Anheuser board under scrutiny over InBev bid

By Martha Graybow

NEW YORK (Reuters) - Anheuser-Busch Cos Inc's BUD.N board is in the hot seat after spurning a $46.3 billion takeover bid, facing questions over whether it is fulfilling its obligations to shareholders and not just the wishes of the brewer's founding family.

The company's suitor, InBev NV INTB.BR, has laid the groundwork to try to unseat the board -- though Anheuser told investors on Friday that it would challenge the Belgian-Brazilian conglomerate's claims that it could remove all 13 Anheuser directors without cause.

For sure, the board -- which rejected InBev's $65-a-share, all-cash offer -- is facing pressure on multiple fronts.

The board, including members of the family that's run the brewer for generations, has been grappling with the future of an iconic U.S. brand that is a large employer in its home base of St. Louis, Missouri.

Politicians have spoken out, with Missouri Gov. Matt Blunt saying he was deeply troubled by a possible InBev deal though he had no power to stop it.

At the same time, some investors have favored the InBev offer as good for stockholders. While Anheuser said on Thursday that the InBev proposal was inadequate and it was moving forward with an internal growth plan, it did leave open the possibility of entertaining a bid at a higher price.

"The board probably feels strongly about keeping the company independent," said Shirley Westcott, managing director of policy at shareholder adviser Proxy Governance Inc. "An investor is really looking for a good return on his investment, whether it's a good offer from InBev or whether the company's plan would provide comparable value."

WIELD INFLUENCE

Busch family members own about 4 percent of the company's stock, which is nowhere near majority control but is still enough to wield influence.

Three directors are considered insiders -- Chief Executive August Busch IV, his father, August Busch III, and Chairman Patrick Stokes, a former president of the brewer.

That leaves 10 other directors, including Henry Hugh Shelton, former chairman of the Joint Chiefs of Staff, and former JPMorgan Chase & Co (JPM.N) chairman Douglas Warner, who are considered independent.

Of those 10, "many of them have been on the board for a very long period of time, so they clearly have a longstanding relationship with family members and previous management teams," said Carrie Schloss, a stock analyst at Talon Asset Management in Chicago, which held about 90,000 Anheuser shares as of May.

But, she said, "I think in this day and age, any public board now truly has to look out for the best interests of the majority of shareholders, not just shareholders who own 4 percent of the company."

The company received an "F" rating -- the worst possible -- in 2007 from corporate governance researcher The Corporate Library, according to data cited in a shareholder proposal in the company's most recent proxy filing. The Corporate Library would not comment to Reuters about its ratings or methodology.

Another governance tracker, RiskMetrics Group Inc (RMG.N), gives the brewer better marks. As of June 1, it scored Anheuser's governance -- based on criteria such as board practices, anti-takeover provisions and executive pay -- better than 75.4 percent of companies in the S&P 500 and better than 91.9 percent of food, beverage and tobacco companies.