Tyco Shareholders Like Bermuda

Shareholders of Tyco International Ltd. voted overwhelmingly Thursday to keep the company based in Bermuda and to keep the outside auditor, defying calls for a shake-up at the conglomerate.

About 74% of investors who voted rejected the plan, Tyco spokesman Gary Holmes said at the company’s annual meeting in Bermuda. Stockholders also reappointed PricewaterhouseCoopers, the auditor under L. Dennis Kozlowski. Kozlowski was ousted last year as chairman and charged with looting the company.

In addition, 10 new directors were elected to Tyco’s board, including current Chairman Edward Breen. No directors who served under Kozlowski remain. The board, which meets for the first time today, was approved by a 94% vote.

Those shareholders unhappy with scandals involving top management scored a victory with the approval of a resolution to subject executive severance packages to a direct shareholder vote. The nonbinding resolution won 58% to 42%. Such proxy votes hardly ever win majority support when opposed by management, as this one was.

A proposal to reappoint PricewaterhouseCoopers as Tyco’s auditor passed 77% to 23%. The firm knew about some of the transactions that led to criminal charges against Kozlowski, ex-finance chief Mark Swartz and former general counsel Mark Belnick, New York prosecutors have said.

Tyco’s shares fell 32 cents to $14.18 on the New York Stock Exchange.

Last year, Tyco shares plummeted 71% amid the scandal.

But analysts were quick to point out Thursday that 26% of the shareholders wanted Tyco to be based in the U.S. once more, demonstrating growing impatience with the company’s Bermuda charter.

The California Public Employees’ Retirement System, the largest U.S. pension fund, and other investors contend that U.S. incorporation would give shareholders more protection against executive dishonesty.

Tyco incorporated in Bermuda in 1997 when it bought ADT Ltd. The charter saves Tyco as much as $280 million a year in taxes, according to Institutional Shareholder Services.

Even though the Bermuda and auditor resolutions were defeated, their support among shareholders exceeded expectations, said Richard Ferlauto, a director of policy for the American Federation of State, County and Municipal Employees.

AFSCME was among those to propose Tyco leave Bermuda.

“We are not hedge funds, we are not short sellers. We are simply asking you to come back to America,” Ferlauto told Breen.

Breen, hired in July to replace Kozlowski, promised shareholders to study requests to move the company.