Ask AFSCME
What Is AFSCME Doing to Fight Corporate Greed?
For nearly a decade, AFSCME has demanded that investors get a say on executive compensation packages, that shareholders be allowed to more easily nominate and elect their own corporate board candidates and that mutual funds use their voting power to protect investors. Today, the tide is turning: Moved to action by public anger over outrageous CEO compensation and scandals, federal agencies, members of Congress and investors are demanding measures to protect shareholders’ investments in public corporations.
There is growing support for AFSCME’s “say-on-pay” proposals, which would allow investors to vote — in an advisory capacity — on executive pay plans. The union’s 1.6 million members, who participate in public pension funds that invest in public corporations, have a direct stake in the outcome of these efforts to link pay to performance. Pension funds should be invested in a way that ensures the safety and security of their retirement benefits — not squandered by overpaid CEOs in pursuit of short-term gains.
AFSCME’s Corporate Governance and Pension Investment Program is leading the charge in this campaign, while the AFSCME staff pension plan files resolutions to seek to create long term value at large, widely held companies.
Change Arrives
Pres. Barack Obama inherited an economic catastrophe requiring billion-dollar taxpayer bailouts to companies “too big to fail,” like insurance giant AIG.
Obama imposed pay restrictions on financial institutions and other companies that accepted bailout dollars. Following his lead, the federal Securities and Exchange Commission (SEC) voted this spring to propose “proxy access” measures designed to let shareholders owning as little as 1 percent of a company more easily nominate board directors.
Congress Acts
Legislative efforts to reign in CEO pay gained no traction during eight years of opposition from the Bush administration. With Obama in the White House and Democrats firmly in control of Congress, AFSCME’s corporate reform proposals have a real chance to succeed.
AFSCME supports the “Shareholder Bill of Rights” introduced in Congress by Sen. Charles Schumer (D-N.Y.). Its core principles — a say on executive pay, a voice in how companies are run and a chance to elect directors who will represent shareholder interests — go to the heart of AFSCME’s campaign to curtail abuses that have caused so much chaos on Wall Street and Main Street.
Leading The Way
Spurred by AFSCME’s corporate activism, proposals to reign in excessive executive compensation have also gained ground with shareholders. Of 29 say-on-pay proposals voted on this proxy season, 10 received majority support.
But these proposals are non-binding. Directors can, and do, ignore them. That’s why we must increase public pressure to persuade boards to accept reforms that are in everyone’s best interest. To achieve that goal, AFSCME has created the Shareowner Education Network (SEN), a nonprofit organization founded to educate individual investors.
If say-on-pay and other shareholder rights had been in place years ago, “they would have helped protect working families invested in the market through their pension systems and savings plans from the $11 trillion in wealth that has been destroyed in the economic meltdown,” says Richard Ferlauto, AFSCME’s director of corporate governance and pension investment, who also chairs the SEN.
Learn more at the Pension Security section of afscme.org. To become part of the solution and take action now, visit shareowners.org.
