NEW YORK, May 22: Hotel operator Marriott International Inc said it was scrapping its system of two classes of common stock that shareholder groups had criticised for giving too much power to the Marriott family.Shareholder activists applauded the conversion into one class of stock, saying the dual structure did not reward all in Marriott's "family" of shareholders.
"This action serves as a reminder to the Marriott family that we are the patient long-term capital of the company and (are) part of this `family,"' said chairman of the CalPERS investment committee, Charles Valdes.
The Washington-based company, which operates the Marriott, Ritz-Carlton and Courtyard hotels, said it would convert the two classes into one, effective as of Thursday on the New York Stock Exchange.
At that time, only the company's class A common stock will be outstanding and traded on the NYSE and other US exchanges, with the ticker symbol changed to MAR from MARa.
Retention of the dual class structure did not get therequisite approval of a majority of outstanding shares for the company to retain both classes, Marriott said. However,it said the structure was supported by holders of a majority of the shares voting at the company's annual meeting on Wednesday in Washington.
The California Public Employees' Retirement System, or CalPERS as it is known, is the nation's largest public pension fund with more than $140 billion in assets under management. It is one of the most powerful and vocal shareholder activists in the nation. The number of shares it owns in Marriott was not immediately available.
"We won't be forced into a system that treats family unequally," Valdes said in a statement.
New York State Comptroller H Carl McCall, the sole trustee of the New York State Common Retirement Fund, which holds 452,100 shares of stock in Marriott, worth about $14.4 million, also welcomed the move. He said the dual class structure would have created a class of shares with 10 times the voting power of common shares, diluting thevalue of the common stock."The defeat of this proposal represents a step toward good corporate governance," McCall said in a statement.
The stock conversion process takes several steps.
Trading in both current classes ended on Wednesday, May 20.
Before the start of trading on Thursday, May 21, all outstanding shares of common stock will be converted, on a one-for-one basis, into shares of Class A common stock.
Holders of the company's common stock will be notified by mail of the conversion.
After the conversion, the company will have about 253 million shares of Class A common stock outstanding.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
