Takeover Defenses Two-Class Proposal Killed at Marriott

After taking a one-two punch from shareholders, Marriott International Inc. finally got the message that they don’t want two classes of unequal voting common stock in the hotel company. Stockholders at the annual meeting turned down the firm’s plan to run with a super-class that packed 10 votes per share and a lower class with one vote each and Marriott canceled the proposal. The rejection came about a month after shareholder protests forced Marriott to drop the dual-class proposal from a restructuring plan tied to the merger of its food service and facilities management operations with the North American business of Sodexho Alliance SA which created Marriott Sodexho Inc. Marriott International then said it would let shareholders vote on a two-class system for the hotel operations that Marriott retained. Defeat was engineered by an unusual coalition. Vehement opposition was publicly spearheaded by the Hotel Employees & Restaurant Employees Union but it was the negative votes of several institutional investors, traditional opponents of corporate defenses, that scuttled the proposal. Technical Communications Corp., a maker of communications security devices jolted by turmoil and a possible proxy fight, responded by securing its own flanks against unwanted takeovers or changes of control. The company installed a three-tiered staggered board and raised to 40% from 10% the percentage of voting stock needed to call a special meeting. The defensive moves were adopted following the resignation of four directors, an investigation which found “certain control procedures” were not followed on foreign contracts, and noises by a shareholder group that it may wage a proxy fight. Among the companies installing poison pills in recent months were: Allegheny Teledyne; American Science & Engineering; Associates First Capital; Choice Hotels; Conectiv; Evergreen Bancorp; Haemonetics; Lee Enterprises; Lexmark International Group; Manor Care; MascoTech; and MoneyGram Payment Systems. Also: New Plan Realty Trust; OEA Inc.; Proffitt’s; Robotic Vision Systems; Samsonite; Source Media; Southwest Water; Startec Global Communications; Sunburst Hospitality; Trinet Corporate Realty Trust; and Walden Residential Properties. Octel Corp., a spin-off of Great Lakes Chemical Corp., was cut loose with a pill in its capital structure. Young & Rubicam Inc. went public with a shareholders rights plan in place.