Lost among the unceasing barrage of news media coverage of Donald Trump is his tenure as the CEO of a publicly-traded company and its predecessors. In July 1987, over a year after James Crosby, the CEO of Resorts International, died unexpectedly, Donald Trump prevailed over other bidders to purchase a controlling stake in the company from Crosby's family for $79 million. (Crosby's transformation of Mary Carter Paints into Resorts International is a fascinating corporate makeover story.) Mr. Trump already owned two Atlantic City casinos and asserted that he would complete Resort's massive casino in about a year.
Originally slated to cost $250 million, the budget to construct the Taj Mahal swelled to $930 million. Early in 1988, with the company having difficulty lining up funding to complete the project and reporting that it was nearing bankruptcy, Mr. Trump made a $22 tender offer for the company. Famed TV producer Merv Griffin topped Mr. Trump's bid sparking a takeover battle and the filing of countersuits. The two reached a settlement in 1988 by which Griffin purchased the company for $365 million and Trump purchased the Taj Mahal from the company for $273 million.
Securities analyst Marvin Roffman of Philadelphia-based brokerage Janney Montgomery Scott had been following Mr. Trump's new entity since 1988 when it issued $675 million in junk bonds at a 14% interest rate to complete the construction of the Taj Mahal. Almost from the outset, Mr. Roffman was negative on the bonds, doubting that the casino property could generate sufficient revenue to maintain interest payments on the bonds. Nonetheless, the buzz surrounding the project and Mr. Trump's name - not to mention his publicists who crowned it the "Eighth Wonder of the World" - pushed the bonds' price to a premium in early 1990.
However, the bonds' price had already started downward when, on March 21, 1990, the Wall Street Journal ran a story in which Mr. Roffman commented on the looming opening of the Trump Taj Mahal. Particularly fateful was his quote in the piece: “When this property opens….he [Trump] will break every record in the book in April, June and July. But once the cold winds blow from October to February, it [the Taj] won’t make it…the market just isn’t there.”
Not long thereafter, Mr. Trump sent a letter in protest to Norman T. Wilde Jr., president and CEO of Janney Montgomery Scott, to express his displeasure with Mr. Roffman's comments. Mr. Trump reminded that he had sprung to the defense of Mr. Roffman after the analyst noted reservations about the Mirage casino in Las Vegas built by Golden Nugget Companies, now part of MGM Resorts International (MGM), and whose CEO Steve Wynn had taken umbrage at the assessment. Mr. Trump said Mr. Roffman had a reputation among gaming industry proprietors as a "hair-trigger" and that the analyst was “somewhat unstable in his tone and manner of criticism.” And for the capper, “I am now planning to institute a major lawsuit against your firm unless
Mr. Roffman makes a major public apology or is dismissed,” said Mr. Trump.
After acquiescing to Mr. Trump's demand by submitting a deferential letter of apology to Mr. Trump and then retracting it after learning Mr. Trump planned to publish it, Mr. Roffman was unceremoniously terminated by his employer. On April 2, 1990, the day the Taj Mahal opened for business, legendary Barron's editor and columnist Alan Abelson waded into the matter to recount the chain of events in a cover story for the finance sector's must-read weekly. His incomparable sardonic wit set the tone for the ensuing unflattering coverage of the story. On the bright side, Michael Jackson showed up to help celebrate the Trump Taj Mahal's opening.
By the time Mr. Roffman was fired the bonds were trading in the 80s and declined into the 20s after the entity that owned the Taj Mahal defaulted on its first interest payment in October 1990. The company filed a Chapter 11 bankruptcy in the spring of 1991. In 1995, Mr. Trump established a new publicly-traded company, Trump Hotels and Casino Resorts (ticker THCR, delisted in 2007), which purchased the Trump Taj Mahal at a valuation of $890 million.
Of course, Mr. Trump was not the first CEO or CFO - nor will he be the
last - to dispute an analyst's unfavorable assessment of his
company's prospects. Exhibiting his trademark aggressiveness, however, Mr. Trump pushed the envelope as is his wont. Unavailable at the time, mind you, was tweeting to vent his frustration real time, since Twitter (TWTR) was not around yet. In contesting an allegedly erroneous evaluation, most execs, reluctant to risk the backdraft, refrain from such heavy-handed tactics, which would seem advisable.
