For Immediate Release
Monday, July 22, 2002
Major Corporate Governance Reforms Won by AFSCME
As corporate scandals mount, union's staff pension plan scores big victories for shareholder accountability during 2002 proxy season
WASHINGTON —For the third year in a row, the Employee Pension Plan of the American Federation of State, County and Municipal Employees (AFSCME), AFL-CIO, scored big victories for shareholders of major corporations. These included corporate governance reforms through four shareholder resolutions passed by majority votes at annual meetings, important corporate governance reforms at two other corporations, and Securities and Exchange Commission (SEC) approval for an innovative proposal addressing the impact of anti-privatization initiatives on corporate performance.
"We have always believed that the performance of companies and pension fund earnings are enhanced by good corporate governance and accountability practices," said AFSCME President Gerald W. McEntee, chairman of the pension plan's board of trustees. "Now, in the wake of Enron, WorldCom, and other scandals, institutional shareholders must push even harder to make big corporations more responsive to investors."
Majority Votes on Classified Boards and Poison Pills
Shareholders at Great Lakes Chemical and Bausch and Lomb gave overwhelming approval to proposals sponsored by the AFSCME Plan to hold annual elections for all members of the companies' boards of directors. Shareholders voted 75 percent and 67 percent, respectively, in favor of "declassifying" their boards. For a number of years, these companies have shielded incumbent directors from shareholder concerns by staggering elections for different classes of directors over three-year periods.
In discussions with AFSCME and other shareholders, Great Lakes agreed to create a governance committee composed of independent directors, which will draft a corporate charter before the next annual meeting. This committee is expected to review the continued use of the classified board, given the growing majorities voting against it at the past three annual meetings.
In other action initiated by the AFSCME Plan, Ryder and Circuit City shareholders approved anti-poison pill proposals with 64 percent and 73 percent of the vote, respectively.
Other Reform Agreements
The AFSCME Plan reached an agreement with Cendent to restrict its use of excessive severance arrangements with executives after submitting a shareholder proposal. The plan also won agreement from McDermott International to put its poison pill to a binding vote by shareholders this year, after a non-binding proposal sponsored by AFSCME received majority support last year.
Waste Management Proposal
The AFSCME Plan also saw its innovative proposal approved by Waste Management shareholders asking the company to report on the impact anti-privatization initiatives were having on its municipal trash hauling business. This was the first such shareholder proposal of its kind and was approved for inclusion on the Waste Management annual meeting ballot by the SEC despite the company's efforts to exclude the proposal.
The Plan is maintained on behalf of AFSCME staff members. AFSCME is the largest public service and health care employees union in the United States with 1.3 million members nationwide.
