Press Release
Socially
Responsible Investors, Labor, Pension Funds Agree: Bail-Out Recipients
Facing Say-on-Pay Resolutions Should Adopt Policy
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CONTACT:
Patrick Mitchell, (703) 276-3266 or pmitchell@hastingsgroup.com.
WASHINGTON,
D.C.
|
February 24, 2009
|
Events of Recent Days, Weeks Pushing Executive-Compensation Reform to
Critical Mass In 2009; American Express, Intel, Hewlett-Packard and
Occidental Latest to Get On Say-on-Pay Bandwagon.
The concerted effort by socially responsible investors, labor unions,
pension funds, religious investors and others for “say-on-pay” executive
compensation advisory votes at major U.S. corporations is now coming to a
head during 2009 much more quickly than originally expected. Of the
record 100 companies facing say-on-pay shareholders resolutions this year,
five have recently agreed to schedule advisory votes.
The list of 100 companies
(http://www.socialinvest.org/SOP2009.htm)
includes 14 companies that will be required under the new federal stimulus
bill to put such binding votes in place within one year, according to the
Social Investment Forum. In the last 10 days, two of the 14 banking
bail-out recipients – American Express (AXP) and Huntington Bancshares (HBAN)
– already have come to an agreement with say-on-pay resolution sponsor
Calvert Group to proceed on an advisory vote. On February 20th, American
Express committed to implement the executive-compensation vote as required
by President Barack Obama’s signing of the American Recovery and
Reinvestment Act into law on February 17, 2009. Huntington Bancshares did
the same on February 23, 2009. The early action by American Express and
Huntington Bancshares is expected to put pressure on other bailout fund
recipients – and, more broadly, leading non-banking companies – to embrace
the say-on-pay advisory vote as standard corporate practice.
In fact, the intent of the stimulus bill amendments successfully
introduced by Senator Dodd is to require a say-on-pay vote in the 2009
proxy season for those companies that have not yet submitted their proxy
materials to the Securities and Exchange Commission (SEC). Investors
intend to press the balance of the 14 companies -- South Financial Group
(TSFG), CoBiz Financial (COBZ), State Street (STT), Wells Fargo & Company
(WFC), Capital One Financial (COF), Zions Bancorporation (ZION), Bank of
America (BAC), Goldman Sachs (GS), Bank of New York (BK), Morgan Stanley
(MS), Fifth Third Bancorp (FITB), American International Group (AIG) – to
also agree to pledge to implement such votes as soon as possible. Any
such early movement would be considered a new wave of support for
say-on-pay resolutions by the resolution filers, who then might withdraw
the pending resolutions.
Other major progress in recent months on say-on-pay resolutions includes:
* In addition to American Express and Huntington Bancshares, new
agreements have been announced in the last few weeks by Occidental
Petroleum (OXY), Intel (INTC) and Hewlett-Packard (HPQ) to hold say-on-pay
votes. These corporations made the move in recent weeks after extensive
discussions with proponents who had filed say-on-pay resolutions. The
latest companies agreeing to say-on-pay follow the past decisions by
Verizon (VZ), Aflac (AFL), Blockbuster (BBI), Motorola (MOT), MBIA (MBI)
and Ingersoll Rand (IR) to do the same. To date, 18 companies have pledged
to or are implementing say-on-pay votes.
* On January 24, 2009, new SEC Chair Mary Schapiro’s endorsed say-on-pay
votes as she responded to questions from her confirmation hearing.
“Executive compensation has been a concern of mine for some time now. I
believe that it’s an appropriate measure to give shareholders an advisory
vote on these matters,” she stated.
* The record 100 say-on-pay resolutions filed for the 2009 proxy season
follows an active 2008 engagement season, where resolutions went to a vote
at over 80 companies and averaged 42 percent support, including 11
companies which received majority votes. In 2007, similar resolutions were
filed at more than 50 companies which also averaged about 42 percent
support including eight companies where the proposal received over 50
percent of the vote.
* The ARRA stimulus bill signed into law by President Obama earlier this
month will require say-on-pay votes at a total of 400 companies receiving
banking bailout funds. The stimulus bill provision is widely expected to
boost the prospects for 2009 passage of a say-on-pay vote bill that
already received strong support in the U.S. House of Representatives in
2008.
Social Investment Forum CEO Lisa Woll said: “The say-on-pay movement
shows what concerned investors can do when they put their financial clout
to work together. This unique investor network started in 2007 - comprised
of many socially responsible investors, public pension funds, labor funds,
asset managers, foundations and religious investors. It is organized by
the American Federation of State, County and Municipal Employees (AFSCME)
Employees Pension Plan and Walden Asset Management, a division of Boston
Trust & Investment Management Company.”
Richard Ferlauto, director of corporate governance and pension investment
at the American Federation of State, County, and Municipal Employees (AFSCME),
said the legislation is “another step in creating a market-wide
standard for ‘say on pay.’" He added: “We expect to be working
with regulators to design specifics for how ‘say on pay’ will be applied.”
