UPDATE: Proxy Governance
Bashes Bear Execs, Backs Buyout
DOW JONES NEWSWIRES
May 21, 2008 3:33 p.m.
DOW JONES NEWSWIRES
Proxy Governance recommended that shareholders support
JPMorgan Chase & Co.'s (JPM) buyout of Bear Stearns Cos. (BSC) and said
the deal was "successful, despite long odds, in salvaging meaningful
value for shareholders."
The vote, scheduled for May 29, will mark the official
end for Bear Stearns, which crashed and burned spectacularly in March
after customers began demanding their money en masse.
The proxy advisor was harsh, however, in its judgment
of Bear Stearns executives, whom it notes will get $4.3 million in
severance among five named officers if the deal closes.
"Poor oversight of inherent business risks which left
the company with few alternatives as the liquidity crisis escalated,
some of which could credibly be argued to have fueled the crisis
itself," the firm wrote. "While we do not necessarily believe that
management could have foreseen this particular liquidity crisis, we do
believe the risks to which the company succumbed in the last two weeks
of March 2008 are recognizable, inherent risks of its business segment
and its business model, and management's culpability in failing to plan
for those risks is no less significant for their rarity."
The firm also said that the Federal Reserve's
"seat-of-the-pants" intervention that led to the buyout deal "ultimately
extended rather than quelled the liquidity crisis."
In the end, Proxy Governance, said that Bear Stearns
shareholders "will receive equity interest in a much stronger company
with significant potential." Bear Stearns holders will get 0.21753 share
of JPMorgan for each share of Bear.
Proxy Governance wrote that "lost in the post-mortem
analysis is the contrast between the strategic responses of the target
and the acquirer over the preceding eight months, as the crisis in the
financial markets deepened: JPMorgan positioned itself to leverage the
opportunities the crisis would produce, rather than become one of them."
- By Andrew Edwards, Dow Jones Newswires; 201-938-5973;
Andrew.Edwards@dowjones.com
|
