2013 MOST PRODUCTIVE YEAR ON RECORD FOR NYC PENSION FUNDS’ SHAREHOLDER ACTIVISM

  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.

Kingsbridge Armory KNIC Proposal at the Finish Line

  The City Council’s Zoning and Franchises Committee heard testimony from Bronx Borough President Ruben Diaz Jr. today as to why the City Council should vote in favor of the Kingsbridge National Ice Center peoposal for the Kingsbridge Armory. Below is BP Diaz's testimony.

  Good morning, Chairperson Weprin and the members of the City Council’s Zoning and Franchises Subcommittee, I am Ruben Diaz Jr., Borough President of the Bronx. 

I am here today to offer my enthusiastic support for the Kingsbridge National Ice Center and the four ULURP applications, which when approved will facilitate construction of one of the most outstanding ice sports arenas in the world.  This project transforms an iconic yet vacant, landmark into a destination for thousands, and by so doing it will also revitalize an entire community and offer permanent living wage employment for Bronx residents. 

The key to the anticipated success of this project is that it represents the culmination of a comprehensive participatory process that included all those who have an interest in the future of the Kingsbridge Armory.  These parties include representatives of the surrounding community, the borough’s elected officials, the Mayor’s Office and the city’s Economic Development Corporation, as well as those associated with the Kingsbridge National Ice Center’s development team.   

I am pleased to highlight some supporting figures that substantiate my endorsement, such as an approximate $300 million dollar investment to restore and preserve an historic Bronx landmark, which entails the reconstruction of the entire drill hall floor;

The project will also pay its employees a living wage of $11.75 per hour without benefits, $10.00 per hour with benefits; which represents a great victory for this site, given where we started from. The redevelopment of the Kingsbridge Armory will create 170 full time equivalent permanent positions at the Armory, as well as 885 construction related jobs on site. In addition, the project is expected to create an additional 2,700 off-site jobs as a consequence of its development.

KNIC will generate 580,000 annual visits to the Armory, which in turn will generate new economic activity approximating $42 million annually.

My enthusiasm for this proposal and what it will offer the Bronx and our city is only surpassed by my support for the Community Benefits Agreement that has been achieved.  This agreement is historic, as it sets to paper benefits I believe establish a gold standard for all future projects that rely on the disposition and use of public sector assets.  Key components of this agreement include assurances that 51 percent of those working at the Armory will be Bronx residents, and that employers shall award 25 percent of the funds spent on employees performing construction, to Minority and Women/Owned Bronx businesses.

Beyond these stipulations, the developer has also pledged to provide an initial monetary contribution of $8 million, to be used towards developing and building out the 50,000 square feet of community facility space for an annual rent of $1.

In addition, $1 million dollars of ice time will be provided annually to local schools and community organizations. KNIC will also provide $250,000 for capital improvements of properties and local businesses,

I am also especially proud to note that this entire project will be environmentally sound, as a LEED Silver designation is being sought.

My administration is very proud of what the entire proposal represents.  It is a project that broadens the profile of the Bronx as a place where new ideas can become reality, where new approaches can bring about better results. 

So many people have worked so hard to bring this project to fruition. From elected officials, to the community board, to local organizations, to our non-profits, to the developer and everyone in between—what we are discussing today is the culmination of years, if not decades, of advocacy and effort to revitalize this magnificent structure. A vote in opposition to this project would be reprehensible.

In closing, I recommend approval of these applications and by so doing endorse the redevelopment of the Kingsbridge Armory by the Kingsbridge National Ice Center.

  

Bill Bratton to Be Next Police Commissioner

  Mayor Elect Bill deBlasio has chosen Bill Bratton to be the next New York City Police Commissioner. Bratton is the former NYC Police Commissioner who was appointed by Mayor Rudy Giuliani in 1994 when Giuliani won the mayoral election in 1993. Bratton introduced the CompStat system of tracking crimes, which proved successful in reducing crime in New York City which is still being used by the police department today.

  Bratton resigned as police commissioner in 1996 under a cloud of a book deal. He became police commissioner of Los Angles in 2002, and his latest employment was as a consultant for the city of Oakland in early 2013.

Borough's Official Hanukkah Celebration

  Tuesday Dec. 2rd. Bronx Borough President Ruben Diaz Jr. along with Dr. Ruth K. Westheimer, Rabbi Israel Greenberg, Rabbi Michael S, Miller, Assemblyman Jeffrey Dinowitz, Assemblyman Luis Sepulveda, Councilman Elect Andrew Cohen, and many others celebrated the official Bronx Chanukah Menorah lighting. 

