For Immediate Release
Tuesday, May 25, 2010
AFSCME Employees Pension Plan Urges Support for Independent Chairman Proposals and ‘Vote No’ Campaigns at Nabors and Abercrombie & FitchWashington, DC —
The AFSCME Employees Pension Plan today urged support for its independent chairman proposals at Nabors and Abercrombie & Fitch and announced it is voting against members of the compensation committee at the annual meetings of both companies in early June.
“Shareholders are at risk when entrenched boards serve as yes-men to the combined chairman and CEOs of companies,” said AFSCME Pres. Gerald W. McEntee, who chairs the AFSCME Employees Pension Plan. “AFSCME’s independent chairman proposals and “vote no” campaigns clearly insist that directors are meant to act on behalf of shareholders, not the CEO.”
Nabors and Abercrombie & Fitch will hold annual meetings on June 1 and 9 respectively. Each board has characteristics that raise concerns about succession planning and entrenchment, while both compensation committees have approved guaranteed pay that fails to link pay to performance.
Nabors Chairman and CEO Eugene Isenberg has held both positions since 1987, meanwhile, the average tenure of a Nabors director is 14 years and the average age is 73. At Abercrombie & Fitch, Chairman and CEO Michael Jeffries has served in both positions since 1998, where despite declining performance and underperforming peers, the board re-signed Jeffries to a five-year contract in December 2008 that included a $6 million stay bonus.
Nabors employs an all-but guaranteed bonus system that has resulted in massive bonus payouts for each of the last 10 years. CEO Isenberg is guaranteed $2.4 million in yearly deferred compensation and his beneficiaries will receive a $100 million “golden coffin” in the event of his death.
Abercrombie & Fitch’s Jeffries receives pay that is benchmarked to the 75th percentile of Abercrombie & Fitch’s peers. He received more than $36 million in 2009, a 50 percent increase from 2008 despite falling performance, and received an additional $4 million payment to end his personal use of the company plane.
“Pay is the litmus test for corporate governance, and these boards failed to perform their duty and more importantly failed to protect shareholders. New independent board leadership is needed to restore an appropriate balance of power between the CEO and the board,” added McEntee. “We will vote against the directors who approved these ‘heads-I-win, tails-I-win’ pay packages to send a clear message that shareholders won’t stand for these games.”
AFSCME’s “Vote No” and independent board chairman campaigns have gained significant momentum among corporate governance advisory firms. RiskMetrics Group Inc. and Glass Lewis are both recommending that shareholders of Nabors vote against the election of the directors in John Lombardi and James Payne, RiskMetrics is recommending support for the independent chairman proposal at Nabors, and Glass Lewis is recommending that Abercrombie & Fitch shareholders vote against Edward Limato and Craig Stapleton (note: RiskMetrics’ analysis for Abercrombie & Fitch was unavailable as of release).