Tyco is to stay in Bermuda, for now.

Shareholders voted yesterday to keep the scandal-plagued company based on the Island.

At the Annual General Meeting held at the Fairmont Hamilton Princess, 73 per cent of votes cast rejected a proposal to repatriate to the United States.

However a coalition of unions and pension funds in favour of repatriation hailed the 26 per cent of votes in favour of the proposal as a "resounding endorsement" of their opposition to Tyco's base in Bermuda.

Richard Ferlauto of the American Federation of State, County and Municipal Employees (AFSCME), representing approximately 400,000 shareholders, said: "They use siting here just as a tax dodge."

He said that it was clear that Tyco used its Bermuda location to avoid taxes, but the question remained whether they had evaded taxes.

Tyco's new chairman and chief executive, Edward Breen, did not discuss the pros and cons of Bermuda incorporation in detail, saying it was a serious issue that would be taken up by the newly elected board and a decision would be made public before the next AGM.

"Tyco has a board of directors which is committed to assessing this issue," he said.

Shareholders welcomed the company's new board at the AGM, saying that they applauded corporate governance reforms at the company.

However they remain "concerned about transparency" said Mr. Ferlauto.

There was also strong criticism of the re-appointment of PriceWaterhouseCoopers as auditors from Greg A. Kinczewski of Marco Consulting, representing some five million shareholders. He said that they had voted against PWC's re-appointment last year and were even more strongly against the appointment this year. He said that most of the scandal occurred "during PWC's watch" and that the firm should have picked up on unapproved bonuses reported by the Wall Street journal.

But Mr. Breen said: "We are obviously in support of PWC."

Since he and new chief financial officer Dave Fitzpatrick came on board, Mr. Breen said they had asked PWC for significant new resources and new engagement partners to be assigned to Tyco and they had been pleased with the response.

He said: "We've had some pretty radical updates. We will address this as an ongoing issue."

In a victory for shareholder activism, Tyco's shareholders approved a resolution to urge the company to limit so-called "golden parachutes".

According to the United Brotherhood of Carpenters Pension Fund, who made the proposal, last year the former board approved a severance package for disgraced former chairman, Dennis Kozlowski of $135 million. The resolution urging the company to seek shareholder approval for future severance agreements for executives was approved with a 57 percent majority .

Mr. Breen indicated that the board would take steps to end "golden parachutes" without shareholder approval.

"Tyco's board of directors does support limiting severance packages. In principle we're in agreement. We want to come up with guidelines to address it," he said.

Of the shareholder resolutions put to the vote, this was the only one was approved - five others were defeated.

Mr. Ferlauto proposed the resolution to "Come Home" to Delaware.

"We thought that at least the weather would be improved here," he joked, referring to the inclement weather over the past two days in Bermuda.

"We are asking Tyco to come back because we represent long term investors in the company," he said.

He cited several reasons, including:

"Under Bermuda law, the duty of the directors of a company is to the directors and not the shareholders of a company"

"Bermuda law does not require written consent for the disposal of assets"

"We're concerned about transparency and the real meaning of value for the shareholders. Up until now value has been based on accounting manipulations."

"We are offering a challenge to the board: We'd like you to set up a board committee to discuss reincorporations"

"We also want you to have independent analysis to assess the cost of returning to the US."

Asked whether in his opinion, Bermuda-based corporations are less strictly regulated than under the US regulatory system, Mr Ferlauto said: "It's not opinion, it's a fact that they are less well regulated."

The coalition admitted that it had no plans to speak to the Bermuda regulator or any other government body in order to verify their views on Bermuda as a jurisdiction. However they revealed plans to make repatriation proposals at the AGM's of Ingersoll Rand and Cooper Industries in Bermuda.

Also speaking in favour of the repatriation vote was Joseph Conzo, a New York firefighter who said he was worried about his "pension being in jeopardy" due to Tyco's location in Bermuda. He said that he was concerned that companies like Tyco expected his fire service to protect their office in New York, but were trying to avoid the very taxes that pay his salary.

One individual shareholder, Timothy Fellowes, spoke in opposition, saying: "I believe there are a lot of misconceptions about being based in Bermuda."

Mr Fellowes is a lawyer at local law firm, Milligan White and Smith. He said that, as a matter of international law, a court would not have to apply Bermuda law if a shareholder wished to sue an officer of a company based here. Shareholders do not lose their rights of redress by virtue of a company being incorporated in Bermuda.

"This great patriotism that exists in the United States, and the issue of incorporation, the two are totally unrelated. I think that the best place for Tyco to be is where it is now," he said.

Mr. Breen said: "Tyco has a board of directors which is committed to assessing this issue. This issues requires serious analysis."

He said the company would disclose its findings on this matter well in advance of next year's AGM.

"We need to take this up at board level."

He also emphasised that Tyco became a Bermuda company in 1997 due to its acquisition of ADT, a company which was incorporated in Bermuda in 1984.

Another institutional investor, the Amalgamated Bank LongView Collective Investment Fund, proposed a resolution to separate the roles of Chairman and Chief Executive. The fund's representative said: "From a governance standpoint the two roles should be split."

But Mr. Breen defended holding both positions saying that the appointment of Jack Krall as Lead Director gave protection to the company as this role was similar to a non executive chairman. The resolution was defeated.