  Dr. Ruth (as she is known) said that she was 85 years old, and that she brought her daughter who still lives in the Bronx with her for this Chanukah Menorah lighting. Students from the Kinnert Day School sang the traditional national anthem, and then Hatikvah the national anthem of Israel. After a few short speeches Rabbi Greenberg, the elected officials, and Dr Ruth went over to light the Bronx Menorah which became a Bronx tradition under BP Diaz after he took office in 2009. 

 

Left - Dr Ruth at age 85 speaks next to the podium so everyone would be able to see her. 

Right -  Students from the Kinnert Day School perform.

 

Left - Elected official line the first row, with several judges sitting in the second row.

Right - Rabbi Greenberg tells the story of Chanukah.

Left - BP Diaz lights one of the Chanukah candles.

Right - Councilman Elect Cohen lights another Chanukah candle.

 

Left - Parkchester Assemblyman Luis Sepulveda lights a Chanukah candle.

Right - After all the candles are lit, BP Diaz dances with Dr. Ruth as Rabbi Greenberg sings a Chanukah song.

COMPTROLLER SEEKS COURT ORDER FOR ACCESS TO DEPARTMENT OF FINANCE TAX RECORDS

  The Office of the City Comptroller has filed a lawsuit, asking the New York State Supreme Court to issue an order enforcing the Comptroller’s rights under the City Charter to access the Department of Finance tax records necessary to audit Finance’s collection of the General Corporation Tax (GCT).

The purpose of this audit is to determine the security and reliability, including the accuracy and completeness, of the assessment and collection of the GCT by Finance. Like all audits, the GCT audit is being done to safeguard the interests of New York City and its taxpayers.

GCT is a tax paid by domestic and foreign corporations that conduct business activities, utilize capital, own or lease property, or maintain an office in New York City. In addition, the GCT makes available many exemptions, deductions, and credits.  It is estimated that the GCT for this year could be as high as $3 billion.

“It is our duty as the City’s fiscal watchdog to monitor this enormous tax collection enterprise and verify that it is fair to all and that the interests of all City taxpayers are being protected,” said City Comptroller John Liu. “Finance is asking us to take its word that the collection of these funds is being properly handled. We don’t do that for any other agency and we will not do it for the Department of Finance.

“For decades Finance has been hiding behind an inaccurate interpretation of law to deny the City Comptroller’s Office the information it needs to ensure that corporations doing business within the five boroughs of New York City are paying their fair share.”

Our office has asked the Court for an order granting it access to records from Finance’s “FAIRTAX” computer system, which contains business tax return information and other vital data relating to how Finance processed the GCT returns.  Finance has denied us those records, citing tax-secrecy provisions, even though the City Charter states that the Comptroller is “entitled to obtain access to agency records required by law to be kept confidential.” Finance relied on a 1991 Opinion of the Corporation Counsel, which the Corporation Counsel reaffirmed in response to our October 2013 subpoena for the GCT records.   

The Comptroller’s Office routinely receives confidential information from City agencies when performing audits. The court order we are seeking would enable us to audit the collection of the GCT and other City taxes that account for close to seven billion dollars.

“After more than 20 years, we are asking the court to resolve this issue once and for all,” said Comptroller Liu.

Background:

“Section 93(c) of the NYC Charter provides, in relevant part (highlighting added):

The comptroller shall have power to audit all agencies, as defined in subdivision two of section eleven hundred fifty, and all agencies, the majority of whose members are appointed by city officials.  The comptroller shall be entitled to obtain access to agency records required by law to be kept confidential, other than records which are protected by the privileges for attorney-client communications, attorney work products, or material prepared for litigation, upon a representation by the comptroller that necessary and appropriate steps will be taken to protect the confidentiality of such records. 

In addition to the power to audit agencies under § 93(c), the Comptroller has:

the power to audit and investigate all matters relating to or affecting the finances of the city . . . and take the testimony under oath of such persons as the comptroller may deem necessary.”

 

N.Y.C. Charter § 93(b). The power to take testimony under § 93(b) includes the power to subpoena documents.

WHAT YOU SHOULD KNOW

By Senator Rev. Rubén Díaz
32nd Senatorial District, Bronx County, New York 

 
The Magnificent Seven Members of the Moreland Commission

  Late Monday afternoon, after most people had left work for the day, the Moreland Commission to Investigate Public Corruption released its preliminary report. The Moreland Commission, as it is commonly called, was convened by Governor Andrew Cuomo in July and included significant involvement from members of his staff.

As expected, the report painted a very bleak picture of New York State politics. According to Thomas Kaplan of the New York Times: “While providing limited details, the report described ‘a pay-to-play political culture driven by large checks,’ in which wealthy interests exchanged campaign contributions for legislation; candidates spent campaign money on personal items like clothing and cigars; and the Board of Elections consistently failed to enforce election laws. The report suggested that campaign finance laws were so lax that fund-raising can amount to ‘legalized bribery’.”