Robert Stead
Friday, May 26, 2017
Saturday, May 20, 2017
More AGMs go virtually undetected
We'd noted recently that some companies, e.g., Wells Fargo (WFC), have decided against holding annual shareholder meetings in their hometowns, in some instances, perhaps, to withhold the venue for local protesters to express long-standing grievances with said companies. On the other hand, each year Berkshire Hathaway enthusiastically attracts tens of thousands of shareholders, and other curious people, to its annual meeting in Omaha, Nebraska, which has come to be known as "Woodstock for Capitalists". Other companies, however, are increasingly doing away with "physical" annual meetings altogether.
Holding its meeting blocks from headquarters, Amazon (AMZN) attracted no fewer than four protests. Pilots for Amazon's Prime Air contends the company's air transport vendor is not competitive with compensation causing pilots to leave; they want the company to pressure Atlas Air to make changes in order to retain staff. Mercy For Animals confronted Amazon shareholders with graphic images of animal abuse obtained during an undercover investigation at an Amazon foie gras supplier. The group introduced a shareholder proposal requiring the company to use sustainability in executive compensation decisions, which was soundly defeated.
With a plane flying overhead trailing a banner reading "AMAZON STOP FUNDING HATE. DROP BREITBART.", an amalgam of groups, which delivered a petition with over 1 million signatures, demanded that Amazon to cut ties with sponsor Breitbart News. Last but not least, SEIU6 plus a coalition of labor, community, and faith groups held a “People's Shareholder Meeting” to urge Amazon to “help ensure a just and sustainable future for all." High-profile Seattle City Councilmember Kshama Sawant spoke at the gathering.
On the other hand, earlier this month Charlotte-based Duke Energy (DUK) conducted its annual meeting as a virtual event for the first time in the company’s history. The company explained the change as an effort to make the meeting more accessible for its 1 million shareholders residing in 30 countries. Of course, in contrast to previous annual assemblies, the 2017 meeting's format did not provide the avenue for a highly-publicized anti-coal protest. The Charlotte Observer noted that DUK AGMs had become "increasingly riotous affairs in recent years."
Duke Energy is not the first major company to hold a virtual annual meeting. That distinction belongs to Intel Corporation (INTC), the Santa Clara, CA-based semiconductor maker, which in 2009 had a physical meeting with the option to participate virtually. Broadridge Financial Solutions Inc., the dominant provider of virtual shareholder meeting technology, assisted the company, which last year went fully virtual. Last year, Broadridge assisted 187 companies in holding virtual shareholder meetings, up from 28 companies in 2010.
Smaller companies are also getting in on the online act. In 2016, for the first time, SurModics (SRDX), a provider of surface modification and in vitro diagnostic technologies to the healthcare industry, conducted a virtual annual meeting, which the company's board chairwoman, Susan Knight, said during this year’s meeting in February that the company expects to do from here on out.
“Quite frankly, it’s more of a social gathering than anything else,” said Andy LaFrence, chief financial officer and vice president of finance for SurModics. Since only four shareholders reportedly showed up at the 2015 meeting, it must not have been a very lively event. More than 90 percent of SurModics shareholders are institutions, he said. “The majority of them are going to be on the coasts,” LaFrence said. “This gives those shareholders an opportunity to participate and to vote live with the tools in place.”
Other motives have been posited for choosing virtual meetings. “Transitioning to a virtual-only meeting allows Duke to fully control the content,” Natasha Lamb, managing partner and director of equity research and shareholder engagement at Arjuna Capital, told ThinkProgress. “One has to assume that any questions that are brought forward in a virtual format would be pre-screened.”
“We respectfully urge the board to take a ‘hybrid’ approach giving Duke Energy shareholders the option to either attend the meeting online or in-person,” Kenneth Bertsch, executive director of the Council of Institutional Investors, wrote in a letter to the company.
