Avon Products (NYSE:AVP) announced further head count reductions to achieve their cost cutting which had also been previously announced. The plan is to whack another 400 and leave Ireland. The plan is to exit small markets and concentrate on big ones.
Yeah OK big markets, big bucks and hopefully big rewards. So why even announce anything for Ireland was it really that big? Sure some employees are out of a job. But Ireland had only a population of just under 5 million. (Ex Northern Ireland) so how big of a savings are we going to see.
Ireland has had a recent history of some very interesting tax laws. The Irish allowed you to shelter much income from the revenuers from many a far-a-way land. As they beat the drums of retreat the Irish advantages are not as attractive. the losses need to be taken where they can be maximized in high tax jurisdictions such as the United States.
So in a little while bye and bye do not be surprised if the IRS suddenly decides to challenge some of the consolidations and tax losses. Fair is fair.
In the mean time lets take a quick look at the board. 9 independent directors, 4 women, average age 65. Average tenure 9.7 years although new blood has been coming on recently.
Ann Moore 62 formerly Chair and CEO of Time. a career time-life executive.
Maria Elena Lagomasino 64 A career private wealth banker from Sun Trust, JP Morgan Private Bank, Chase Manhattan Bank.Would have understood the advantages of Ireland’s tax code very well.
Paula Stern 68. Former Commissioner of US International Trade Commission. Expert understanding of international structures and how to leverage them.
Laurence Weinbach 73 was chairman of Unisys until 2006. Previously managing director – chief executive officer Andersen World Wide. Retiring in a few weeks but with that level of accounting expertise he would have a very good handle on taxes and structuring.
Gary Rodkin 60. CEO of Conagra Foods. Prior was Chair and CEO of Pepsico Beverages and Food. Significant experience at Tropicana, General Mills and Yoplait Yogurt. Food is an international commodity which is usually structured to be tax effective.
Don Cornwell 65 Chairman of Granite Broadcasting 1988-2009. COO Corporate Finance Dep’t Goldman Sachs 1980-88. Vice President at Investment Banking Goldman Sachs from 1976. This guy is all about financial engineering.
Charles Noski 60 former vice chair of Bank of America. Former CFO of Northrop Grumman, ATT, Hughes Electronics and formerly partner of Deloitte & Touche. Financial engineer extraordinaire.
So the board with a very strong financial engineering background decides to get out of Ireland because its a small market and they can fire a few guy’s. They even press release it.
George Gutowski writes from a caveat emptor perspective.