In its first tactical step to fend off a hostile takeover attempt by American Telephone & Telegraph Co., NCR Corp. moved yesterday to muster the loyalty of its employees.
It announced it had created a $500 million employee stock ownership plan that could effectively control 8 percent of the company's stock.
The NCR board also approved a special $1 dividend payment to shareholders and set March 28 as the date for the special meeting called for by AT&T to try to remove NCR's entire 13-member board. NCR will also hold its annual meeting on the same day.
The employee stock ownership plan will buy a new issue of 5.5 million shares of preferred stock that will be convertible into about 8 percent of NCR's common stock.
The establishment of the employee plan will likely prevent AT&T from removing NCR's entire 13-member board at the meeting, where a vote of 80 percent of the shareholders is needed to replace directors.
While the employees are not required to support management, NCR hopes that by placing more shares in friendly hands, it will receive more votes in favor of retaining its board.
On Wednesday, 24,000 NCR employees were each issued one share of convertible preferred stock. Absent a court order, the employees will be able to vote those shares at the coming shareholder meetings. The unallocated shares in the plan would then be voted in the same percentage as the employee votes cast.
Four NCR directors, including Charles E. Exley Jr., the company's chairman and chief executive, and Gilbert P. Williamson, NCR's president, must stand for re-election at NCR's annual meeting, where only a majority of votes is needed to unseat directors.
In response to AT&T's tender offer, 66 percent of NCR shareholders voted to accept AT&T's offer of $90 a share, making it likely that AT&T will be able to take control of four seats on NCR's board at the annual meeting.