IR’s Bermuda incorporation support slips

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Tuesday, July 1, 2003

DAVIDSON, N.C. - A little less than two years after shareholders gave overwhelming support for Ingersoll-Rand to incorporate in Bermuda, investors sent a different message when they recently voted on a proposal to reincorporate the company in the United States.

Though the proposal did not pass, 41.4 percent of voting shareholders at the company’s annual shareholders meeting here in June supported the resolution proposed by the American Federation of State, County and Municipal Employees.

In 2001, 89 percent of voting shareholders supported the company incorporating in Bermuda, a move that enabled Ingersoll-Rand to tap into tax savings offered by the British colony. The company continues to maintain headquarters in Woodcliff Lakes, N.J.

Even though the measure was not approved, officials at AFSCME, a union that represents 1.4 million public employees, believe the vote sent a strong message to the company that it should review its status of incorporation in Bermuda.

“It was the highest vote yet from shareholders for incorporation and it was a very loud voice from share-holders of the company,” said Richard Ferlauto, director of pension investment policy for AFSCME.

Ingersoll-Rand issued a response short-ly after the vote, saying it will remain sensitive to the impact of reincorporation of the company and will continue to monitor legislative changes that might impact its business.

Paul Dickard, director of public relations for Ingersoll-Rand, echoed those sentiments. But at this time, company officials did not say they would conduct a formal review of its incorporation.

Ferlauto initially hoped at least 15 percent of shareholders would support the measure. “We believe that shareholders’ rights are significantly diminished by having an overseas address and going to a tax haven,” he said.

Chief among the concerns is legislation proposed in California, Texas, Montana and Connecticut to deny federal and state contracts to companies that incorporate in overseas tax havens to avoid taxes.

AFSCME launched its campaign a few weeks ago for Ingersoll-Rand to reincorporate in the states. It garnered support from Connecticut’s retirement plan group, California’s Public Employee’s Retirement System and others. All are shareholders in Ingersoll-Rand.

A similar reincorporation campaigned launched against Tyco earlier this year has been called a success by AFSCME. At Tyco’s annual shareholder meeting in March, 26.4 percent of shareholders voted to support a resolution to reincorporate the company in the United States.

Based on the vote, officials at Tyco have now agreed to conduct an in-depth review of its incorporation in Bermuda, with plans to submit a report to shareholders this fall.

Dickard said should Ingersoll-Rand decide to issue a report to its shareholders, the decision would be made by the company’s board of directors.