For Immediate Release
Thursday, May 17, 2007
AFSCME Urges “Vote No” for ACS Compensation Committee Members
Committee’s judgment on pay and backdated stock options labeled excessive
WASHINGTON, DC —The AFSCME Employee Pension Plan announced today that it is calling for a shareholder “Vote No” against current and former Affiliated Computer Services (ACS) compensation committee members. The Vote No campaign is based on the directors’ service on the ACS compensation committee during the backdated stock options scandal and other issues related to excessive pay for executive officers.
The plan will withhold votes from current and former compensation committee members Darwin Deason, Frank Rossi, J. Livingston Kosberg and Joseph O’Neill for failure to properly oversee the grant dates of options. Kosberg and O’Neill are also being held to account for awarding excessive contracts and perquisites and making compensation decisions without regard to performance.
“We have serious concerns about the overall judgment of directors who serve on compensation committees when stock options have been backdated under their watch,” said AFSCME President Gerald W. McEntee, who is chairman of the AFSCME Pension Plan. “The directors need to be held accountable for backdating options, which is tantamount to stealing from company owners.”
“If you are not doing your job representing the interest of investors, you will not get our vote,” explained McEntee. “An advisory vote on pay is the only alternative shareholders have for communicating their dissatisfaction with the decisions of compensation committees.” The AFSCME Pension Plan has also filed a “Say on Pay” shareholder proposal at the company, which calls for an annual advisory vote on the CEOs’ compensation package.
ACS is being investigated by the U.S. Securities and Exchange Commission and the Department of Justice, and is the subject of a number of shareholder lawsuits. Poor internal controls and the need for financial restatements also put the company out of compliance with Sarbanes-Oxley, Section 404. AFSCME found fault with the following aspects of the compensation program.
- ACS admitted to having backdated a very large number of stock option grants from 1994 through 2005, which resulted in the companying having to recognize nearly $60 million of additional compensation expenses.
- The firm spent $43.6 million on multiple CEOs and Chairman Darwin Deason during fiscal 2006.
- In September 2005, before the options backdating scandal surfaced, ACS CEO Jeffrey Rich resigned; yet, for fiscal 2006, he received $22.45 million from stock option repurchases and termination payments, $793,470 in salary, and $101,689 in non-business use of corporate aircraft.
The AFSCME Employees Pension Plan is an institutional shareholder activist with more $800 million in assets. The vote recommendation is consistent with the plan proxy voting guidelines.
