Three days after corporate accountability activists rallied with AFL-CIO President John Sweeney and Machinists President Thomas Buffenberger at the New Britain, Conn. headquarters of Stanley Works, the toolmakers’ executives announced Aug. 1 they are abandoning a proposal to reincorporate in the tax haven of Bermuda.
“The decision by Stanley Works to drop its infamous plan to avoid paying U.S. corporate taxes by moving its mailbox to Bermuda is a promising example of one company rejecting financial gimmicks,” Sweeney says. “There is no question that Stanley Works reversed its previous goal to move to Bermuda only because of the unprecedented pressure brought directly on the company’s CEO and members of its board of directors.”
If approved by shareholders, the paper move would have allowed the company to avoid $30 million in federal taxes annually and dilute shareholder rights while retirees paid capital gains taxes on their shares and Stanley Works executives’ stock options grew more valuable.
“This was our Alamo,” says Buffenberger, whose members include Stanley employees. “We were determined to be on the winning side this time. And we won when (Stanley Works CEO) John Trani waved the white flag last night….We won’t be satisfied until the thousands of jobs he sent overseas begin to return.”
This spring, Stanley Works executives agreed to a shareholder re-vote on the Bermuda plan after the IAM claimed they had violated federal law by contacting employee-shareholders at home and at work to garner support. As the activists rallied in Connecticut July 29, four Stanley Works employees--IAM Local 1433 members--filed suit in Washington, D.C.'s District Court, charging Stanley Works and its financial service providers violated their federal pension rights to vote without fear of intimidation or retribution by the company. On July 31, a busload of Stanley Works employees rode to a rally in Boston outside the headquarters of Fidelity Investments, the largest shareholder in Stanley Works, demanding the mutual fund giant vote against the reincorporation plan and disclose its shareholder votes.
The AFL-CIO supports legislation sponsored by Connecticut's Fifth District Rep. Jim Maloney (D) to end the tax savings lure of overseas reincorporation. Legislators and pension fund trustees advanced that cause late last week. On July 25, California State Treasurer Philip Angelides proposed that his state's mammoth public employee and teacher pension funds sell their investments in U.S. companies that reincorporate in overseas tax havens. The funds’ investments in such companies total more than $752 million.
And on July 26, the U.S. House of Representatives voted 318–110 for an amendment, sponsored by Rep. Rosa DeLauro (D-Conn.), to the bill creating the new Homeland Security Department. Initially opposed by Republicans, who switched sides when passage appeared likely, the measure prohibits the new agency from giving contracts to publicly traded companies incorporated in 10 overseas tax havens including Bermuda. "This issue is seismic...[and] resonating across the country," says Rep. Richard Neal (D-Mass.), co-sponsor with Maloney of the House anti-reincorporation measure.
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