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Union Asks 150 Funds to Support Corporate Reforms

November 30, 2002|Laura Smitherman | Bloomberg News

WASHINGTON — A government workers' union is asking 150 pension funds to support its corporate governance proposals, including one each at Citigroup Inc., Exxon Mobil Corp. and Sears, Roebuck & Co. to let shareholders list their choices for directors on annual company-issued proxy ballots.

The American Federation of State, County and Municipal Employees wants the public employee pension funds, which together manage more than $1 trillion in assets, to vote their shares for the union's proposals at 2003 annual meetings at 22 U.S. companies.

The effort by AFSCME, which represents about 1.3 million government workers, coincides with similar moves by other investors and groups, such as the treasurers of state governments, as they seek greater corporate accountability after financial scandals and executive abuses at companies such as Enron Corp. and Tyco International Ltd.

"The fundamental problem with the crisis in the markets and the lack of confidence in the markets is that shareholders don't have the appropriate oversight, and their voice is continually not heard by corporate boards," said Richard Ferlauto, director of pension investment policy at AFSCME.

The union also is asking companies to treat stock options as an official expense on income statements.

The proxy-access proposals at Citigroup, Exxon Mobil and Sears would require that the companies change their bylaws. The other AFSCME proposals -- including requests that Tyco and Ingersoll-Rand Co. move their official headquarters back to the United States from tax-haven Bermuda -- aren't binding because they merely urge that certain action be taken by corporate managers.

Officials at Citigroup and Exxon didn't return phone calls for comment.

Sears spokeswoman Jan Drummond said the company is reviewing the proposal.

Under current rules, dissident candidates for board seats must send their own proxies to shareholders, a strategy that may cost tens of thousands of dollars and has slim prospects for success.

The AFL-CIO labor federation has said it plans to ask the Securities and Exchange Commission for a rule change that would force companies to print the names of dissident candidates on the proxies they send to shareholders.

The pension funds being petitioned by AFSCME include the California Public Employees' Retirement System, the largest U.S. public pension fund, and the New York City Employees' Retirement System.

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