Timken Co. shareholders Tuesday voted 53% in favor of a CalSTRS' proposal to split the company into separate steel and ball-bearing businesses, according to company proxy voting results.
The company opposed the proposal.
“The Timken board of directors takes its fiduciary responsibilities seriously and remains committed to driving shareholder value,” Ward J. “Tim” Timken Jr., chairman of the board, said in a statement. “We appreciate the thoughtful feedback we've received from our shareholders on the spinoff proposal as well as their broader input on corporate governance and capital allocation. The board will carefully evaluate the views of our shareholders and announce next steps within 45 days.”
In a separate statement, Anne Sheehan, director of corporate governance at the $163.7 billion West Sacramento-based California State Teachers' Retirement System, said, “CalSTRS appreciates the confidence our fellow shareholders have placed in our analysis of the optimal corporate structure for the company, but as importantly, we expect the board to heed shareholders' wishes and move expeditiously toward the split. Two-thirds of independent shareholders voted with the CalSTRS proposal.
Since Nov. 28, “the date of the proposal's announcement, Timken stock has risen nearly 32% with a potential to rise another 30% after the split. That is an additional estimated $1 billion of value for shareholders,” Ms. Sheehan said.
“The split we proposed can and should be executed without negative impact on employment or on the Canton (Ohio) community,” Ms. Sheehan continued. “The two companies should preserve the Timken name, remain headquartered in Canton and continue to have Timken family members serve on both boards.”
CalSTRS was joined by Relational Investors in the effort to split the company. Together they own 7.28% of Timken's 96 million outstanding shares, including CalSTRS' 0.41% or 389,667 shares. “CalSTRS is a long-term shareholder and is expected to remain invested in the company for the foreseeable future,” the statement said.
In other proxy voting, shareholders in a non-binding vote approved the compensation of the CEO and other executives, and re-elected all 12 members of the company's board, according to the company statement, which provided no vote tally.
CalSTRS voted to oppose five directors and voted against the executive compensation.