Shift in director elections gets strong backing

April 14, 2005|By James P. Miller and Andrew Countryman | James P. Miller and Andrew Countryman,CHICAGO TRIBUNE

CHICAGO - Caterpillar Inc. shareholders yesterday voted down a proposal designed to make major changes in the way company directors are elected, but backers were cheered by unexpectedly solid support for the measure.

Wall Street investors watched the vote at Caterpillar's annual meeting in Chicago with interest. Proposals seeking to require director nominees to receive a majority of votes to win their seats are scheduled for stockholder votes at nearly 80 other U.S. companies during this year's annual meeting season.

With 62 percent of the Caterpillar votes cast in opposition, yesterday's vote wasn't close. But the 38 percent support exceeded many expectations.

The vote "is a shot across the bow for a lot of companies," said Patrick McGurn, a corporate governance expert at the Institutional Shareholder Services proxy advisory firm. "At that company and being the first one out of the box, that's a pretty strong result."

The majority-vote proposal at Caterpillar was introduced by the United Brotherhood of Carpenters and Joiners of America, which is heading a coalition of unions backing the plan.

Requiring a majority vote to win a seat, the carpenters argued in Caterpillar's proxy document, "is a fair standard that will strengthen the company's governance and the board."

The Chicago Tribune is a Tribune Publishing newspaper.

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