Ingersoll Rand To Stay In Bermuda After Shareholder Vote

by Leroy Baker, Tax-News.com, New York

02 June 2003

At its annual meeting in North Carolina last week, Ingersoll Rand shareholders rejected a proposal for the company to reincorporate back to the United States from its present headquarters in Bermuda.

The company later revealed that 58.6% of the company's shares were voted against the move whilst 41.4% were voted for it.

Pressure on Ingersoll Rand from state and union pension funds to reincorporate in the US has been growing for some time, particularly from the American Federation of State, County and Municipal Employees, which has been one of the more vocal critics of firms in the 'corporate inversion' debate. The AFSCME believes that certain Bermudian laws restrict shareholder rights.

Ingersoll Rand's decision to hold the meeting in a remote company facility some 30 miles north of Charlotte, whilst also closing the proceedings to the press has apparently not helped the company's case in the eyes of the AFSCME.

"Given the fact that very few shareholders are able to actually attend annual meetings, we think they all should be open to the news media," AFSCME's head of corporate affairs, Michael Zucker commented. "There's no question but that Ingersoll-Rand is attempting to hide from public scrutiny on its decision to incorporate offshore," the Royal Gazette quoted Zucker as observing.

Alhough the shareholder vote will no doubt please the board of Ingersoll Rand, which saved $50 million in taxes last year, according to reports, it represents something of a hollow victory, as the tide of public opinion continues to turn against firms incorporated in low tax jurisdictions. It must also be noted that those shareholders who voted for reincorporation to the US represent a surprisingly high minority. A similar proposal at Tyco's annual meeting earlier in the year attracted around a quarter of shareholder votes. It is all the more striking when weighed up against the original vote which saw the firm move from its New Jersey HQ in 2001. Then, nearly 90% of shareholders voted for reincorporation to Bermuda.

In spite of this, Ingersoll appears unphased. "The fact of the matter is that the majority of our shareholders still agree that the Bermuda incorporation is in the best interests of the company and we're operating under that assumption," company spokesman Paul Dickard announced recently.

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