The shareholders of Ingersoll Rand will today vote on whether to leave Bermuda following pressure in the US to halt companies moving overseas to cut their tax bill.

Ingersoll Rand, a leading diversified manufacturing company with customers around the globe, announced its intention to incorporate in Bermuda to reduce its worldwide tax rate in October, 2001. Before reincorporating, Ingersoll Rand was incorporated in New Jersey and its headquarters are still in Woodcliff Lake, New Jersey.

But there is now concern about loss of shareholder rights and long-term investment returns from a cross-section of US institutional investors, state treasurers and labour unions.

A full page advertisement was taken out in USA Today this week urging the company to “Come Home to America” from its so-called offshore tax haven in Bermuda.

The annual meeting will be held today in Davidson, North Carolina and not in Bermuda, which could lead to more shareholders turning up for the meeting.

“Ingersoll Rand, with hundreds of millions of dollars in defence and homeland security contracts, operates from a mailing address on the sandy shores of Bermuda,” the advertisement said. “That's bad for shareholders.”

The advertisement, which appeared in USA Today editions in New York and Los Angeles, noted that other companies like Tyco and McDermott International have agreed to review their decision to move their official headquarters to an offshore post office address. “Why not Ingersoll Rand?”

But the company is likely to use the example of Stanley Works to halt the move. Stanley Works decided not to reincorporate in Bermuda following a row over the move in which the company was called unpatriotic but has been forced to cut jobs and seen its profits fall dramatically since the decision was made.

The US hand tool maker wanted to move to Bermuda to save money on its tax bill and just last month pointed to struggling with rising costs and slow sales in a soft market and cut its profit forecasts for four straight quarters.

Last month it said it will cut 1,000 of its 15,000 employees as it shuts four factories and five warehouses. It is also closing its Mac Direct business, which sells tools directly to mechanics.

Ingersoll Rand, which is in a similar market and competes with Stanley Works, may argue that the cost of reincorporating in the US is too great despite the negative publicity generated by the move.

Its shareholders will vote on a resolution calling on management to reincorporate the Bermuda-chartered company on US soil. It follows last week's decision by the leading proxy policy advisor in the US to recommend that shareholders vote in favour of the proposal.

Institutional Shareholder Services said: “The company has not yet conducted a meaningful analysis in assessing the risks associated with remaining incorporated in Bermuda.”

“Ingersoll Rand set up a sham offshore mail drop while it actually runs the company from New Jersey,” said Jack Ehnes, chief executive officer of the California State Teachers' Retirement System, one of the sponsors of the ad and a supporter of the reincorporation resolution. “We've asked Ingersoll Rand to reconsider their reincorporation, but they're not listening. They owe it to their shareholders to listen to us, to ISS and to other more enlightened companies.”

The advertisement was signed by many of the largest institutional investors in the US.

The same mixed group was behind the high-profile effort to lure Tyco International Ltd. back to the US. That endeavour, which also had the backing of ISS, drew support from 26.4 percent of the votes cast at Tyco's annual meeting in March.

Following the meeting, Tyco committed to reviewing the issue. Another AFSCME target, McDermott International Inc., promised to consider recommending a vote in favour of changing its domicile to the United States from Panama.

So far, there's been no similar pledge from Ingersoll Rand, and no indication that its stance will change, either.

From the company's point of view, there's not much to discuss. Through the so-called corporate inversion, Ingersoll Rand cut its tax burden by avoiding US taxes on overseas income.

Officials say they are operating under the assumption that investors support its Bermuda reincorporation, which saved it between $50 million and $60 million in taxes last year, based on the overwhelming support by shareholders - 89 percent of the votes cast - when the issue was first weighed back in 2001.

“As far as we're concerned, that was obviously strong support and we don't see that anything has changed from a shareholder perspective,” said Paul Dickard, an Ingersoll Rand spokesman. ISS noted that it supported Ingersol Rand's reincorporation from New Jersey to Bermuda in 2001. In switching gears, ISS cited several issues, including “the tidal wave that has been gathering at key states, such as Texas and California, that seeks to deny state and municipal government contracts to those companies that have incorporated offshore.”