For Immediate Release
Tuesday, April 20, 2004
AFSCME Employees Pension Plan Releases a List of "No Vote" Companies for 2004 Annual Meetings
WASHINGTON —The AFSCME Employees Pension Plan today released a list of individuals for which it will be withholding votes for election as director on specific corporate boards. The "No Votes" are based on current AFSCME proxy voting guidelines for annual meetings this year.
"We’re withholding votes for companies at which excessive executive pay does not match performance, where directors have significant conflicts of interest or where boards have ignored majority shareholder votes," said Pension Plan Chair Gerald W. McEntee. "We are sending a message to directors that we will hold them directly accountable for weak corporate governance and actions that are not in the shareholders’ best interest."
Companies with directors targeted by the AFSCME Pension Plan include: Lockheed Martin (NYSE: LMT), American Express (NYSE: AXP), Clear Channel Communications (NYSE: CCU), Safeway (NYSE: SWY), United Rentals (NYSE: URI), Comcast (NASDAQ: CMCSA), Electronic Data Systems (NYSE: EDS).
The AFSCME Employees Pension Plan is a leading institutional shareholder activist with more than $600 million in assets.
AFSCME Employees Pension Plan Withhold Votes
Lockheed Martin (LMT), meeting date 4/22/04
Former Enron board member Frank Savage continues to sit on the Lockheed Martin board. The Powers Report, a study of the board’s role in Enron’s failure, presented a board disengaged from its task of overseeing Enron, with Mr. Savage involved as a member of Enron’s Management Development and Compensation Committee and its Finance Committee. We also will withhold votes from Norman Augustine and Joseph Ralston for conflicts of interest. Mr. Augustine, Lockheed’s former Chairman and CEO of Lockheed continues to receive an office and executive assistant, while he sits on the Nominating and Corporate Governance Committee. Mr. Ralston is the Vice Chairman of the Cohen Group, a consulting firm that received approximately $500,000 in fees from Lockheed in 2003. Mr. Ralston also serves on the Nominating and Corporate Governance Committee
American Express (AXP), 4/26/04
American Express director Frank Popoff's is also a member of the Qwest board, where he serves as chairman of its Compensation and Benefits Committee. In 2002, Business Week included Qwest on its list of worst boards, noting "the compensation committee — described as 'comatose' by one expert — awarded ex-CEO Joseph Nacchio an $88 million pay package in 2001, one of the worst years in the company's history."
Clear Channel Communications (CCU), 4/28/04
Clear Channel’s Compensation Committee has overseen the employment agreements for Chairman and CEO Lowry Mays and his sons and fellow directors President and COO Mark Mays and Executive Vice President and CFO Randall Mays. Each agreement provides a seven-year contract that renews automatically each day, severance agreements that allow for seven-years’ salary and bonus, 1 million options, and tax gross-ups, and if neither Mark nor Randall become chairman and CEO after Lowry steps down, they are then entitled to a double severance of 14-years’ salary and bonus and 2 million options. Because of these terms, we are withholding votes from the members of the Compensation Committee: John Williams, J.C. Watts, Alan Feld, and B.J. McCombs. Additionally, Mr. Feld is associated with a law firm that has consistently received fees from Clear Channel, and Mr. McCombs, who also serves on the Nominating and Governance Committee, has a history of related transactions with Clear Channel.
Safeway (SWY), 5/20/04
We will withhold votes from the slate of Safeway directors at this year’s meeting based on the company’s poor performance coupled with conflicts of interest through the Kohlberg Kravis Roberts connection. We will withhold votes from Chairman and CEO Stephen Burd for Safeway’s poor performance and unsuccessful acquisitions and from Messrs. Tauscher and MacDonnell for their inherent conflicts of interest. Mr. MacDonnell is a former partner of KKR, which has a long history of transactions with Safeway, and Mr. Tauscher is another director with a past history of significant related-party transactions with management.
United Rentals (URI), 5/20/04
United Rentals Compensation/Stock Option Committee has overseen and approved employment agreements golden parachutes of 13.51, 9.655, and 10.91 times salary and bonus for executives and fellow directors Bradley Jacobs, Wayland Hicks, and John Milne, respectively. Upon Jacobs’ recent retirement as CEO, the term of his underwater stock options was extended to 2013, he was given a three-year $500 an hour consulting consulting agreement, and he will be allowed to use company aircraft for personal use for up to three years after his consulting ends. In 2001 Mr. Jacobs received $19 million in restricted stock while Hicks and Milne each received more than $11 million. Because of these employment terms, we intend to withhold votes from Chairman Jacobs, President and CFO Milne, and Compensation/Stock Option Committee member Christian Weyer.
Electronic Data Systems (EDS), 5/25/04
This board has ignored majority votes on poison pills and supermajority votes for four straight years. We are withholding votes from directors Roger Enrico, Fred Hassan, and Robert Kidder based on the board’s failure to implement shareholder proposals that receive majority votes.
Comcast (CMCSA), 5/26/04
Out of 11 Comcast directors, we classify seven as insiders or affiliated outsiders who are party to substantial related transactions. Ralph Roberts, Brian Roberts, Julian Brodsky, and Michael Armstrong are each paid insiders, and Brian Roberts also serves as chairman of the Governance and Directors Nominating Committee. S. Decker Anstrom is the CEO of the Weather Channel, which received close to $20 million from Comcast in 2003, Sheldon Bonovitz has (according to the proxy) "personal relationships with the Roberts family" and is an attorney with Duane Morris LLP, a firm that has provided Comcast legal services, and Joseph Castle II’s son-in-law was a Comcast employee in 2003. Mr. Anstrom serves on the Audit, Compensation, and Governance & Directors Nominating committees, and Mr. Castle also serves on the Compensation Committee.
