Maytag stock sinks lower; shareholders to decide issues

Maytag stock sinks lower; shareholders to decide issues
 
Date March 21, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

Associated Press Writer

DES MOINES — Maytag Corp. stockholders were growing edgy after watching share prices drop to their lowest level in at least a decade.

“Of course we’re not happy with the price of the stock,” said Nick Rossi, who owns a hardware store in Northern California and owns 800 shares of Maytag stock. “I’m unhappy with management. I think they’ve made a lot of bad mistakes over the past 10 years.”

Maytag shares closed Friday at $13.47, considerably less than the $70 per share trading price in 1999. The stock has traded in a 52-week range of $13.47 to $32.21, but as recently as 2002, shares were trading above $45. Shares were above $14 in early trading today.

Rossi, of Boonville, Calif., said he has owned the stock for more than 20 years. He’s an advocate of more shareholder control. Maytag‘s board currently maintains the ability to reject any purchase offers by other companies through a so-called “poison pill” policy.

“That is a violation of fundamental ownership,” Rossi said. “If an offer comes from another company, the shareholders have the right to consider it and management has an obligation to present their case for or against it, but the shareholders should decide.”

About 60 percent of shareholders have voted to eliminate the poison pill policy every year since 2001, but the board has declined to accept it.

Last year, the company’s board has said they would reverse the policy this year, but they’ve retained the right to reinstate it at any time.

Rossi has successfully placed the issue before shareholders at the company’s May 12 annual meeting in Newton.

The company has advised shareholders to vote no.

“The board is in the best position to negotiate on behalf of all stockholders, evaluate the adequacy of any potential offer, and seek a higher price if there is to be a sale of Maytag,” the company said in a proxy statement to be released to shareholders. “The board’s ability to seek a higher price in takeover contests on behalf of all stockholders is significantly greater than the ability of the individual stockholder to achieve such a result.”

Another initiative, which would allow shareholders to vote on all of the company’s board directors each year, also is on the ballot. A majority of shareholders have voted for the change for the past three years but the company refused to make the change. It is endorsed for the first time by the company this year.

Annual elections would make board members more accountable to shareholders, said John Chevedden, of Redondo Beach, Calif.

His father, Ray Chevedden has 207 shares of Maytag stock. He’s held stock in the company for at least a decade.

“I guess you could say they are a serial ignorer of the majority of shareholder votes,” John Chevedden said. “We feel if they had adopted these good governance practices they’d be better positioned today.”

Rossi said he too hopes the board adopts an annual election this year because he said it makes the board members more accountable to shareholders.

The company has maintained that it could leave Maytag vulnerable to a takeover.

Rossi said with the stock trading at current levels, increased interest in buying the company is a possibility.

“If somebody sees value in that company and has a good idea how to turn that company around, the shareholders should have the option of considering it,” he said.

An investment fund owned by the International Union of Bricklayers and Allied Craftworkers wants shareholders to approve a study on the affect outsourcing has had on the company’s reputation.

Trowel Trades Standard & Poor’s 500 Index Fund had the issue included in the company’s annual proxy statement. The issue will be placed before shareholders at the annual meeting.

The fund owns 2,779 shares of Maytag stock.

Maytag has shifted some refrigerator production to a plant in Mexico after closing a factory in Galesburg, Ill., and has agreements with Daewoo and Samsung, both Korean manufacturers to make Maytag appliances.

If passed by shareholders at the meeting in May, the company board would be asked to set up an independent committee to determine if outsourcing has hurt Maytag‘s brand name or reputation.

The company opposes the move and contends that its global strategy has helped it stay competitive and in some cases has preserved jobs in the United States.

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