Maytag places annual election of board members before shareholders

Maytag places annual election of board members before shareholders
 
Date March 15, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

Associated Press Writer

PETER HUSSMANN

Newton Daily News Editor

Maytag Corp. says it plans to place the issue of an annual election of all board members on the agenda for its May 12 shareholders meeting.

The vote was announced in a document filed Monday with the Securities and Exchange Commission and represents a reversal in the board’s long-held position.

For three years, the board has resisted a demand from the California Public Employees’ Retirement System, which owns 300,000 shares of Maytag stock, for annual elections of the entire board. CalPERS said annual elections hold board members more accountable to shareholders.

Each time, Maytag board members have said annual elections are not in the best interest of the company or its shareholders because they promote instability.

This year, CalPERS said it would seek disqualification of board members who opposed the plan. It then withdrew the request, according to a document filed with the SEC on March 4.

Last year, 66 percent of Maytag‘s shareholders voted for an annual election of the entire board. In 2003, 59 percent supported the change. In 2002, 55 percent of shareholders supported it.

“The board has listened and responded to its shareholders who believe this change is in the best interest of the company,” said CEO Ralph Hake in a statement. “While the board believes that classifications of directors promoted continuity and stability on the board, careful consideration was given to all relevant factors including our shareholders’ wishes. Given this, the board supports the change and will urge our shareholders to approve these amendments.”

Currently, three or four company board members are elected each year for a three-year term, staggering the terms. This year, directors Barbara Allen, Howard L. Clark Jr., Lester Crown and William T. Kerr are nominees up for election.

If shareholders representing at least two-thirds of the outstanding shares approve of the proposal, the four directors who are nominated for election in 2005 will be elected for one-year terms. If the declassification measure fails, the nominees will be elected for three-year terms expiring at the 2008 annual meeting. Directors not up for re-election this year will serve the remainder of their three-year terms.

Several other stockholder initiatives are included in the preliminary proxy statement, including a measure to study the impact of Maytag‘s outsourcing and offshoring manufacturing on its brand name and reputation.

Trowel Trades S &P Index Fund intends to initiate a shareholder proposal which calls on the board of directors to establish an independent committee to “prepare a report evaluating the risk of damage to Maytag‘s brand name and reputation in the United States as a result of the outsourcing and offshoring of manufacturing work to other countries …”

Trowel contends that offshoring poses a significant risk to Maytag.

“In our opinion, Maytag‘s brand name is one of its most important assets,” the preliminary proxy statement says. “In the 2003 Annual Report, Maytag‘s Chairman and CEO listed ‘highly regarded brands’ as one of Maytag‘s ‘significant strengths.’ We are concerned that shifting production offshore can harm Maytag‘s name and reputation. We believe Maytag is vulnerable to consumer dissatisfaction in the U.S. where a signifant portion of Maytag‘s sales take place.”

The corporation is asking shareholders to reject the proposal.

“While Maytag has and will continue to maintain a strong manufacturing base in the U.S., Maytag‘s U.S. workforce mirrors a U.S. economy that is changing from a manufacturing to a techology and services economy,” the proxy statement says. “Our outsourcing has largely consisted of obtaining component parts and certain finished goods from low-cost countries in order to remain competitive. These actions are taken as needed to continue to provide high-value products for our customers and consumers around the world and to create a strong company that benefits all of our stakeholders over the near, medium and long term. Given Maytag‘s strong employment record in the U.S., its long history of responsible globalization and the enduring strength of its reputation and brand, the board does not believe a study of this kind is necessary.”

Another shareholder proposal calls for Maytag to implement the International Labor Organization’s standards on human rights. The board is asking shareholders to reject the proposal saying it has already implemented practices addressing the issue and such a measure would be “duplicative of our existing efforts.”

The preliminary proxy statement shows that CEO Hake’s base salary rose about $38,000 in 2004 to $879,167. For the second year in a row, the chairman did not receive an annual incentive tied to financial metrics for company performance. He did receive $282,880 in long-term incentive pay in 2004 and with other payouts brought his salary to approximately $1.2 million last year.

Maytag stock closed down Monday 13 cents at $14.63 on the New York Stock Exchange. In early trading today, it was down another nickel.

The stock has been trading at a 52-week range of $14.47 to $32.21.

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