For Immediate Release
Thursday, January 06, 2005
AIG, Proxy Access and Executive Pay Reforms Lead AFSCME List of Shareholder Proposals for 2005 Annual Meetings
Washington —The AFSCME Employees Pension Plan outlined its shareholder proposals for the 2005 corporate annual meetings including binding proxy access proposals at American International Group (AIG) and the Eastman Kodak Co.
"We believe that insider influence on the AIG board has prevented it from effectively monitoring its business practices and providing needed checks and balances on executive management," said Gerald W. McEntee, Chairman of the AFSCME Employees Pension Plan. "AIG should follow the example of Marsh & McLennan and work with shareholders to add an independent director to its board and remove corporate insiders. AIG is another example of where proxy access would clearly benefit shareholders concerned about boardroom accountability."
McEntee added, "AFSCME Plan proposals are aimed at giving shareholders the voice they have been denied by insisting that failed boards be more responsive to investors. Until the SEC proposes a workable proxy access rule that is fair to investors, the Plan will push for the right to nominate directors, company by company. In 2005 we will be focusing on nominating rights, excessive pay, ignored majority votes, and insular boards that continue to show a lack of director accountability to shareholders."
The AFSCME Plan has submitted proposals at 19 companies (see attachment for detailed list). Among the proposals, the Plan seeks access to the proxy at Halliburton Company and The Walt Disney Company. A proposal at Maytag Corp. would establish a shareholder majority vote committee because the board has not implemented multiple majority votes to declassify its board. Other majority vote proposals where the companies have agreed to declassify their boards will likely be withdrawn.
Executive compensation reforms are being urged by the Plan at Amgen Inc., Adobe Systems, AT&T Corp., Bed Bath & Beyond, Bristol-Myers Squibb, and Home Depot, including guidelines for restricted stock pay for performance and stock holding requirements after option exercises.
Non-binding proposals have been filed at Ingersoll-Rand and Siebel Systems to declassify their boards, at ADC Telecommunications Inc. and The Bank of New York to remove their poison pills, and at Waste Management for additional risk disclosure.
In addition to the proposals at ADC Telecommunications (NASDAQ:ADCT), Adobe Systems (NASDAQ:ADBE), AIG (NYSE:AIG), Amgen (NASDAQ:AMGN), AT&T (NYSE:T), Bank of New York (NYSE:BK), Bed Bath & Beyond (NASDAQ:BBBY), Bristol-Myers Squibb (NYSE:BMY), Eastman Kodak (NYSE:EK), Halliburton (NYSE:HAL), Home Depot (NYSE:HD), Ingersoll-Rand (NYSE:IR), Maytag (NYSE:MYG), Siebel Systems (NASDAQ:SEBL), Walt Disney (NYSE:DIS), and Waste Management (NYSE:WMI), other companies include Gillette (NYSE:G), Morgan Stanley (NYSE:MWD), and Raytheon (NYSE:RTN).
2005 AFSCME Employees Pension Plan Shareholder Proposals
Proxy Access
The AFSCME Plan has filed binding proxy access proposals at American International Group (AIG) and Eastman Kodak that give investors the right to nominate company directors. Additionally, a precatory proxy access proposal based on the Securities and Exchange Commission’s proposed proxy access rule was filed at The Walt Disney Company, where the SEC initially ruled to allow the proposal on the proxy, but then reversed its position to allow Disney to exclude it, and another was filed at Halliburton Company, which is pending no-action review by SEC staff. AIG has five executives serving as directors and another director whose organization has received more than $2 million from the Starr Foundation (run by AIG Chairman and CEO) in recent years. AIG is currently under investigation by the New York Attorney General and it recently paid $126 million to settle probes by the Justice Department and SEC into sale of policies allegedly designed to conceal two companies’ losses. Eastman Kodak’s stock price has languished in the last five- and ten-year periods, and the Kodak board has failed to implement shareholder proposals supported by holders of a majority of shares, including proposals seeking board declassification and one that had urged the company to expense employee stock options.
Majority Votes
The AFSCME Plan filed a binding by-law amendment at Maytag Corp. in response to repeated majority votes on shareholder proposals to declassify their board that have been ignored by the board. The proposal would amend Maytag’s bylaws to require the creation of a board committee that would meet with shareholder proponents pursuant to any unimplemented majority vote. Similar proposals filed at Raytheon, Morgan Stanley and Gillette have been withdrawn now that each company has initiated actions to declassify their boards. In 2004 boards moved to implement more than 70 majority votes on 2003 AFSCME Plan shareholder resolutions.
Executive Pay
The plan has filed proposals urging the board to place a holding period for stock sales after option exercises at Amgen Inc. The Plan has refiled similar proposals for 2005 at Adobe Systems, and Bed Bath & Beyond. Proposals that link the vesting of restricted stock awards to the achievement of performance goals have been filed at Bristol-Myers Squibb, AT&T and Home Depot.
Overall Corporate Governance
A proposal to rescind a poison pill has been filed at ADC Telecommunications and re-submitted at the Bank of New York, which received a majority vote to redeem its pill last year. Proposals to declassify a company’s board have been filed at Siebel Systems and Ingersoll-Rand.Risk Factor Disclosure
The Plan has refiled a resolution at Waste Management urging that the company report to shareholders the increased risk factors on company business strategy caused by measures to oppose privatization.