But earlier this year the Securities and Exchange Commission indicated that would not stand in the way of companies electing the "virtual-only" option for annual meetings. Late last year, the SEC's Division of Corporate Finance, responding to a Hewlett Packard Enterprise Co. (HPE) letter about John Chevedden and Bartlett Naylor's shareholder proposal, wrote that "[t]here appears to be some basis for your view that HP may exclude the proposal under rule 14a-8(i)(7), as relating to HP's ordinary business operations" because the proposal “relates to the determination of whether to hold annual meetings in person.” Previously, SEC staff agreed that HP could exclude on procedural grounds.
With the SEC's stance on the matter clarified, regardless whether the reality is that AGM attendees are too many, too few, too inquisitive or too boisterous, look for the movement to virtual meetings to pick up speed next season.
Robert Stead
Holding its meeting blocks from headquarters, Amazon (AMZN) attracted no fewer than four protests. Pilots for Amazon's Prime Air contends the company's air transport vendor is not competitive with compensation causing pilots to leave; they want the company to pressure Atlas Air to make changes in order to retain staff. Mercy For Animals confronted Amazon shareholders with graphic images of animal abuse obtained during an undercover investigation at an Amazon foie gras supplier. The group introduced a shareholder proposal requiring the company to use sustainability in executive compensation decisions, which was soundly defeated.
With a plane flying overhead trailing a banner reading "AMAZON STOP FUNDING HATE. DROP BREITBART.", an amalgam of groups, which delivered a petition with over 1 million signatures, demanded that Amazon to cut ties with sponsor Breitbart News. Last but not least, SEIU6 plus a coalition of labor, community, and faith groups held a “People's Shareholder Meeting” to urge Amazon to “help ensure a just and sustainable future for all." High-profile Seattle City Councilmember Kshama Sawant spoke at the gathering.
On the other hand, earlier this month Charlotte-based Duke Energy (DUK) conducted its annual meeting as a virtual event for the first time in the company’s history. The company explained the change as an effort to make the meeting more accessible for its 1 million shareholders residing in 30 countries. Of course, in contrast to previous annual assemblies, the 2017 meeting's format did not provide the avenue for a highly-publicized anti-coal protest. The Charlotte Observer noted that DUK AGMs had become "increasingly riotous affairs in recent years."
Duke Energy is not the first major company to hold a virtual annual meeting. That distinction belongs to Intel Corporation (INTC), the Santa Clara, CA-based semiconductor maker, which in 2009 had a physical meeting with the option to participate virtually. Broadridge Financial Solutions Inc., the dominant provider of virtual shareholder meeting technology, assisted the company, which last year went fully virtual. Last year, Broadridge assisted 187 companies in holding virtual shareholder meetings, up from 28 companies in 2010.
Smaller companies are also getting in on the online act. In 2016, for the first time, SurModics (SRDX), a provider of surface modification and in vitro diagnostic technologies to the healthcare industry, conducted a virtual annual meeting, which the company's board chairwoman, Susan Knight, said during this year’s meeting in February that the company expects to do from here on out.
“Quite frankly, it’s more of a social gathering than anything else,” said Andy LaFrence, chief financial officer and vice president of finance for SurModics. Since only four shareholders reportedly showed up at the 2015 meeting, it must not have been a very lively event. More than 90 percent of SurModics shareholders are institutions, he said. “The majority of them are going to be on the coasts,” LaFrence said. “This gives those shareholders an opportunity to participate and to vote live with the tools in place.”
Other motives have been posited for choosing virtual meetings. “Transitioning to a virtual-only meeting allows Duke to fully control the content,” Natasha Lamb, managing partner and director of equity research and shareholder engagement at Arjuna Capital, told ThinkProgress. “One has to assume that any questions that are brought forward in a virtual format would be pre-screened.”
“We respectfully urge the board to take a ‘hybrid’ approach giving Duke Energy shareholders the option to either attend the meeting online or in-person,” Kenneth Bertsch, executive director of the Council of Institutional Investors, wrote in a letter to the company.
But earlier this year the Securities and Exchange Commission indicated that would not stand in the way of companies electing the "virtual-only" option for annual meetings. Late last year, the SEC's Division of Corporate Finance, responding to a Hewlett Packard Enterprise Co. (HPE) letter about John Chevedden and Bartlett Naylor's shareholder proposal, wrote that "[t]here appears to be some basis for your view that HP may exclude the proposal under rule 14a-8(i)(7), as relating to HP's ordinary business operations" because the proposal “relates to the determination of whether to hold annual meetings in person.” Previously, SEC staff agreed that HP could exclude on procedural grounds.
