Deal good for ESOP
Employee stockholders of US Airways would reap an instant gain of at least $60 million if the proposed merger with United Airlines is completed by the projected 2001 date.
Aside from creating the world's largest airline, the merger would add riches to US Air's defined contribution plan participants, who held more than 1 million shares in the company's employee stock ownership plan and another 2.8 million shares in its 401(k) plan at the end of 1998, based on US Air's most recent Form 5500 filing.
According to a Pensions & Investments' survey, United had total employee benefit assets of $14 billion as of Sept. 30, and US Air, $5.6 billion.
United's defined benefit plan was 52%invested in domestic equities and 29%in domestic fixed income, while US Air had 57%and 26% respectively. United's allocation to foreign equities was 16% compared with US Air's 12% The only major difference in assets was US Air's 3%allocation to real estate; United had none.
Hawaii makes changes
The $10.2 billion Hawaii Employees' Retirement System has revamped some of its money manager stable, affecting 13 firms.
Hired were: Putnam, for $359 million in large-cap growth; Prudential, $150 million, small-cap equity; domestic equity; and State Street Global, $377 million, EAFE.
Pending successful contract negotiations another, unidentified, small-cap equity manager is expected to be hired to oversee $150 million, said David Shimabukuro, administrator.
Terminated are: Denver Investment Advisors, $60 million, small-cap value equity; Independence, $364 million, amplified alpha equity; Scudder Kemper, $157 million, domestic fixed-income; and Phillips & Drew, $164 million, EAFE.
In addition, four existing managers had their mandates boosted: Denver Investment, a large-cap equity manager, will now manage $102 million, up from $52 million; S&P 500 index manager Mellon Capital's $740 million mandate will be raised to $1.051 billion; CIC-HCM, domestic fixed income, upped to $148 million from $98 million; and Bradford & Marzec, also domestic fixed income, to $405 million from $298 million.
Large-cap equity manager Delaware Investment and S&P 500 index manager Alliance Capital will see their allocations reduced to $395 million and $900 million from $700 million and $1.2 billion, respectively.
Callan is the consultant.
Florida exec fired
Andy McMullian, administrator of the State Board of Administration of Florida for 21 years, was fired by Florida Department of Management Services Secretary Thomas McGurk.
Mr. McMullian, in charge of operations at the $101 billion system, was not available to comment. Sources said he never got along with the administration of Gov. Jeb Bush, and he was upset about the state's pension reform movement that will allow retirees to move assets from a defined benefit plan to a defined contribution plan.
Mr. McMullian's deputy, Ron Poppell, will become acting administrator until a replacement is named.
New allocation for fund
The $98 million Louisiana Baptist Foundation will allow for a 15%investment of its $72 million fixed-income portfolio's assets in non-dollar bonds, said Wayne Taylor, executive director.
The move was made as a result of manager Payden & Rygel's success in the asset class with other clients, said Mr. Taylor.
Also, the fund dropped its maximum allocation to government investing to 40%of all fixed-income assets, down 25 percentage points.
$275 million to private equity
The $50 billion State of Michigan Department of Treasury, Bureau of Investments allocated $275 million to private equity, state Treasurer Mark A. Murray.
The system committed $175 million to the Heartland Industrial Partners fund, which recently raised $1 billion in its first round of financing to focus on restructuring core industrial businesses, and $100 million to Prudential Global Private Equity to invest in small and medium-sized funds with less than $500 million for a proprietary fund of funds.
It is the department's first investment with Heartland.
Funding will come from cash reserves.
SEI opens in U.K.
SEI Investments (Europe), a subsidiary of SEI Investments, was officially launched last week after receiving regulatory approval to begin marketing in the United Kingdom. The new unit hopes to capitalize on U.K. plan sponsors' growing frustration with balanced money managers to sell its manager-of-managers approach.
The firm will launch asset-liability modeling and back-office administration services in the United Kingdom over the next 12 months, said Simon Ewan, head of U.K. sales.
Bill passes hurdle
The U.S. House Employer-Employee Relations Subcommittee has approved the Wealth Through the Workplace Act, which would create a new "super stock option" for rank-and-file workers.
The legislation has two goals: to encourage more employers to grant stock options to more of their employees and to help employees who have stock options use them to build long-term wealth and retirement security.
The new option combines elements of the two existing types of stock options, non-qualified and incentive options, and rolls them into one new option.
Federal tax law currently forces many workers to cash out immediately when exercising their options because it requires people to pay the income tax on the exercise of the shares when the options are exercised. The bill would allow workers to defer all taxation on their options until their shares are sold.
To offer the new super-option, a company would be required to offer it to at least 50%of its workers. The measure also includes employee safeguards that prohibit employers from cutting salaries and payroll and substituting the new options in their place.
Kiddie to join Rothschild
David Kiddie will join Rothschild Asset Management in September as chief investment officer and global head of equities, both new positions, said Paul Manduca, Rothschild CEO.
Mr. Kiddie is head of pan-European equities at Hill Samuel Asset Management and will not be replaced directly because of HSAM's merger with Scottish Widows Investment Management, said a SWIM spokesman.
Fiona McRae, SWIM's head of European equities, will be head of European equities for the combined business.
