Strong message sent by IR reincorporation vote

Thursday, May 29, 2003

May 29, 2003

DAVIDSON, N.C. - A public employee union group received overwhelming support today as it urged Ingersoll-Rand investors at the company’s annual shareholder’s meeting to support a reincorporation of the company in the United States.

Of the voting shareholders, 41.4 percent voted to support a resolution proposed by the American Federation of State, County and Municipal Employees for Ingersoll-Rand to reincorporate in the United States.

Though it did not pass, officials at AFSCME 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 shareholders of the company," said Richard Ferlauto, director of pension investment policy for AFSCME.

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

Ferlauto initially hoped that 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.

The AFSCME, which represents 1.4 million public employees, launched the campaign a few weeks ago for Ingersoll-Rand to reincorporate in the states. Last year Ingersoll-Rand legally changed its corporate headquarters to Bermuda to tap into tax savings offered by the British colony.

The AFSCME has 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 have now agreed to conduct an in-depth review of its incorporation in Bermuda, with plans to submit a report to shareholders this fall.