations, which own 43 percent of voting stock. In addition, the validity of the voting is being challenged in federal court in Detroit.

But the company is downplaying the shareholder event. Fireworks are best left for the Fourth of July, said Roy Winnick, a spokesman. Hopefully, it will be a very boring meeting.

Another promises at least an exchange of dialogue: the annual meeting of Croghan Bancshares Inc., of Fremont, where Toledoan Nate Danziger and relatives have again challenged the board.

Their proposals require each director to stand for election annually instead of holding staggered terms and call for an independent chairman of the board. Mr. Danziger, an insurance agent, nominated himself for a board seat over the objections of the firm s board and management.

Area firms meeting in the usual wide variety of venues, including hotels, auditoriums, and corporate headquarters typically have only a few items on the agenda, unlike General Motors Corp., which faces 10 shareholder proposals at its June 5 meeting in Wilmington, Del.

The proposals for GM range from performance-based stock awards to limiting board members to service on a maximum of two other boards to a provision that would give one vote for each share times the number of directors to be elected.

Shareholders have been flexing their muscles for several years, according to Institutional Shareholder Services Inc., of Rockville, Md.

The group reported in March that over 500 proposals were filed at that early date. Among them were 340 on environmental and social issues, 82 requiring directors to get a majority vote to be elected, 48 linking pay to performance, and 42 to require disclosure of political contributions.

It is too early to tell if the number of proposals will surpass last year s

634, the 625 on ballots in 2005, or the 703 in 2004.

Institutional Shareholder Services reported that four perennially popular measures received majority votes in each of the last three years. They were a requirement for simple majority votes on most issues; annual election of directors; shareholder approval of future poison-pill anti-takeover measures; and shareholder approval of golden parachutes for executives.

We ve got a bunch of things in the hopper, said Dan Rosan, spokesman for the Interfaith Center on Corporate Responsibility in New York. The group s members want more disclosure on political donations by companies and trade organizations.

For the first time, the group has ballot proposals, at Ford Motor Co. and Wal-Mart Stores Inc., seeking disclosure of long-term strategies for employee health care.

One of the hottest new topics is an advisory vote on pay, said Tim Smith, director of socially responsible investing for Walden Asset Management, a unit of Boston Trust & Investment Management Co.

That idea, patterned after a five-year-old British law requiring shareholder votes on executive pay, went on some U.S. ballots last year and got at least 40 percent of the vote at six corporations annual meetings, Mr. Smith said.

The idea also got a boost from the U.S. House of Representatives, where a committee gave its OK last week to a bill requiring nonbinding shareholder votes on executive pay.

There will be some firsts at area shareholder meetings.

Owens Corning will hold its first shareholder meeting in seven years.

The Fortune 500 firm was in Chapter 11 bankruptcy for six years, emerging last fall. Spokesman Jason Saragian said the meeting will be after October because bylaws require waiting a full year after emergence from bankruptcy.

Another Fortune 500 firm, Owens-Illinois Inc., will hold its first annual meeting at its new headquarters in Perrysburg s Levis Park, and the session will be a chance for shareholders to meet the new CEO, Albert Stroucken.

Similarly, many shareholders of Findlay s Cooper Tire & Rubber Co. will get their first look at Roy Armes, who took over as CEO Jan. 1.

Toledo s largest Fortune 500 firm, Dana Corp., is not holding a shareholders gathering because it is in its second year of bankruptcy.

Sky Financial Group Inc., of Bowling Green, likely will have its final shareholder meeting this spring, but it will be a special meeting to vote on its pending acquisition by Columbus-based Huntington Bancshares Inc. Spokesman Tim Dirrim said Sky expects to have details of the meeting by mid-April.

Shareholders at two area firms will vote on new stock.

One is United Bancshares Inc. in Columbus Grove, Ohio, and the other is Health Care REIT Inc. in Toledo.

At the latter, shareholders will vote on measures to boost the number of authorized common shares to 225 million from 125 million and the number of preferred shares to 50 million from 25 million.

The added stock would put enough shares of the real-estate investment trust on the market to potentially double or even triple its current market valuation of over $3.2 billion.

The proxy statement sent to shareholders recently noted that the extra stock could be used for future stock offerings, stock dividends, or for acquisitions, and could make it a hostile takeover more difficult.

Contact Homer Brickey at:homerbrickey@theblade.comor 419-724-6129.