As was also expected, the Moreland Commission presented recommendations to clean up New York State’s political mess, including the public financing of campaigns similar to the system that is already in place in New York City and implementing limits on campaign contributions.
Ladies and gentlemen, you should know the report did not have the unanimous consent of all the members of the Commission. There were seven dissenters and I stand with these magnificent seven members of the Moreland Commission. I stand with these magnificent seven members of the Moreland Commission in their statement that public funds should not be used for political campaigns. Why should public funds be used for my political campaign when just the other day the New York Daily News described the Bronx as “the hungriest borough?” Why should public money be used to finance political campaigns when our homeless shelters are overflowing and affordable housing is so scarce? How can any politician in good conscience accept public money for his or her campaign when so many of their constituents continue to struggle to support their families?
You should also know that the majority of politicians who have been indicted, found guilty and who are presently serving or waiting to serve prison sentences, are not in prison as a result of campaign finance and election law violations. They are in prison or have been found guilty for other unrelated crimes. The simple reality is that had the Moreland Commission’s recommendations already been in place, the recommendations would not have prevented these politicians from committing the types of crimes for which they were found guilty and subsequently sent to prison.
My dear reader, don’t get me wrong, the current system needs to be fixed and loopholes exist that you could drive a Sherman Tank through. Take for example Governor Cuomo’s birthday fundraiser bash he held at the Roseland Ballroom in New York City on Tuesday night. The top ticket came with a price tag of $50,000. How can he honestly look at any politician with a straight face, especially on the heels of his Moreland Commission’s report, and call for campaign finance reform while he blatantly increases his already-bloated war chest? Shouldn’t the Governor be the role model for campaign finance reform? Shouldn’t the Governor eliminate the influence of big money donors who have business before the State? Shouldn’t the Moreland  Commission be looking into the Governor’s campaign contributions as well as the Legislature’s?
You should know that just because the Governor’s big money fundraiser is not technically illegal, it doesn’t mean that it is morally and ethically justifiable. As I have written before in this column, “In ancient Rome there was a saying that says Caesar’s wife should not only be pure, but have the appearance of purity.”  
That is why I agree with the Magnificent Seven Members of the Moreland Commission.  And I hope that all my colleagues in the Senate do the same.
I am Senator Rev. Rubén Díaz and this is what you should know.

 

Metro North Derailment Update

  Work this afternoon to get all of the Metro North Railroad cars up righted and removed from the derailment site went smoothly as the lead car that almost wound up in the Hudson River has been placed back on Metro North Tracks. Just the first three cars remained as of this afternoon, and all three are expected to be taken away by tomorrow. All that is left to do is clean up the debris from the derailment and fix the track that was damaged. 

  Late this afternoon it was said that the black box recorder in the derailed Metro North train showed that the train was going 82 MPH as it entered the sharp curve north of the Spuyten Duyvil station. The top speed limit for the track is 70 MPH and goes down to 30 MPH at the sharp curve. It was also said that the National Transportation Safety Board has not spoken to the engineer yet, but was looking into his cell phone data to see if he might have been distracted before coming to the sharp curve. Service should now be back to normal by the end of the week or early next week.

Left - Cranes dig the first car from the banks of the Hudson River.

Right - This car is being placed back on the tracks.

 

Left - The first car is now back on the tracks.

Right - Another car that had been placed back on the track is awaiting to be taken away. That is the cut off to the Amtrak Bridge as both Amtrack and Metro North share the Hudson Line tracks above where the train derailment occurred.

Official Chanukah Menorah Lighting

   Tonight was the official Riverdale Chanukah Menorah lighting. State Senator Jeff Klein joined Rabbi Levi Shemtov and both went up in the Con Edison truck bucket to light the fifth light of the Riverdale Menorah. This was the official lighting and over 100 people came out to watch, dance, have delicious donuts and potato latkas , and a good time. 

   As you will see in the photos below Senator Klein and Rabbi Shemtov put on safety harnesses and went up in the trucks bucket up to the top of the giant menorah (the largest in the Bronx) to light the Chanukah lights. 

Left - The Chanukah party is in full swing.

Right - Rabbi Shemtov explains to Senator Klein just what he has to do in lighting the giant menorah.

Left - The pair put on their safety harnesses.

Right - The bucket starts to go up to the top of the giant menorah.

Left -   The center light is lit first.
Right - The fifth light is next for the fifth night.

Left - Rabbi Shemtov guides the bucket operator so the other lights can be lit.

Right - The other lights are lit one by one.

Left - Once all the days lights are lit the bucket returns to ground level.

Right - Now that all of the days lights are lit that partying begins. There are three more nights of Chanukah left to enjoy and to light the lights of the eight nights of Chanukah.