With the SEC's stance on the matter clarified, regardless whether the reality is that AGM attendees are too many, too few, too inquisitive or too boisterous, look for the movement to virtual meetings to pick up speed next season.
Robert Stead
Sunday, May 14, 2017
New HQ digs inhospitable to shareholders?
News came this week that the Apple (AAPL) mothership has landed in Cupertino and that Amazon (AMZN) has nearly completed its jungle spheres for meetings, meals and mingling at its new campus in downtown Seattle. In 2009, the late co-founder Steve Jobs started meticulously designing Apple Park, which covers 175 acres. It reportedly will cost $5 billion to bring to fruition, predominantly for the 2.8
million-square-foot main office building called “The Ring”, complete with a sophisticated natural
ventilation system and a two-story yoga room. Jobs chose Norman Foster, a Pritzker Prize winner whose commissions have included
the Berlin Reichstag, the Hong Kong airport, and London’s infamous
“Gherkin” tower, as the architect.
Now occupying an estimated 15-20% of Seattle's office space, late last year Amazon opened it's 37-story skyscraper adjacent to the already famous geodesic biodomes, soon to encompass 40,000 plants.
In a recent Wall Street Journal piece, regular contributor and former hedge fund manager Andy Kessler says the stock market reaching dizzying heights has him focusing on the toughest decision for investors: when to sell a stock. According to Kessler, Wall Street's most successful players get ahead of the news, understand a CEO's mind, and figure out where the company is going. To this end, he often uses the "HQ indicator", which is for those playing long ball, not day traders. Simply put, when a company announces it is moving its executives into a lavish palace, it's often time to get out.
He wryly notes that Salesforce (CRM) will soon relocate to the 1.6 million-square-foot Salesforce Tower, just a few short blocks from where Mel Brooks filmed the Hitchcock "Vertigo" spoof "High Anxiety". The company's new headquarters building will be the tallest in San Francisco and the second tallest building west of the Mississippi.
Kessler goes on humorously yet ominously to recount notorious examples of the HQ indicator in recent years.
In 2007, InterActiveCorp. (IAC) , owners of CollegeHumor and Tinder, moved into Frank Gehry-designed, deconstructivist-style IAC Building in Manhattan. IAC stock promptly deconstructed itself, going from around $40 in 2007 to under $15 two years later, though rebounding since.
Also in 2007, after almost 100 years on West 43rd Street, a location so iconic that Times Square is named after the paper, the New York Times (NYT) moved into a more lavish setting on Eighth Avenue. In 2003 when construction started on the new location, the stock traded around $45; when the daily took occupancy in 2007 the stock was at half that price and now trades around $14.
In 2003, Time Warner (TWX) opened the $1.7 billion Time Warner Center, a "city within a building", overlooking Manhattan's Central Park. Time Warner's stock was $45 at the time, hit $68 in January 2007 and then dropped to $17 two years later. It didn't reach $45 again until 2012.
In 2002, Bear Stearns moved into 383 Madison Ave., which covered a full New York City block. A lot of the expansive space went into mortgage origination, packaging, collateralization and trading - activities at the core of the 2008 Financial Crisis. Bear Stearns common peaked at $171 in January 2007 but J.P. Morgan agreed to buy the company in a fire sale for $2 a share in March 2008 (subsequently renegotiated to $10).
In 1984, AT&T (T) took occupancy of the postmodern "Chippendale" Building at 550 Madison Ave., just before finding itself in a premodern price war with MCI and Sprint over long-distance telephone rates. Eight years later AT&T was out and Sony moved in. If its pending merger with Time Warner goes through, however, it will gain custody of Time Warner Center.
Why does the HQ indicator work? Kessler answers his own question:
Investors in public companies have no control and are at the whims of management. Are a company's leaders frugal, or do they spend shareholders' money like drunken sailors? Are they modest or do they have the hubris that leads to an edifice in honor of the CEO's greatness and legacy? Will management be tempted to rush to fill the huge swaths of new empty headquarters space, often taking on questionable businesses?
