Watson Wyatt to do IPO
Watson Wyatt directors will recommend an IPO of about 25% of the firm's total shares early next year.
Shareholder approval is required. The company is owned almost entirely by active employees. The IPO will involve shares held by both the company and existing shareholders. Watson Wyatt expects to continue holding about 75% of total shares.
As of June 30, the book value of the firm was $107.6 million, based on 116,112,000 shares of outstanding common stock at $6.68 a share.
The company plans to file a registration statement with the SEC in December.
PRIM adds 2 in equities
The $28 billion Massachusetts Pension Reserves Investment Management Board hired Legg Mason and J.P. Morgan to manage $585 million each in domestic large-cap equities, subject to successful contract negotiations, said Scott Henderson, executive director. Funding came from reducing Fidelity's large-cap portfolio to $585 million from $1 billion, and from reducing the fund's exposure to passive indexed equities.
Mr. Henderson said the board wanted more large-cap managers, and wanted to bring the passively managed allocation down to 80% from 90%.
The board also approved a $33 million commitment to Austin Ventures for a technology-focused fund. In addition, results of an actuarial study show the pension fund is 73%funded, which is not as well funded as the system had hoped, Mr. Henderson said.
Pension provision OK'd
The Senate passed a bill that includes a provision allowing employers to continue tapping their surplus pension assets for another five years to pay for their current retiree health-care costs. The legislation now goes to President Clinton, who is expected to sign it into law.
Only companies with pension assets exceeding 125%of current liabilities would be permitted to take advantage of the provision; and companies would have to maintain the same cost of benefits for retirees for five years after the transfer.
The legislation gives the Treasury Department the authority to issue regulations preventing companies that cut back on their retiree health care coverage from taking advantage of this provision.
Towers Perrin sued
Raytheon and Hughes Electronics are suing Towers Perrin, alleging Towers is responsible for cost-of-living enhancements Hughes made to its retirement plan before Raytheon bought Hughes Electronics from General Motors in December 1997.
The suits claim Towers said there were sufficient funds in the Hughes plan to cover its obligations, but Raytheon said the plan is underfunded.
A source familiar with the suits said the enhancements involve only 200 or so retirees, who had been senior managers at Hughes, and that the amount of money involved was also small, barely $1 million.
Towers Perrin spokesman Joe Conway said the suit centers on differing interpretations of the treatment of automatic COLAs under the tax code. He added Hughes voluntarily decided to enhance the plans of some of its very highly compensated former employees, and Towers Perrin has offered to reimburse Hughes for a portion of the costs and expenses along with any applicable taxes and fees involved in paying retirement benefits.
Both Raytheon and Hughes turned down the offers, he said.
The Hughes lawsuit argues that because of the advice it got from Towers, it was forced to make millions of dollars in payments to retirees to avoid future lawsuits from them. Hughes seeks to recover its damages and to force Towers Perrin to return some of the $20 million in fees Hughes has paid it for actuarial services "on work which was negligent or in disregard of its duty of loyalty to its client."
1st Quadrant purchase
First Quadrant bought Prolific Objective Asset Management for an undisclosed amount in a move that will boost First Quadrant's assets under management invested from the London office by 10%to 9.35 billion ($14.7 billion).
Houston cops study RFPs
The $1.7 billion Houston Police Officers' Pension System is sorting through responses to RFPs issued earlier this fall for two managers and a new consultant, according to Tim Ng, chief investment officer.
The fund is selecting a domestic fixed-income manager to run $100 million and a high-yield manager to run $60 million. The domestic bond manager is to be named in January; no timetable has been set for the high-yield manager decision. Northern Trust, ARM Capital, Delaware International and PIMCO are the system's current fixed-income managers.
IBM taps new pension chief
R.L. "Jay" Vivian Jr. will become head of IBM's $58 billion pension fund upon the retirement, expected soon, of Assistant Treasurer and Managing Director Thomas Cadigan, according to spokeswoman Jana Weatherbee.
Mr. Vivian will assume the same titles as Mr. Cadigan. He is director of global benefits for the $58 billion fund.
Former Oklahoma exec dies
Jo D. Witt, former CIO of the Oklahoma Teachers' Retirement System, died after a battle with cancer. She was 63.
Ms. Witt, who started with the Oklahoma City fund in 1970, retired earlier this year. Her family requested donations be made in Ms. Witt's name to Trinity Episcopal Church, Guthrie, Okla., or to a charity of choice.
Franklin Resources reorganized its senior management and created new offices of the chairman and the president to make major strategic and operating decisions for the companies.
Charles B. Johnson will remain CEO and chairman. Rupert H. Johnson Jr. and Harmon Burns, executive vice presidents, will become vice chairmen and form the new office of the chairman.
The office of the president will be made up of Gregory E. Johnson, president of Franklin Templeton Distributors Inc.; Allen J. Gula Jr., chief information officer; Charles E. Johnson, president of Templeton Worldwide Inc.; and Martin L. Flanagan, CFO.
Chuck Johnson will become president of the international division, with responsibility for portfolio management functions. Greg Johnson will become president of the U.S. division and will oversee the institutional, retail and bank/finance businesses. Mr. Flanagan will assume the title of COO and responsible for service businesses, finance and Canadian operations.
Joint Web site planned
Hewitt Associates and 401k Forum have extended their partnership to create a joint Internet site to provide retirement planning and investment advice to defined contribution plan participants