NEW BRITAIN, Conn. — Stanley Works shareholders approved a plan Thursday to move the legal residence of the toolmaker to Bermuda, amid criticism of corporate tax havens.
The change — which the company said would take effect at the end of business Friday — could save Stanley $30 million in annual taxes. But in a time of war and lingering economic uncertainty, there is rising pressure in Washington to stop the tax-shelter exodus.
Stanley said 67.2 percent of all shares favored the move, slightly more than the two-thirds majority needed. Some 12 million shares were not voted; some 1 million shares abstained.
U.S. Rep. James Maloney, D-Conn., said before the vote that Stanley was "engaged in a betrayal of Connecticut." Maloney is a sponsor of legislation that would curtail the use of offshore tax havens. He said he was not surprised that the Stanley plan passed.
"The large, institutional shareholders see that they might get a financial advantage over the course of the next 20, 30 or 40 years," Maloney said. "This hurts the small shareholders, but of course they hold small numbers of shares."
Company officials said the proposed shift would improve Stanley's ability to compete worldwide and retain thousands of jobs in the United States. In most cases, the Bermuda setup is only a shell, with the company's main operations remaining in the United States.
About 30 protesters marched outside the shareholder meeting, holding banners that said "Bless the U.S.A" and handing out American flags.
Stanley spokesman Gerard J. Gould said the deal would generate $150 million in taxes for the government.
"We feel that's very patriotic," he said.
The tax bill stems from the way the government views the transaction — as a sale of stock.
A 37-year employee of Stanley, machinist Stan Piorkowski, said the deal "is going to cost me my retirement." He holds 3,500 shares of Stanley, and said capital gains taxes on the deal would cost him between $30,000 and $50,000.
Companies reason that the corporate tax savings will quickly outweigh the shareholders' tax liability as those savings result in higher earnings and ultimately, a higher stock price.
The new corporate address would reduce Stanley's tax rate to about 24 percent from about 32 percent.
"The global playing field has been leveled, and our company is now better able to compete," Stanley Chairman John M. Trani said.