Ending Charity for Fat Cats Begins at Home
by William Lucy
Even though most members of AFSCME work for government, all are affected by how private corporations behave. Most public employees understand that when IBM or AT&T or some other giant corporation axes an army of workers, life in the public sector gets a little tighter. Mass layoffs hurt the tax base; that means fewer services and a threat to public jobs. But that's not the only way that corporate behavior affects you.
Sisters and Brothers, when the big cheese at AT&T, Robert Allen, fired 40,000 workers and pocketed millions of dollars, he took money out of your pocket, too. Your bucks were part of the $100 million Al Dunlap collected in 1994 by firing 11,000 at Scott Paper and dumping the company. Michael Eisner at Disney owes you some thanks because in 1993 you helped him stuff $203 million into his wallet.
The problem is, you didn't know a thing about any of this, but what's happening in corporate America—the golden parachutes, the downsizing, the leveraged buyouts, bonuses and stock options for the executive suite, and shrinking paychecks for people on the line—all these things directly affect you and your future security. Here's why.
Just about every one of AFSCME's 1.3 million members has money in one pension plan or another. These, together with other worker pension plans, now hold more stock in American corporations than anybody or anything else.
Pension funds—and public-sector funds are the fastest growing segment —now hold stock worth nearly $5 trillion.
A share of stock is a share of ownership. Pension funds today own very close to half of all corporations, and the bigger the corporation, the bigger the share that pension funds hold.
As corporate owners we have to start paying closer attention to how big shots are using our money. We have to begin setting some new standards, and that's not going to be easy. In theory, shareholders own the companies and should be able to call the shots. In fact, most often management ignores what shareholders have to say.
What's happening at Archer Daniels Midland (ADM) in Decatur, Ill., one of the world's biggest food companies, may not be totally typical, but it's not all that far off the mark. CEO Dwayne Andreas loaded ADM's Board of Directors with cronies and relatives who regularly thank him with millions in pay and perks.
ADM is now under a federal investigation for possible price fixing and other practices, and authorities say that there could be an indictment. If so, ADM stock is going to take a dive, and a pension fund that probably has your money in it is going to suffer accordingly.
So how do we start to clean things up and protect our retirement security? For openers, we have to wake up pension fund managers and push them to become aggressive advocates for corporate reform. In short, if we want to have responsible corporations, we have to be responsible owners.
A few public-pension funds are already trying to do this. They are demanding corporate accountability and good corporate citizenship. But most funds are doing nothing. And nothing is what is going to happen until the few activist funds become the many.
Pension funds—corporate owners—have to demand a voice in decisions critical to the welfare of the corporation and the community alike. A voice, for example, in executive compensation—no more platinum perks and bonuses for lousy performance. A voice in mass layoffs. A voice in plant closings that mean the death of a community. That's responsible ownership.
Look at it this way. Let's say you own a house, and you hired someone to make some repairs. But you find that the repairs were never made. In fact, the house is in even greater disrepair. The ceiling is leaking. The air conditioner is blowing hot air. And the lights keep flickering on and off. What do you do in a case like that?
Well, you sure don't give the contractor a raise and a bonus. But that's what we've been doing to corporate executives, and as the owners, we have to start repairing our house.
The nation and every working family in it, including every member of AFSCME, have a right to expect good corporate citizenship. I assure you that your union is working to make that come about.
If you serve as a Trustee or in any other capacity on a public pension fund, please send a postcard or fax your name, title, local and address to:
Pension Project
AFSCME Research Department
1625 L Street NW
Washington DC 20036-5687
FAX: 202-223-3255
