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June 26, 1997 01:00 AM

A provision in tax legislation limiting the ability of companies to...

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    A provision in tax legislation limiting the ability of companies to take tax deductions for stock options they grant employees might be dropped because of actions by a coalition of high-tech companies, small businesses and corporate groups, said William L. Sollee Jr., principal consultant in the Washington office of Price Waterhouse. But the coalition, including the APPWP, might ultimately lose the war. The Senate is expected to keep the issue alive by passing a non-binding resolution recommending Congress hold hearings on stock options, he said.

    Legislation introduced by Sens. Carl Levin, D-Mich., and John McKean, R-Ariz., would have nixed the ability of companies to take tax deductions for stock option grants unless they take a corresponding hit on their bottom line by expensing the options. The bill also would limit the tax deductions companies could claim to the fractional value of the options, rather than the higher imputed value of the options.

    The Oregon Investment Council, Salem, terminated Hotchkis and Wiley, which managed more than $738 million in active U.S. stocks for the $25 billion Oregon Public Employes' Retirement Fund. The council also put Columbia Management and Nicholas-Applegate on its watch list.

    The money from Hotchkis and Wiley will be placed, at least temporarily, in a value-oriented indexed portfolio with Barclay's Global. Fund officials still must decide whether to move the money to other firms, said Dan Smith, Oregon's director of investments. Sharp underperformance against the S&P 500 and the sale of Hotchkis and Wiley to Merrill Lynch were reasons for the termination. Hotchkis and Wiley and Merrill officials declined to comment.

    Columbia, which manages more than $740 million for Oregon, and Nicholas- Applegate, which runs about $441 million, are on watch because of dissatisfaction with the firms' recent performance and concerns about their direction, council members said. Both will be asked to give written responses.

    Chevy Chase Bank today announced an agreement to purchase ASB Capital Management from NationsBank. Terms of the deal were not disclosed.

    The new ownership will have little effect on our day-to-day operations, nor will there be any changes in the company's management structure,'' ASB President Robert M. Phillips said in a statement. Chevy Chase previously had no institutional money management units.

    Officials at CIPSCO Inc., parent of Central Illinois Public Service Co., Springfield, and Union Electric Co., St. Louis, are studying whether their employee benefit funds will be consolidated as a result of the merger of the two companies. In defined benefit assets, Union has $925 million and CIPSCO, $290 million. In 401(k) assets, Union has about $500 million and CIPSCO, $100 million. It could take a year or more to complete the study and make a decision.

    HIRINGS

    Memorial Sloan Kettering Cancer Center, New York, committed $10 million each to Blackstone Capital Partners III Merchant Banking Fund and WCAS Capital Partners III fund; $20 million to J.P. Morgan for a global multimarket fund; and $10 million to the S.C. Fundamental Value Fund, a global hedge fund. Funding will come from existing U.S. equity managers; none will be terminated.

    The hires are part of the $1.5 billion general fund's new $190 million allocation to alternatives, said Mike Gutnick, senior vice president, finance. The fund has committed $130 million and is still seeking to add other managers. Cambridge Capital Advisors is assisting.

    The Central Pension Fund of International Union of Operating Fund Engineers, Washington, hired Boston Partners to manage $120 million in equities for the $4.7 billion fund. John Szczur, director of investment, said funding came from a restructuring. Several managers were terminated, but he wouldn't name them. Ennis Knupp & Associates assisted.

    Boston Partners will run the money in its premium strategy, which invests in non-traditional investments and large-cap value stocks.

    WHO'S NEWS

    Connecticut state Treasurer Christopher Burnham said he will resign later this summer to become the president and CEO of Columbus Circle Investors.

    Mr. Burnham is the sole trustee of the $13.8 billion State of Connecticut Retirement & Trust Funds, Hartford. He will take over the CEO duties from Irwin Smith, the founder of Columbus Circle, who continues as CIO. Mr. Burnham's new position does not preclude him from future runs for public office, said Patrick O'Neil, a spokesman. Mr. Burnham was rumored to be a candidate for the U.S. Senate and a future gubernatorial candidate.

    Gordon Linsday will become executive director of the Municipal Employees Retirement System of Michigan, Lansing, Aug. 18. He replaces Dorothy A. Stevens, who is retiring after 20 years at the $2.6 billion fund.

    Mr. Linsday retired as deputy director, bureau of investments at the Michigan Department of Treasury after 27 years. A search for Mr. Linsday's replacement is under way

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