3 stockholder proposals fail at CAT annual meeting

Wed Jun 9, 2010 6:02pm EDT

* Stockholders had pushed for human rights audit

* All five company-backed proposals approved

* Critics of bulldozer sales to Israel disrupt event

By James B. Kelleher

CHICAGO, June 9 (Reuters) - Three stockholder-backed proposals under consideration at Caterpillar Inc (CAT.N) went down to defeat on Wednesday during an annual meeting disrupted several times by pro-Palestinian protesters angry with the company's sales of tractors to Israel.

The meeting was the last for Jim Owens, the company's 64-year-old chairman and chief executive, who is retiring later this year after a life-long career with Caterpillar.

The stockholder-backed proposals -- which would have split the job of chairman and chief executive, established a committee to review whether Caterpillar's products are used in ways that violate human rights, and would have permitted special shareholder meetings to be called if just 10 percent of share owners decided one was needed -- were all opposed by management.

Only 34 percent of voting shareholders supported the special stockholder meeting proposal; 20 percent voted for the review of the company's global human rights policies; and 17 percent supported splitting the roles of chairman and CEO.

The effort to review the Peoria, Illinois-based company's human rights record was backed by a number of pro-Palestinian groups, including Jewish Voice for Peace, a group critical of Israel's policies in the West Bank and Gaza Strip.

All five of the company-backed proposals passed, including one that will provide for the annual election of the company's directors. In the past, Caterpillar's board was divided into three classes of directors, with each class elected every three years.

As has been the case for several years now, pro-Palestinian and pro-Israeli protesters shouted at each other outside the annual meeting, held on the sixth floor of the Northern Trust building in Chicago's Loop business district.

Inside the event, the proceedings were interrupted 14 times as pro-Palestinian shareholders stood up, one at a time, and urged Caterpillar to stop selling its bulldozers to the Israeli Defense Forces.

For the first time ever, shareholders who supported the company attempted to shout the protesters down, at one point chanting, "Out, out, out."

Caterpillar, which has been targeted by activists for seven years, insists it cannot control how its equipment is used. Sales are made through the U.S. government under the U.S. Foreign Military Sales Program.

The company also says it is subject to strict anti-boycott requirements under two U.S. laws -- the tax reform act of 1976 and the export administration act -- that essentially prevent it from from taking part in boycotts not sanctioned by the U.S. government.

Once again, the protesters invoked the name of Rachel Corrie, a 23-year-old American peace activist killed in 2003 by Israeli soldiers driving a Caterpillar bulldozer while she was protesting a home demolition in the Gaza Strip.

Corrie's parents are suing Caterpillar over her death.

When Owens relinquishes the CEO reins at the end of the month, it will mark the end of a 38-year career with the company.

A thoughtful, soft-spoken North Carolina native who never lost his Southern drawl, Owens joined Caterpillar in 1972, a year before he was awarded his PhD in economics.

Owens' successor, Doug Oberhelman, another lifelong Caterpillar employee, will take over as CEO on July 1 and assume the position of chairman on Oct. 31.

Oberhelman, 56, was most recently head of Caterpillar's engines and turbines unit. He joined the company in 1975, worked in South America and Asia, and served as chief finance officer between 1995 and 1998 -- a position that Owens also held. (Reporting by James B. Kelleher, editing by Matthew Lewis)

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