NYSE rebukes Black & Decker, says firm should have considered partnership

Company had defended executive's relationship with board member who voted on compensation, merger

March 10, 2010|By Lorraine Mirabella | lorraine.mirabella@baltsun.com

The board of Black & Decker Corp. should have considered a real estate partnership between chief executive Nolan D. Archibald and a company board member to determine the director's independence in voting on a pending merger with The Stanley Works, The New York Stock Exchange has advised.

Towson-based Black & Decker disclosed Wednesday that it had discussions with representatives of the stock exchange after issuing a news release Tuesday in response to inquiries about whether the "private business relationship" between Archibald and M. Anthony Burns compromised Burns' independence as a director.

Burns, as a director and a member of a committee designed to evaluate the Stanley deal, approved the $4.5 billion deal and a lucrative pay package for Archibald, who will serve as executive chairman of the combined Stanley Black & Decker.

Shareholders are set to vote on the all-stock merger Friday.

In its disclosure Tuesday of the business partnership, Black & Decker said Archibald and Burns have been co-owners since August 2005 of the Red Ledges real estate development in Heber City, Utah, a private golf community where luxury homes start at $900,000. The toolmaker said in its statement that the company is not affiliated with the project.

The company said in the release that "personal business relationships between individuals (as opposed to relationships with the company) generally are not relevant to the independence tests under the New York Stock Exchange rules because they do not create a material relationship between a director and the company."

But on Wednesday Black & Decker said representatives of the stock exchange advised the company that, under New York Stock Exchange rule, "the NYSE believes relationships between a director and a member of senior management that are material to either party should be considered by a board of directors in its evaluation of a director's independence."

It was unclear whether that interpretation would have any implications for Black & Decker.

Douglas M. Schmidt, chief executive of financial services company Chessiecap Inc., had questioned the relationship in a series of commentaries on Citybizlist Baltimore, in which he said he objected to Burns' selection by the board to be one of three independent directors on a committee evaluating the Stanley deal.

As part of his compensation as executive chairman of the newly combined company, Archibald will earn an annual base salary of $1.5 million and up to $1.9 million in annual bonuses. He also will be eligible for stock options and awards, as well as a "cost synergy bonus" of up to $45 million if he meets certain goals by the end of his three-year contract.

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