Administration March 5, 2006

PwC, Raytheon Shareholders Settle

May 27, 2004 (PLANSPONSOR.com) - PricewaterhouseCoopers, LLP has agreed to settle a lawsuit filed by Raytheon Co. shareholders who claimed the auditing firm signed off on misleading financial statements.
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Shareholders of the Waltham, Massachusetts-based defense contractor alleged PricewaterhouseCoopers issued clean audit opinions of Raytheon’s finances, despite numerous red flags that indicated accounting problems in 1998. The suit, filed by New York State Comptroller Alan Hevesi, sole Trustee of the New York State Common Retirement Fund, said the auditing firm stood to gain more than $70 million worth of fees for non-audit services, according to a news release issued by Hevesi’s office.

In admitting no wrongdoing in the case, PricewaterhouseCoopers agreed to pay $50 million to settle the action.

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“This settlement sends a strong message to auditors and other gatekeepers that they will be held to a high level of accountability and integrity in matters that impact the investing public,” Hevesi said.   “Investors depend on these third parties to guard them from corporate corruption and fraud. Auditors must be independent and diligent in overseeing public companies in order to protect shareholders whose savings and retirements are vulnerable to corporate wrongdoing.”

Earlier this month, Raytheonagreed to pay a total of $410 million in cash and warrants to settle all claims against it and its former top executives in the same action.   Hevesi said if the settlements, which are both currently pending before the U.S. District Court for the District of Massachusetts, are approved; the $460 million settlementwould be the 6th largest settlement in securities class action history.

Administration March 4, 2006

Nestle Shareholders Reject Pension Fund Dual Exec Prohibition

April 15, 2005 (PLANSPONSOR.com) - In a scenario that echoed goings-on at The Walt Disney Co., food group Nestle has successfully fought off a corporate governance proxy initiative from a group of pension funds to block Nestle's CEO from also becoming chairman.
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The motion by the Ethos Group – which represents Swiss pension funds – was defeated at the Nestle annual meeting in Lausanne with 35.94% shares being voted in favor and 50.55% against, according to an IPE report. The proposal would have prevented chief executive Peter Brabeck from also becoming chairman.

The resolution was backed by five pension funds including the Canton of Jura, City of Zurich and Canton of Luzern holding a combined 0.25% of shares. The group also got support from international consultant Deminor and Institutional Shareholder Services, a prominent US proxy voting advisor.

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“I want to congratulate shareholders for having made the right decision,” said Brabeck after the vote, according to the IPE report. “The dogmatic approach to corporate governance issues would have meant a long-term competitive disadvantage for Nestlé.”

Nestle officials told IPE that they did not regard Barabek’s dual role as a corporate governance problem.

US entertainment giant Disney was in much the same position when institutional shareholders led a drive against chief executive Michael Eisner (See  Eisner Protest Vote Reaches 43% ). Many of the fund representatives said that they were particularly troubled about the dual roles Eisner held as chairman and chief executive officer. Eisner was eventually stripped of his chairmanship.

In mid-March, Disney announced that Eisner will step down a year earlier than expected and that Robert Iger would be his successor. Iger, 54, the firm’s current president and chief operating officer, will assume his new role October 1 and will co-lead the company with Eisner during the transition, Disney’s board said.

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