Since there are exceptions that prove the rule, Kessler cautions that this shouldn't be an investor's only filter. Five-and-dime store operator F.W. Woolworth moved into the gilded neo-gothic Woolworth Building in 1912 and had a nice run until the 1980s. Your grandpa would have lost a ton if he got out before the world wars, Kessler observes. Alas, time marches on and the building is now luxury condos.
The latest trend marks a stark departure for the tech industry, which typically has steered clear of the edifice complex reflected in the corporate palaces of banks and oil & gas multinationals. Tech companies generally have occupied unremarkable, low-slung office buildings like those on Apple’s existing campus. Even headquarters viewed locally as lavish — like former Sun Microsystems Inc.’s Silicon Valley campus — had relatively restrained designs and looked so much like a prison it was dubbed Sun Quentin.
Google (GOOGL) never built a headquarters but in 2003 took over the complex built for Silicon Graphics. The latter company's stock peaked within nanoseconds of signing a lease for the Mountain View, Calif., campus it never occupied. The former company recently filed plans for a transparent scalloped canopy over 600,000 square feet of office space including a public "Green Loop" through the first of four domes. "We aim to blur the distinction between our buildings and nature," said the company.
Since early March, the so-called FAANG stocks - Facebook (FB), Amazon, Apple, Netflix (NFLX) and Google - have gained approximately $260 billion in value, while the other 495 companies in the S&&P 500 have lost the same amount. Since early 2015, the total market capitalization of the S&P 500 has risen from $19.5 trillion to $21.3 trillion. Notably, the "Big 5" NASDAQ stocks, the FAANGS ex-Netflix plus Microsoft account for 56% of the $1.8 trillion gain. Breaking it down, the combined market cap of the NASDAQ Big 5 has soared from $1.9 trillion to $3 trillion since early 2015, or by 55%. That compares to just a 4.5% gain in the aggregate market cap of the other 495 S&P 500 stocks during that period. This pronounced narrowing of market drivers has drawn comparisons to the Nifty Fifty scenario of the early 1970s, which was followed by a major, prolonged downturn in equities.
Shareholders have no direct input on decisions to construct arguably extravagant corporate headquarters but that's a topic for another day. But, hopefully, the spate of erecting lavish headquarters for some of today's most prominent market-movers is not the harbinger of a similar down leg in valuation for these companies - and for the market as a whole.
Robert Stead
Now occupying an estimated 15-20% of Seattle's office space, late last year Amazon opened it's 37-story skyscraper adjacent to the already famous geodesic biodomes, soon to encompass 40,000 plants.
The erection of such edifices is hardly unprecedented. “This is what rich, wealthy and powerful
individuals have done since the Pharaohs built the pyramids — you build a building that projects power to the world,” said Louise Mozingo, an
urban-design professor at the University of California, Berkeley, who
wrote a book on corporate campuses.
In a recent Wall Street Journal piece, regular contributor and former hedge fund manager Andy Kessler says the stock market reaching dizzying heights has him focusing on the toughest decision for investors: when to sell a stock. According to Kessler, Wall Street's most successful players get ahead of the news, understand a CEO's mind, and figure out where the company is going. To this end, he often uses the "HQ indicator", which is for those playing long ball, not day traders. Simply put, when a company announces it is moving its executives into a lavish palace, it's often time to get out.
He wryly notes that Salesforce (CRM) will soon relocate to the 1.6 million-square-foot Salesforce Tower, just a few short blocks from where Mel Brooks filmed the Hitchcock "Vertigo" spoof "High Anxiety". The company's new headquarters building will be the tallest in San Francisco and the second tallest building west of the Mississippi.
Kessler goes on humorously yet ominously to recount notorious examples of the HQ indicator in recent years.
In 2007, InterActiveCorp. (IAC) , owners of CollegeHumor and Tinder, moved into Frank Gehry-designed, deconstructivist-style IAC Building in Manhattan. IAC stock promptly deconstructed itself, going from around $40 in 2007 to under $15 two years later, though rebounding since.
