Shareholder Group Targets 30 Companies for Reforms : Activism: Investors’ 1993 campaign takes aim at high executive pay and poor performance.
The opening salvo in the 1993 campaign by stockholder activists was fired Tuesday when the United Shareholders Assn. released a list of 30 companies it is targeting for nationwide pressure next year.
The Washington-based group of 65,000 institutional and individual investors said the companies are unresponsive to shareholders on issues such as high executive pay, management-entrenchment schemes and puppet directors.
USA members who are shareholders in companies on the target list will introduce proposals to be voted on at annual meetings and, in certain cases, will withhold votes for management-nominated directors.
USA’s list includes companies whose chief executives have been criticized for excessive pay, such as Champion International and Time Warner, as well as corporations whose performance has badly deteriorated, such as Citicorp and IBM.
The USA targets include Community Psychiatric Centers of Laguna Hills and Los Angeles-based Northrop.
Other companies on the USA include: American Cyanamid, Caterpillar, Cooper Industries, Crane, Crystal Brands, Deere, Edison Bros., EG&G;, Grumman, Hartmarx, Household International, International Multifoods, International Paper, Morrison Knudson, Ogden, Polaroid, Southdown, SNET, Timken, USAir, U.S. Shoe and Union Carbide.
The goal is to nudge target companies toward certain reforms: to insure the independence of boards from management; to eliminate poison pills that make it difficult to remove entrenched management and golden parachute plans that richly reward managers removed in mergers, and to reform executive pay by linking it more closely to performance.
USA said that it is now negotiating with 10 companies, which may or may not eventually be added to the list, depending on the outcome of talks. Matters have been resolved with three companies. On Monday, USA announced that Occidental Petroleum and Reebok had been dropped as targets after they instituted requested reforms. Calfed was also taken off because a pending restructuring eliminates certain anti-merger regulations.
USA is not the only group that has selected specific offenders. Big pension funds such as the California Public Employees Retirement System are also jawboning for reforms at companies in which they own substantial stakes.
Calpers won’t identify the 12 offenders on its target list until December, after the companies have had a chance to respond. But among those believed to be on the Calpers list include Chrysler, Boise Cascade, Sears, Pennzoil and Westinghouse.
The Council of Institutional Investors, which is holding a conference this week, will release to its members a list of 25 companies that have had disappointing results for several years, though it is not asking for any specific action.
The Securities and Exchange Commission threw its weight behind shareholder activists last June. The agency proposed new rules that enable shareholders to communicate with one another more freely and new standardized procedures for reporting executive pay that clarify amounts and compare them to performance.
SEC Chairman Richard C. Breeden has said he intends to have the new rules in place by the end of October for the 1993 proxy season.
