City of Oak Creek

Common Council Report

Meeting Date: 09/19/06

Item No.:        

Recommendation:  That the Common Council adopt Resolution No. 10677-091906, authorizing the Mayor and City Clerk to execute documents related to securities registered to the City of Oak Creek through the Equitable/AXA Companies.

Background:  The City is currently the holder of approximately 2,250 shares of unexchanged common stock in AXA Financial, Inc. The City became enrolled with the Equitable Company in the 1980’s to provide coverage for an insurance and deferred compensation program.  When the company later converted from a mutual company to a shareholder-owned company, and the City was issued, and has retained, shares of Equitable stock, which later became converted to AXA Financial, Inc. stock.  Now, there is no longer a market for the shares due to the corporate acquisition of AXA Financial, Inc. by its larger conglomerate, and the City is offered a choice of having substitute shares issued or liquidating the stock.  There is no longer a benefit to the City to retain these shares.  We were recently informed that the decision must be made before the end of September.

A firm engaged by AXA to assist shareholders has offered to handle the transaction for a fee of $3.75 per share, or approximately $8,500.  We contacted a local broker, Dan Savaglia, for clarification, and found that his firm could handle the transaction for about one-half that fee, so we have taken steps to utilize the local firm.  In order to accomplish the stock liquidation, there are numerous documents that are required to be executed by the Mayor and City Clerk, and a resolution is needed to formalize their authority to act on behalf of the City. 

Fiscal Impact:  The City’s liquidation of the stock will result in proceeds of approximately $80,000, with a brokerage fee of approximately $4,500, for net proceeds of approximately $75,500.  This amount will be credited to General Fund Miscellaneous Revenues for 2006.

Prepared by and Fiscal Review by: Beverly A. Buretta, CMC City Clerk/Comptroller

Respectfully submitted, Patrick DeGrave City Administrator