For Immediate Release
Monday, January 24, 2011
AFSCME Employees Pension Plan Announces 27 Shareholder Proposals
The American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME) Employees Pension Plan, today announced its 27 proposals for greater transparency concerning risk, director accountability and independent board leadership.Washington, DC —
The American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME) Employees Pension Plan (“the AFSCME Plan”), today announced its 27 proposals to foster greater transparency concerning risk, director accountability and independent board leadership.
The AFSCME Plan, an institutional shareholder with more than $850 million in assets, has submitted the shareholder proxy proposals for consideration at annual company meetings this spring. The Plan’s proposals are designed to address accountability and transparency, and align the interests of management with those of shareowners.
“Shareholders aren’t served when CEOs give themselves lavish bonuses and obscene pay,” said AFSCME Pres. Gerald W. McEntee. “It’s time to hold the CEOs and the corporate boards accountable.”
The AFSCME Plan has filed proposals seeking independent board chairs, annual director elections, majority vote standards for director elections, insider trading best practices, reincorporation to Delaware, compensation benchmarking no greater than the peer median, and reports on the risks to shareholders of corporate lobbying expenditures and aggressive corporate tax strategies.
“These proposals will bring greater transparency and accountability when a board of directors fails to properly represent shareholders’ best interests. Additionally, shareowners will now be able to use Say on Pay at all companies to voice disapproval for unwarranted CEO pay,” added McEntee.
Proposals have been filed at: Abercrombie & Fitch (ANF); Alcoa (AA); Amazon (AMZN); Anadarko Petroleum (APC); Ball Corp. (BLL); Bank of America (BAC); Charles Schwab (SCHW); Chesapeake Energy (CHK); Citigroup (C); ConocoPhillips (COP); Dell (DELL); Home Depot (HD); International Business Machines (IBM); Lazard (LAZ); Lockheed Martin (LMT); Moody’s (MCO); Nabors (NBR); Occidental Petroleum (OXY); Pfizer (PFE); Prudential Financial (PRU); Raytheon (RTN); SAIC (SAI); Target (TGT); TJX Companies (TJX); Valero Energy (VLO); Wal-Mart (WMT); and WellPoint (WLP).
Proposals seeking the annual election of directors have been filed at Alcoa, Charles Schwab, Chesapeake Energy and Valero Energy.
Majority Vote Standard:
The AFSCME Plan submitted resolutions to require that directors be seated only if they receive the support of a majority of shareholders at Nabors and SAIC.
The role of a board is to monitor management and the chair runs the board. But if the board is led by a chair who is also the CEO, then the CEO effectively becomes his or her own boss. Separating the chair and CEO positions avoids that fundamental conflict of interest. Proposals have been filed at Abercrombie & Fitch, Anadarko Petroleum and Dell.
Median Peer Benchmarking:
A factor in escalating executive compensation is the use of benchmarks to set compensation at the median of selected company peer groups. Peer benchmarking above the median peer group leads to increased executive compensation without regard to performance. This resolution asks for compensation benchmarking no greater than the 50th percentile of peers at Target.
Proposals asking that companies prepare an annual report disclosing their policies and payments for direct and indirect lobbying activities have been filed at Bank of America, Citigroup, ConocoPhillips, International Business Machines, Lockheed Martin, Occidental Petroleum, Prudential Financial and Raytheon.
A corporation’s approach to taxation can create several distinct risks for share value, from the overall impact on financial results to an increased likelihood of financial restatements. Proposals asking for a report disclosing a board’s risk assessment of the company’s tax actions have been filed at Amazon, Home Depot, Lazard, Pfizer, TJX Companies and Wal-Mart.
Reincorporation from Indiana to Delaware:
Indiana Corporate Statutes adopted in 2009 diminish key basic rights of shareowners by weakening standards of care for directors and strengthening anti-takeover provisions through default classified boards. Reincorporation to Delaware, with fewer anti-takeover measures and an established standard of care for directors, would restore these key shareowner rights. Proposals asking for Delaware reincorporation have been filed at Ball Corp. and WellPoint.
10b5-1 plans are intended to eliminate executives’ discretion over transactions in company stock, allowing executives to diversify their holdings while reducing the risk of insider trading liability. However, 10b5-1 trading plans contain a very large loophole for executives to exploit, because there is no requirement that the pre-planned trades be irrevocable. This proposal, filed at Moody’s is designed to ensure that 10b5-1 plans are not abused by codifying a set of 10b5-1 “best practices” that currently are not legally required.