City Comptroller John C. Liu today announced that the $144 billion NYC Pension Funds achieved new levels of success in 2013 toward improving the environmental, social, and governance practices of the corporations in their investment portfolio. The details of the 2013 proxy season are available in the NYC Pension Funds’ annual report. The report also includes summary information on the Funds’ proxy voting.
“We have a duty to City workers and retirees
to ensure
our portfolio companies focus on creating sustainable shareowner value,”
Comptroller Liu said.
“Over
the past year we helped strengthen employees’ workplace rights, shed
light on employee diversity, and negotiated policies to help claw back
pay from misbehaving
executives. The NYC Funds have a proud tradition of active ownership
to protect and create long-term shareowner value, and we have worked to
intensify these efforts over the past four years.
Shareowner Proposals
The
Comptroller’s Office negotiated agreements on 27 of the 55 shareholder
proposals it submitted to corporations — a record rate of adoption for
its requests. Among
the highlights of the agreements Comptroller Liu’s office achieved on
behalf of the Funds:
•
Capital One
(NYSE: COF),
Citigroup (NYSE: C), Encore Capital (NASDAQ: ECPG), and Wells Fargo
(NYSE: WFC) — and three pharmaceutical firms — Boston Scientific
(NYSE: BSX), Johnson & Johnson (NYSE: JNJ), and Merck (NYSE: MRK)
— enacted policies empowering the board to claw back pay from senior
executives responsible for improper conduct or excessive risk taking.
•
Chesapeake Energy
(NYSE: CHK)
agreed to propose a bylaw amendment to grant shareowners access to
the corporate proxy to nominate directors as part of a major overhaul of
its board and governance. Since the Funds led a successful director
“vote no” campaign in 2012, the company has reconstituted
its board, named an independent chairman and hired a new CEO, and its
share price has outperformed its peers.
•
Health insurer
Wellpoint (NYSE: WLP) agreed to name an independent
chairman upon the April 2013 retirement of its existing chair, and to
maintain the position for at least two years.
•
EMC
(NYSE: EMC),
Gap (NYSE: GPS), NIKE (NYSE: NKE), Target (NYSE: TGT),
and Texas Instruments (NASDAQ: TXN) agreed to promote
greater transparency of their suppliers’ compliance with internationally
recognized standards on workplace safety and human and worker rights by
encouraging key suppliers to prepare sustainability
reports using Global Reporting Initiative (GRI) protocols.
•
AIG
(NYSE: AIG),
Bank of NY Mellon (NYSE: BK), and U.S. Bancorp (NYSE: USB)
agreed to disclose the breakdown of their workforce by race and gender for major job categories, including senior management.
•
Anadarko Petroleum
(NYSE: APC),
Domino’s Pizza (NYSE: DPZ), Philip Morris (NYSE: PM), and
Ralph Lauren (NYSE: RL) expanded their EEO policies to prohibit discrimination based on gender identity.
•
Lowe’s Companies
(NYSE: LOW)
and WellCare Health Plans (NYSE: WCG) agreed to disclose all direct and indirect political spending.
•
Avalon Bay
(NYSE: AVB),
Kimco Realty (NYSE: KIM), and SL Green Realty (NYSE: SLG) agreed
to prepare annual sustainability reports based on the GRI and
specifically addressing greenhouse-gas emissions, water conservation,
waste minimization and energy efficiency.
All three are residential REITs with significant property holdings in
New York City.
Director “Vote No” Inititiatives
Cablevision
(NYSE: CV)
The
Funds led a “vote no” campaign against five Cablevision directors,
three of whom had failed to receive majority shareowner support in 2010
and 2012. In a letter
to Cablevision
shareowners and filed with the SEC, Comptroller Liu cited Cablevision’s
fundamental lack of board accountability, poor performance, excessive
executive pay, and pervasive conflicts of interest involving the Dolan
family, which controls 73 percent of the voting
power despite owning less than one quarter of the company. The five
directors were each opposed by at least 39 percent of votes cast,
including two directors who failed to receive majority support. The
board reseated all five directors.
Hewlett-Packard
(NYSE: HPQ)
The
Funds opposed two Hewlett-Packard directors who failed to protect
investors from a series of ill-advised acquisitions (Autonomy, EDS and
Palm)
and boardroom fiascos that destroyed tens of billions of dollars in
shareowner value. The Comptroller’s Office detailed the Funds’ concerns
with the directors
in a press release
that was also filed with the SEC. Shareowners subsequently cast 45
percent and 46 percent, respectively, against the directors’ election.
In a major victory for shareowners, both directors resigned two weeks
later.
Wal-Mart
(NYSE: WMT)
The
Funds opposed nine Wal-Mart directors due to the board’s poor oversight
of compliance, lack of independence and unresponsiveness to investor
concerns, as detailed in a Comptroller’s Office press release
filed with the SEC. Four of the directors — including the Chairman,
CEO, former CEO and audit committee chairman — received particularly
high opposition votes: excluding the Walton family, which controls
approximately 50 percent of the company’s shares, unaffiliated
shareowners cast about 21 percent to 30 percent of their votes against
their election. It was the second consecutive year the four directors
received strong opposition. Since last year’s no confidence vote, which
was driven by reports that executives attempted
to cover up alleged bribery in Mexico, Wal-Mart’s board has become less
independent, even as it has reportedly expanded its investigation into
possible bribery to additional countries.
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