Say no, Marriott holders are told Two firms advise stock owners to vote against lodging spinoff


March 06, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Two prominent stockholder advisory firms are recommending that Marriott International Inc. shareholders vote against the company's plan to spin off its lodging operations from its management services business.

Institutional Shareholder Services and Proxy Monitor base their recommendations on Bethesda-based Marriott's decision to link a shareholder vote on a proposed merger with numerous "anti-takeover provisions and management entrenchment devices."

Although ISS said Marriott's pending merger with Sodexho Alliance S.A. is attractive, the consultant contends the hotel company's bundling of the two issues leaves stockholders with a "difficult choice."

"We consider the board's bundling of anti-takeover provisions with an economically attractive merger and spin-off to be coercive to shareholders," said Mark Brockway, a senior analyst with ISS, which measures proxy issues for 500 clients worldwide and 16,000 corporate votes annually.

"While we believe the merits of the Sodexho transactions are without question, shareholders should have the opportunity to vote separately on the anti-takeover provisions," Brockway added.

Marriott shareholders will vote March 17 on whether to spin off the company's lodging, senior living and distribution businesses and merge its management services business with Sodexho's North American operation.

A new company, Sodexho Marriott Services Inc., would be the nation's largest contract services firm with annual sales of $4 billion and more than 4,800 accounts.

Proxy Monitor, a New York-based pension fund consultant, said the new Marriott would "perpetuate the anti-democratic, anti-takeover provisions that are contained in the company's present certification of incorporation."

"Proxy Monitor feels strongly that the company should take this opportunity to embrace principles that comport with today's notions of good corporate governance," wrote Desmonde Printz, Proxy Monitor senior analyst.

Printz, like ISS, recommends that Marriott have separate votes on the Sodexho merger and the anti-takeover provisions.

The two advisers and the Hotel Employees & Restaurant Employees International, which represents thousands of the company's workers, also oppose the Marriott plan because it would help solidify Marriott family control over the company through the issuance of a new class of stock that would subordinate its existing common stock.

Marriott family members control roughly 20 percent of the company.

The enhanced anti-takeover measures include a so-called "poison pill" that kicks in when someone obtains 15 percent of Marriott's stock. Currently, the poison pill provision isn't unleashed until 20 percent of Marriott's stock is acquired.

Marriott, which contends it requires the new stock to complete acquisitions, said that despite the objections the merger and provisions will benefit shareholders.

"We reaffirm our belief that the transaction will have benefits for our shareholders, associates and customers," said Tom Marder, a Marriott spokesman.

Marder also noted that both ISS and Proxy Monitor agreed that the Sodexho merger was "economically positive for shareholders."

Pub Date: 3/06/98

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