Tuesday February 12, 7:51 pm Eastern Time
Qualcomm Re-Elects Enron's Savage to Board
By Ben Berkowitz
LOS ANGELES (Reuters) - Investors in Qualcomm Inc., a wireless technology firm whose finances fell under scrutiny after energy trader Enron Corp. collapsed, reelected Enron director Frank Savage to its board on Tuesday, over the objections of dissident investors.
A Qualcomm spokeswoman said Savage, chairman of New York-based Alliance Capital Management and an Enron director since 1999, was reelected to Qualcomm's board at a shareholder meeting in San Diego. He has been a Qualcomm director since 1996 and was backed by company founder and Chief Executive Irwin Jacobs.
Labor union AFL-CIO and California's public employee retirement plan CalPERS, the nation's largest, had wanted Savage dropped from Qualcomm's board because he served on an Enron board that had missed problems leading to the energy trader's bankruptcy.
Since then, some analysts have raised questions about San Diego-based Qualcomm and other companies with complex financial structures.
``We feel like this is an issue that's going to only increase shareholder concern and shareholder scrutiny in Qualcomm,'' said William Patterson, director of the AFL-CIO's investment office.
CALPERS 'DISAPPOINTED'
``We've asked Qualcomm's board to step forward with some explanation of why they believe the practices of the Enron board have not impacted their board,'' Patterson told Reuters. ''We think Frank Savage should step forward and tell his story.''
The AFL-CIO asked the U.S. Securities and Exchange Commission on Feb. 4 to examine whether Enron board members should be banned from the boards of other publicly traded companies.
``We're obviously disappointed,'' CalPERS spokeswoman Pat Macht told Reuters. ``It points out the undemocratic process that exists today in selecting board members.''
But Macht also acknowledged the difficulty in changing the status quo.
``It's an uphill battle to try and unseat a board member,'' she said. She added that CalPERS had not yet made a decision as to whether or not it might call on Savage to resign.
Scandals surrounding Enron's accounting practices have made investors and independent watchdogs more wary of publicly traded companies with complex financial structures, Qualcomm included.
Last Friday, the Center for Financial Research and Analysis (CFRA) issued a report highlighting its concerns about Qualcomm's business practices, including taking equity from licensees in lieu of cash and giving executive positions to Jacobs' children.
The report drove Qualcomm stock to a multiyear low, but shares rebounded on Monday as investors brushed off the CFRA report. Analysts said the financial community had been well aware of the issues raised by the CFRA and investors were not concerned with them.
Shares in Qualcomm closed down 1.9 percent at $40.50 on Nasdaq on Tuesday. For the year, the shares are down 20 percent. |
