Fiduciary Fracas
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
No sooner did the politicians start piling on against the efforts of Stanley Works to move the legal domicile of its business to Bermuda from Connecticut than the comptroller of New York State, Carl McCall, jumped onto the bandwagon. Mr. McCall is the sole trustee and steward of the New York State Common Retirement Fund. On May 9, he voted its 276,896 shares in the tool maker against the company’s plans to move and, more recently, he issued a press release saying he’s going to vote against the move again when a revote is called sometime in the next few months.
This is a case of the state comptroller and Democratic gubernatorial candidate using the New York State Common Retirement Fund as his own personal soapbox to appease labor and demagogue for votes. Better to score political points on his own time and with his own money. The reason the Stanley Works wants to reincorporate in Bermuda is to reduce its tax bill. It is widely agreed that the move would raise the company’s stock price, but Mr. McCall claims he is voting in the pensioners’ best interests.
His logic seems spurious at best. “While shareholders may receive some short-term gains,” Mr. McCall claims in a written statement issued last week, “there is no evidence that reincorporation to an offshore tax haven will provide long-term benefits.” Those short-term gains consist of a reduction in taxes of about 28%. Doesn’t sound like small potatoes to us. The company says its stock could rise by 11.5% if the plan goes through. Some tax experts think the company is underestimating its tax savings. What’s missing is any downside for investors.
Mr. McCall also said, “Corporate governance laws in Bermuda could be used to enact policies that are profoundly detrimental to shareholders’ long-term economic interests.” That’s a lot of hot air. The comptroller has admitted that he has no plans to sell Stanley Works stock should the company move. “As fiduciary, the Comptroller has the duty to act in the best interests of the Systems’ members and retirees,” reads the state pension system’s Web site. That means that Mr. McCall should be looking out for the interests of the 927,000 participants in the state’s two pension funds, which include policemen, firemen, and a host of other state workers. In fact, these workers’ retirement money seems to be being used to play a political game.