Also in 2007, after almost 100 years on West 43rd Street, a location so iconic that Times Square is named after the paper, the New York Times (NYT) moved into a more lavish setting on Eighth Avenue. In 2003 when construction started on the new location, the stock traded around $45; when the daily took occupancy in 2007 the stock was at half that price and now trades around $14.
In 2003, Time Warner (TWX) opened the $1.7 billion Time Warner Center, a "city within a building", overlooking Manhattan's Central Park. Time Warner's stock was $45 at the time, hit $68 in January 2007 and then dropped to $17 two years later. It didn't reach $45 again until 2012.
In 2002, Bear Stearns moved into 383 Madison Ave., which covered a full New York City block. A lot of the expansive space went into mortgage origination, packaging, collateralization and trading - activities at the core of the 2008 Financial Crisis. Bear Stearns common peaked at $171 in January 2007 but J.P. Morgan agreed to buy the company in a fire sale for $2 a share in March 2008 (subsequently renegotiated to $10).
In 1984, AT&T (T) took occupancy of the postmodern "Chippendale" Building at 550 Madison Ave., just before finding itself in a premodern price war with MCI and Sprint over long-distance telephone rates. Eight years later AT&T was out and Sony moved in. If its pending merger with Time Warner goes through, however, it will gain custody of Time Warner Center.
Why does the HQ indicator work? Kessler answers his own question:
Investors in public companies have no control and are at the whims of management. Are a company's leaders frugal, or do they spend shareholders' money like drunken sailors? Are they modest or do they have the hubris that leads to an edifice in honor of the CEO's greatness and legacy? Will management be tempted to rush to fill the huge swaths of new empty headquarters space, often taking on questionable businesses?
Since there are exceptions that prove the rule, Kessler cautions that this shouldn't be an investor's only filter. Five-and-dime store operator F.W. Woolworth moved into the gilded neo-gothic Woolworth Building in 1912 and had a nice run until the 1980s. Your grandpa would have lost a ton if he got out before the world wars, Kessler observes. Alas, time marches on and the building is now luxury condos.
The latest trend marks a stark departure for the tech industry, which typically has steered clear of the edifice complex reflected in the corporate palaces of banks and oil & gas multinationals. Tech companies generally have occupied unremarkable, low-slung office buildings like those on Apple’s existing campus. Even headquarters viewed locally as lavish — like former Sun Microsystems Inc.’s Silicon Valley campus — had relatively restrained designs and looked so much like a prison it was dubbed Sun Quentin.
Google (GOOGL) never built a headquarters but in 2003 took over the complex built for Silicon Graphics. The latter company's stock peaked within nanoseconds of signing a lease for the Mountain View, Calif., campus it never occupied. The former company recently filed plans for a transparent scalloped canopy over 600,000 square feet of office space including a public "Green Loop" through the first of four domes. "We aim to blur the distinction between our buildings and nature," said the company.
Since early March, the so-called FAANG stocks - Facebook (FB), Amazon, Apple, Netflix (NFLX) and Google - have gained approximately $260 billion in value, while the other 495 companies in the S&&P 500 have lost the same amount. Since early 2015, the total market capitalization of the S&P 500 has risen from $19.5 trillion to $21.3 trillion. Notably, the "Big 5" NASDAQ stocks, the FAANGS ex-Netflix plus Microsoft account for 56% of the $1.8 trillion gain. Breaking it down, the combined market cap of the NASDAQ Big 5 has soared from $1.9 trillion to $3 trillion since early 2015, or by 55%. That compares to just a 4.5% gain in the aggregate market cap of the other 495 S&P 500 stocks during that period. This pronounced narrowing of market drivers has drawn comparisons to the Nifty Fifty scenario of the early 1970s, which was followed by a major, prolonged downturn in equities.
Shareholders have no direct input on decisions to construct arguably extravagant corporate headquarters but that's a topic for another day. But, hopefully, the spate of erecting lavish headquarters for some of today's most prominent market-movers is not the harbinger of a similar down leg in valuation for these companies - and for the market as a whole.
