NEW BRITAIN, Conn., May 10 - Stanley Works threw out a contested shareholders vote today that would have allowed it to become a Bermuda company and said that it would schedule a new one. þþThe company's chief executive, John M. Trani, said tonight that the company thought the vote on Thursday was fair and appropriate but that ``even the appearance of impropriety is unacceptable.'' þþStanley's decision came after Connecticut's attorney general sued to block the move on grounds that the company, which makes tools, used deception to win a shareholder vote. þþRichard Blumenthal, the attorney general, said tonight, ``This victory is a major win for shareholder rights, but the debacle has decimated the company's credibility.'' þþ``If there is a revote,'' he added, ``we will critically scrutinize it to stop management's misleading statements about the move overseas. Even before any revote, Congress should close the federal tax loophole that is motivating Stanley Works to abandon America and Connecticut.'' þþIn the lawsuit filed this morning in state Superior Court here, Mr. Blumenthal said the vote was invalid because Stanley management had ``provided misleading and deceptive information'' to employees about how their votes would be counted. þþ``What we've done today is used the level of the law to stop an illegal act by Stanley Works,'' Mr. Blumenthal said at a news conference on the steps of the New Britain courthouse this afternoon. As he spoke, he held a mahogany bubble level that Stanley gave him 10 years ago for helping it defeat a hostile takeover by Newell Rubbermaid. þþ``Stanley broke corporate governance laws that assure fairness, and there is evidence that Stanley Works broke federal securities laws,'' he said. ``Stanley Works made a hammer with two heads. One was slipshod, and the other was dishonest.'' þþMr. Blumenthal filed the suit on behalf of Denise L. Nappier, the state treasurer, who said she would insist on a new vote at a minimum. She expressed doubt that Stanley would ever win approval for its plan to become a Bermuda company resident in Barbados, a move that would allow it to reduce and perhaps eliminate federal and state income taxes on profits earned in the United States. þþDon D'Amato, president of the machinists local, stood by as the two state officials spoke and then reiterated his contention that Mr. Trani ``stole the election.'' þþThe lawsuit focused on an April 4 letter by Mr. Trani telling shareholders that unvoted shares would be counted as no votes. Mr. Blumenthal said Mr. Trani's letter was part of an effort to ``deliberately mislead'' workers into not voting their shares. þþA new, undated letter from Mr. Trani that union members said they received last Saturday he had made a mistake in his April 4 letter. The new letter said that unvoted shares in the company's 401(k) retirement plan would be voted by the plan's trustee ``in accordance [with] the trust agreement and applicable law.'' þþMr. D'Amato, noting that many of the union members lacked high school diplomas, said the language was meaningless to many unionists. He said many others threw the letter away unopened because they had already decided to vote no by not voting their shares. þþThe trust agreement called for shares to be voted in the same proportion as all other votes cast, which was 85 percent in support and 15 percent against. þþMr. Trani, in an interview on Thursday, said there were 3 million unvoted shares in the 401(k) plan and that about 2.5 million were voted in favor of the plan. He said the Bermuda proposal was approved with a margin of about 425,000 votes and would have lost without the 401(k) plan shares voted by the trustee. þþThe suit filed here sought a temporary order blocking the company from becoming a Bermuda corporation. That was scheduled to take place at 4 p.m. þþMr. Blumenthal's assistants then called Mr. Trani to advise him that a restraining order would be sought unless the company voluntarily agreed to delay. Within a few hours Mr. Trani agreed that Stanley would not take any steps to become a Bermuda corporation without giving Mr. Blumenthal three business days' notice. þþMr. Blumenthal said he would aggressively pursue the case to find out how the letters that he called deceptive came about as well as other issues that he said raised questions about whether the company had violated state and federal laws intended to protect the interests of shareholders. þþIn a statement announcing the revote, the company said tonight, ``Although the company believes that the shareowner vote was fair and appropriate, it acknowledges concerns raised at yesterday's shareowners meeting that some people may have been confused about 401(k) plan voting procedures.'' þþStanley shares lost $2.96, or 6 percent, today, closing at $43.55.þ
Source: NY Times
