Investors Vote for Governance Reform at Cheesecake Factory
WALL STREET WEST
Cheesecake Factory Inc. shareholders approved four non-binding corporate governance reform measures last week, but company officials have yet to say if the proposals by a Culinary Workers Union local in Las Vegas will be adopted.
Shareholders recommended to the board of the Calabasas-based restaurant operator: that it submit its stock option plan to shareholder approval, hold annual elections for directors, submit its “poison pill” to prevent hostile takeovers to a shareholder vote, and lower the amount of votes needed to enact a binding shareholder proposal to a simple majority of shares from 80 percent.
Each of those proposals received between 66 and 81 percent of the votes cast.
Two other non-binding proposals fell short of a majority. One that sought the expensing of stock options received 49 percent of the vote, and another that sought to prevent the chief executive of the company from chairing the board received 37 percent.
“This is a clear call to the Cheesecake Factory’s board of directors that it’s time to reform and modernize the company’s poor corporate governance policies,” said Chris Bohner, a senior research analyst for the union.
It’s unclear if Cheesecake Factory will enact any of the measures approved by shareholders. The board recommended shareholders vote against all of them.
Company officials declined to comment last week, but in a press release, Chairman and Chief Executive David Overton said the board would “carefully consider these non-binding recommendations.”
Bohner said the company is stalling.
“Clearly,” he said, “they are not committed to respecting the vote.”
Andy Fixmer
Stamp Suits
Avery Dennison Corp. faces a flurry of litigation related to the Justice Department’s investigation into the label making industry.
The leading producer of label stock has been sued by four label printing firms for alleged unlawful competitive practices. The lawsuits, which purport to reach class action status, follow a Justice Department’s criminal investigation, launched last month, into the label stock industry.
Four companies filed the lawsuits. Bertek Systems Inc., of Swanton,. Vt., a printer of pre-paid phone cars, is a client of Avery; Glenroy Inc. of Menomonee Falls, Wis., is a family-owned printing firm that is a competitor. Two other firms, Sekuk Global Enterprises and Sentry Business Products Inc., weren’t characterized in the Securities and Exchange Commission disclosure by Avery Dennison.
In addition to the industry lawsuits, Avery has been targeted by 10 class action lawsuits on behalf of shareholders.
Kate Berry
Downsized
The downturn in equity markets has finally hit Wedbush Morgan Securities, the L. A. investment bank and brokerage house. This year, the firm has laid off about 15 employees due to weakness in the securities industry.
Edward W. Wedbush, firm president, characterized the layoffs as “minor staff reductions in research, trading and investment banking.”
Wedbush now has 10 research analysts, after dropping four recently two who were laid off and two who left the firm for other jobs. The other cuts took place in its investment banking and trading operations, where 30 and 60 employees work. Overall, the company has 600 employees in 22 offices nationwide.
“It was a downsizing, but it’s been followed by some replacements in certain positions,” Wedbush said of the cuts, which occurred in February.
Wedbush said he’s already seeing signs of a turnaround.
“Overall, the confidence in the securities market has improved and that’s what’s driving this market up and will push it higher,” he said.
Kate Berry
