The CtW Investment Group has asked Caterpillar’s board to make changes to its auditing and executive pay structures in wake of the unfolding tax fraud scandal. The CtW Investment Group, who works with union pension funds with $250B in assets, sent a letter to CAT’s incoming board chair David L. Calhoun today calling for the company to:
Establish a special committee of independent directors to investigate, evaluate, and disclose changes to reduce risks related to the Caterpillar’s tax scheme. If the Company is unable to establish a special committee, it should reconstitute the Audit Committee.
Replace PricewaterhouseCoopers—the firm that both developed the tax avoidance scheme and is currently responsible for CAT’s external auditing.
Amend the Company’s clawback policy to enable the board to recoup executive compensation in the event of conduct that results in reputational or financial harm—like what is happening now. The Investment Group submitted a clawback resolution in December, and we believe it will be voted on at the company’s AGM this year.
The funds the Investment Group works with have 1.6 million shares in CAT, and they plan to seek the support of other significant investors in the company on these issues as well.