Caterpillar Faces Call to Shake Up Audit Panel -- WSJ
May 18 2017 - 02:02AM
Dow Jones News
By Andrew Tangel
An investment group wants to shake up Caterpillar Inc.'s audit
committee, amid mounting scrutiny of the machinery giant's offshore
tax strategy.
CtW Investment Group, an arm of union coalition Change to Win,
issued a public letter Wednesday asking shareholders to vote
against three Caterpillar board members that the group says kept an
inadequate watch over Caterpillar's tax strategy and outside
auditor PricewaterhouseCoopers LLP.
Caterpillar has faced years of scrutiny over a strategy that
shifted much of the profit from its lucrative replacement-parts
business to a Swiss subsidiary. The strategy, which dates back to
the late 1990s, has lowered the company's U.S. tax bill. It has
also drawn scrutiny, including an employee lawsuit, a U.S. Senate
investigation and a federal criminal investigation that led to
March 2 raids on Caterpillar's headquarters and two nearby
facilities in Illinois.
Protest votes against directors without a competing slate of
nominees don't often succeed. But they can lead to pressure for
change if they garner significant support or embarrass directors.
CtW said the unions it represents collectively own 1.8 million
shares, or 0.3% of Caterpillar stock. Shareholders are scheduled to
meet June 14.
"Given their long tenure and the audit committee's lack of
response, we question these directors' ability to provide adequate
oversight of the continuing federal investigation of the offshore
tax structure and outside auditors," Dieter Waizenegger, CtW's
executive director, wrote in the letter.
"I'm astonished at how many alarm bells went off and then were
turned off," Mr. Waizenegger said in an interview.
The investment group is targeting board members Daniel
Dickinson, a private-equity executive; Dennis Muilenburg, chairman
and chief executive of Boeing Co.; and William Osborn, former
chairman and chief executive of Northern Trust Corp.
A Caterpillar spokeswoman declined to comment Wednesday. The
company has previously said it was paying the taxes it owed and was
cooperating with federal authorities.
PwC and a Boeing spokesman declined to comment.
CtW's letter says the audit committee has failed to address
PwC's conflict of interest in the Swiss tax strategy. The
accounting firm developed the tax plan and audits Caterpillar's
books.
The letter also calls on shareholders to support its proposed
changes to the company's "clawback policy" for recouping executive
pay in the event of incidents that may damage Caterpillar's
reputation. The company opposes that proposal, and says its
existing clawback policy is robust.
Write to Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
May 18, 2017 02:47 ET (06:47 GMT)
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