Hedge funds and Private Equity - PES

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2.3 Effects on job creation, investments in training
and education of labour force, investments in innovation
The comment of the Dutch labour union (FNV Bondgenoten) is as follows: “Centaurus and
Paulson have imperceptible increased their shares in Stork. They were able to do that without
publicity, because they bought their shares by means of sorts of Ltd.’s. As long as one Ltd. has
no more than 5% of total shares in a company, you are not obliged to report your ownership to
the authorities. By now, the hedge funds own rather 30% of the shares and use their shareholder
power to have Stork splitted up. They want the divisions Food and Technological Services
(Prints) to be sold; Stork should specialize on Aerospace. When this happens, FNV
Bondgenoten fears that employment will disappear.”
Moreover, Dutch labour unions investigate whether Dutch pension funds have shares in Paulson
and Centaurus. The pension fund of the metal industry is not willing to sell of their investments
in Paulson.
2.4 Corporate governance and economics
On the shareholders’ meeting Centaurus and Paulson proposed a motion with the proposal
to split up Stork within one year. This motion was supported by 86% of the shares present during
the meeting, who represent 40% of total shareholders. Paulson and Centaurus own totally
32% of the shares. The firm Marel owns 8% of Stork-shares and supports the intentions of the
hedge funds because Marel wants to buy the Food division. 52% of the shares was represented
at the shareholders’ meeting. Therefore, 40% supported the motion, and 12% rejected. This
means that 40 / 52 = 86% of the present shareholders at the meeting voted in favour of the splitting
up. But in reality, probably only 40% of the shareholders supports the splitting up.
2.5 Management policies and shareholder activism:
stock option programmes, effects on board and CEO’s,
management fees, employee information.
Stork asked for some time for reflection to think about the motion. But everyone knew that the
board of directors does not see any prospect in the proposed splitting up. The board of directors
indeed rejected the motion. As reaction to this, Paulson and Centaurus asked for a third
extraordinary shareholders meeting in which they ask for two measures: 1) To abandon the
confidence in the board of commissioners; 2) To have all spendings above 100 million euro
approved of by the shareholders.
In the meantime, the board of directors of Stork asked the law court of Amsterdam to start an
investigation whether the hedge funds complied with the duty to report about their shareholdings.
They may have been broken the law. On December 21 and January 17 witness hearings
will take place.
Also, the board of directors planned to use a so-called poisson pill: Stork would offer new shares
to the ‘Stichting Stork’, a organization that has only one goal: protecting Stork from a violent bid.
Stichting Stork would then have a majority vote on the shareholders meeting.
Dutch judge president Willems of the Law Court decided the following to overcome the impasse:
Stork is not allowed to emit new shares to Stichting Stork. The hedge funds are not allowed to
send off the board of commissioners. Instead, the Law Court appointed three men to become