Robert Stead
Wednesday, May 10, 2017
SPILL washes up on BAX AGM
Headquartered in Deerfield, a northern suburb of Chicago, Baxter International (BAX), held its annual shareholder meeting at its corporate campus earlier this month. Since taking the reins as chairman, president and CEO in January of 2016, José Almeida has responded to investor dissatisfaction with the hospital and renal products maker's stagnating revenues by streamlining operations including significant employee layoffs. Since he took the helm, BAX common has increased over 47%, compared to 30% for the S&P Healthcare Equipment Index and 17% for the S&P 500 Index.
So it was not investment or employment concerns that prompted the neighbors of the company's R&D and manufacturing facilities a few suburbs over to take their 15-year-old dispute with the company to its shareholders attending the AGM. Stop Pollution in Long Lake, or SPILL, picketed to protest alleged pollution of the lake near Baxter operations and its unknown effects on wildlife.
Besides the environmental variety, another hazard for the publicly-traded company these days seems to be holding its annual shareholder meeting too close to home, where long-simmering grievances can be aired by rowdy local residents. More companies are following in the footsteps of bank holding company Wells Fargo (WFC). Since 2012, when loud and raucous demonstrations against the bank disrupted the gathering in San
Francisco, the company's meeting hasn't been held in its hometown, but has been on the circuit of cities like Salt Lake City and San Antonio. The
location is disclosed in its annual proxy statement, which becomes public roughly a
month in advance of the meeting.
It may not always be possible, however, to keep a step ahead of the disgruntled protestor or activist determined to take matters into his own hands.
Robert Stead
So it was not investment or employment concerns that prompted the neighbors of the company's R&D and manufacturing facilities a few suburbs over to take their 15-year-old dispute with the company to its shareholders attending the AGM. Stop Pollution in Long Lake, or SPILL, picketed to protest alleged pollution of the lake near Baxter operations and its unknown effects on wildlife.
"We want to see a signed sewer connection agreement," said SPILL spokeswoman Paige Fitton, who owns property on the lake. She said homeowners near the lake converted from septic
systems to the sewer system decades ago to help protect the
lake, and Baxter should have followed suit. Currently, "[w]e are actively working
with local and regional agencies...to secure the necessary
approvals for Baxter to begin construction of the connection to the
public wastewater system," said Baxter spokesman William Rader. "In
fact, we have meetings scheduled in the next few weeks that should
substantially advance this process. We appreciate the opportunity to
work with the agencies to secure the required permits as soon as
possible."
The company is in compliance with the law, but some residents near the lake "don't like the fact that we do discharge the clean water into the lake," Mr. Almeida said in response to a shareholder's question at the AGM about the protesters. However, the Illinois EPA issued a violation notice to Baxter last August and since then has been working with the company on an agreement to resolve the violations, such as exceeding its discharge permit for biochemical oxygen demand, or the amount of dissolved oxygen that must be in the water so microorganisms can decompose the organic matter, and for total suspended solids, or particles trapped by a filter and used as a guide on the wastewater's quality after treatment in a wastewater treatment plant.
In January, although the company could not provide a timeline when either the agreement with the IEPA or the connection to the sewer system would be operative, a spokesman said it invested about $1 million in treatment plant improvements and remained committed to resolving the issues. "We are hopeful they mean it and are going to make it happen soon," SPILL representative Fitton said. "They're way overdue."
The company is in compliance with the law, but some residents near the lake "don't like the fact that we do discharge the clean water into the lake," Mr. Almeida said in response to a shareholder's question at the AGM about the protesters. However, the Illinois EPA issued a violation notice to Baxter last August and since then has been working with the company on an agreement to resolve the violations, such as exceeding its discharge permit for biochemical oxygen demand, or the amount of dissolved oxygen that must be in the water so microorganisms can decompose the organic matter, and for total suspended solids, or particles trapped by a filter and used as a guide on the wastewater's quality after treatment in a wastewater treatment plant.
In January, although the company could not provide a timeline when either the agreement with the IEPA or the connection to the sewer system would be operative, a spokesman said it invested about $1 million in treatment plant improvements and remained committed to resolving the issues. "We are hopeful they mean it and are going to make it happen soon," SPILL representative Fitton said. "They're way overdue."
It may not always be possible, however, to keep a step ahead of the disgruntled protestor or activist determined to take matters into his own hands.
Robert Stead
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