PhillyInc: For a pair of big local companies, shareholders gather

Posted: May 31, 2012

This is shaping up to be an interesting week in the corporate governance of two Philadelphia-based companies.

At a shareholders meeting on Thursday, Checkpoint Systems Corp. investors will gather less than a month after Rob van der Merwe retired as chairman, president, and CEO of the maker of antitheft systems for retailers.

He did so the same day Checkpoint announced a net loss of $11 million, or 27 cents per share, on net revenues of $162.3 million for its quarter ended March 25. Compared with last year, revenues were lower and the net loss larger.

Checkpoint director George Babich Jr., who was named interim CEO and president, faced some harsh criticism from investors on a May 3 conference call about those financial results and the company’s plan to review and restructure its operations.

You can understand the concern. Under van der Merwe, Checkpoint’s stock price fell 59.7 percent, from $23.33 to $9.34. On Tuesday, Checkpoint shares closed at $7.88, up 27 cents.

Babich, 60, is a former president (2002-05) and chief financial officer (2000-04) of Pep Boys, where he was involved in a turnaround of the auto-parts chain. "I believe that many of the lessons I learned as president and CFO of Pep Boys could prove valuable to our turnaround situation at Checkpoint today," Babich said on the conference call.

Shareholders gathering at 9:30 a.m. Thursday. at the Hub Meeting & Events Center in the United Plaza building, 30 S. 17th St., who are eager to hear what Babich intends to do may be disappointed, because he indicated that he needed about 90 days to review Checkpoint’s operations. Still, more change will come to the company even if it doesn’t involve an outright sale, as at least one investor (Roumell Asset Management L.L.C.) suggested should be on the table.

Big company, big ballot

The biggest companies tend to attract the most attention from activist shareholders. Having swallowed NBCUniversal, Comcast Corp. will face votes on four shareholder proposals at its annual meeting at the Convention Center on Thursday at 9 a.m.

The first, by investor gadfly Evelyn Y. Davis, calls for cumulative voting in the election of directors, which would strengthen the ability of minority shareholders to elect a director. Usually, if you own 100 shares and there are 10 directors up for election, you can vote your 100 shares "for" or "against" each nominee. In cumulative voting, you could vote 1,000 shares (10 times 100) for just one nominee.

Last year, a similar question by Davis that was included in Comcast’s proxy was defeated but attracted a favorable vote of about 27 percent of all shares cast.

The second proposal, sponsored by the AFL-CIO Reserve Fund, would require that Comcast’s chairman of the board be an independent director. Currently, Brian L. Roberts is chairman and CEO.

Though Comcast does have an independent presiding director, Joseph J. Collins, a former Time Warner Cable executive, the AFL-CIO says that’s not enough. A similar measure on last year’s proxy ballot was defeated, receiving a favorable vote of just 20 percent of the shares cast.

Another perennial performer in the shareholder-proposal pits is Kenneth Steiner, of Great Neck, N.Y., and he wants to subject Comcast’s "poison pill" takeover defense to a shareholder vote. Comcast’s pill, also called a shareholder-rights plan, would be triggered should a potential acquirer exceed a threshold of 10 percent ownership of Comcast shares.

The fourth proposal seeks to require senior executives at Comcast to "retain a significant percentage of shares" in the company until reaching normal retirement age. The International Brotherhood of Electrical Workers Pension Benefit Fund says doing so would focus management on the long-term success of the company and better align its interests with shareholders.

Need I say that Comcast opposes all four measures?

Contact Mike Armstrong at 215-854-2980 or marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at www.phillyinc.biz.

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