WILMINGTON, Del. — DuPont chairman and chief executive officer Chad Holliday said at the annual shareholder meeting here Wednesday that the pending sale of its $6.9 billion Invista fiber business was “a very emotional time for all of us” at the company that pioneered the synthetic fiber industry.
“Friday of this week the textile department and the petroleum department will transfer ownership to another family company,” he said, referring to the privately held purchaser, Koch Industries Inc. of Wichita, Kan. “It’s the right thing for Invista to merge into a family that has a strong polyester business.”
DuPont decided to get out of the fibers business because executives said it was a low-growth, low-margin segment. The company has been a force in the industry since the invention of nylon by a DuPont scientist, Wallace Carothers, in 1935. The fiber unit — cut back in recent years — generated 25.6 percent of all DuPont’s revenue in 2003.
The company reported net income of $1.58 billion last year compared with a loss of $1.1 billion in 2002. Sales increased 12.5 percent to $27 billion.
Shareholders and employees were also focused on the sale. Several investors who addressed the meeting at the Hotel DuPont said the company’s sale of the Conoco oil business several years ago had been unwise because of the loss of revenue. Union representatives said Koch was offering less generous benefits, and investors questioned how the proceeds of the sale would be used.
“I don’t want to see the $4.2 billion [the price Koch paid for Invista] sucked up by you getting bonuses,” stockholder John Visage said, addressing Holliday and senior management.
Shareholders criticized the performance of the company’s stock. DuPont shares fell 2.5 percent to $43.41 in New York Stock Exchange trading Wednesday, compared with the 52-week high of $46.25.
Carl Goodman, president of the International Brotherhood of DuPont Workers, representing about 3,000 members, said while people on the board and top managers were congratulating themselves on the Koch deal, “others found themselves working for a new employer, which may not sound so bad, unless you are the person whose pension is devalued by as much as 50 percent.”
After the meeting, Goodman said DuPont’s full pension benefits kicked in after 30 years of service, while Koch’s plan would not pay until a retiree reached the age of 65. He said change would cause employees to lose money if they retired early and might force workers to stay on the job.
DuPont is managed by “a board that has allowed this great company to be busted up,” he said.
Holliday did not respond directly to the charge. “We trust Koch to do the right thing going forward,” he said.
Koch has said it plans to merge Invista into its KoSa polyester business, creating an $8.4 billion enterprise that will be the world’s largest fiber company. The deal is expected to be completed Friday.
Holliday said DuPont will have some connection with the textile trade, citing the DuPont Artistri operation. That unit, part of the company’s coatings division, has developed an ink jet printing system that works on textiles, and is targeted at sample rooms and small-lot manufacturers.
Shareholders elected a company-nominated slate of 12 directors and approved the board’s selection of PricewaterhouseCoopers as its auditor. They voted against three shareholder proposals to have the company disclose the identity of employees who previously worked for the government, to adopt a human-rights code based on International Labor Organization standards and to reassess its standards of executive compensation.
Holliday was paid $2.5 million in salary, bonus and other compensation in 2003, a decline of 26.1 percent from the previous year, according to DuPont’s proxy statement with the Securities and Exchange Commission.
The firm marked another milestone at the meeting. Ed DuPont, the last member of the family that founded the enterprise in 1902 as a gunpowder maker, retired from the board. He was elected director emeritus.