Tim Smith, senior vice president, Environment, Social and Governance
Group, Walden Asset Management, said: “We are clearly moving toward
say-on-pay votes for all companies. We believe that with SEC Chairwoman
Schapiro’s and Commissioner Walter’s support, the strong 2-to-1 vote in
the House in the last Congress, the movement by company leaders and the
intense public sentiment on executive pay, it is virtually inevitable that
companies will soon be required to implement this policy. The smart thing
for corporations to do now is to step forward and voluntarily adopt the
say-on-pay advisory vote.”
“TIAA-CREF has always felt that executive compensation is one of the most
important oversight responsibilities of boards,”
said Stephen L. Brown, director, Corporate Governance, TIAA-CREF. “As
long-term investors, we believe that executive compensation policies
should promote and reward the creation of long-term shareholder value.”
Say-on-pay vote proponents are seeking a management-sponsored non-binding
advisory vote on executive compensation presented in the annual proxy
statement. The resolutions have been submitted at a wide range of
companies, including but not limited to those where pay has been excessive
or where there has been a perceived misalignment between pay and
performance over the past three to five years.
2009 filings at major companies include Apple, Bank of New York Mellon,
American Express, Coca-Cola, AIG, Capital One, Hewlett-Packard, Intel,
Wells Fargo, AT&T, Exxon Mobil, Raytheon, General Electric, Goldman Sachs,
Home Depot, IBM, Merck, UnitedHealth, Time Warner, Citigroup,
ConocoPhillips, CVS Caremark, Morgan Stanley, Valero Energy, and YUM!
Brands, Occidental Petroleum, Wal-Mart, Rite-Aid, KB Homes, Ryland Group
and Charming Shoppes.
Aflac was the first U.S. company to give shareholders a say on pay vote in
2008, and it was overwhelmingly supported by over 95 percent of
shareholders. Also in 2008, RiskMetrics, H&R Block (HRB), Zale (ZLC) and
Littlefield (LTFD) joined Aflac as among the first companies adopting the
advisory vote. At RiskMetrics, 94 percent of shareholders supported its
compensation approach. At H&R Block, 99 percent of shareholders voted for
the proposal, as did nearly 97 percent at Littlefield.
Proponents of the 2009 say-on-pay resolutions cover the gamut of the world
of concerned investors:
Labor
AFL-CIO Reserve Fund
AFSCME Employees Pension Plan
Amalgamated Bank LongView Funds
Communications Workers of America
The Firefighters’ Pension System of the City of Kansas City
Service Employees International Union Master Trust
Utility Workers Union of America
Asset Management Companies
Boston Common Asset Management
Calvert Group
F & C Asset Management
First Affirmative Financial Network
Friends Fiduciary Corporation
Newground Social Investment
NorthStar Asset Management
Rockefeller and Co.
TIAA-CREF
Trillium Asset Management
Walden Asset Management
Public Pension Funds
California Public Employees Retirement
System (CalPERS)
Connecticut Retirement Plans and Trust Funds (CRPTF)
New York City Pension Funds
Foundations
Christopher Reynolds Foundation
Nathan Cummings Foundation
Funding Exchange
Edward W. Hazen Foundation
Max and Anna Levinson Foundation
Needmor Fund
Tides Foundation
Religious
Adrian Dominican Sisters
Benedictine Sisters of Fort Smith –
St. Scholastica Monastery
Benedictine Sisters of Virginia
Benedictine Sisters of Perpetual Adoration
Catholic Health East
Christus Health
Church of the Brethren Benefit Trust
Community Church of New York
Congregation of Benedictine Sisters, Boerne, Texas
Congregation of Divine Province – San Antonio, TX
Congregation of the Sisters of Charity of the Incarnate Word – Houston
Congregation of the Sisters of Charity of the Incarnate Word – San Antonio
Congregation of the Sisters of St. Joseph, Boston, MA
Congregation of the Sisters of Holy Cross, Indiana
Congregation of the Passion – East
Dominican Sisters of Hope
Domestic & Foreign Missionary Society of the Episcopal Church
Episcopal Church Executive Council
Glenmary Home Missioners
Marianist Province of the United States
Mercy Investment Program
Missionary Oblates of Mary Immaculate
Monasterio Pan de Vida
Presbyterian Church (USA)
Providence Trust
Province of St. Joseph of the Capuchin Order (Midwest Capuchins)
Rochester Minnesota Franciscans
Sisters of Mercy Community of Detroit
Sisters of the Holy Names of Jesus and Mary, US Ontario Province
Sisters of St. Agnes
Sisters of Charity of St. Vincent de Paul-NY
Sisters of St. Dominic of Caldwell, NJ
Sisters of St. Francis of Philadelphia
Sisters of St. Joseph of Carondelet, MO
Sisters of St. Joseph, Nazareth
Sisters of St. Joseph of Boston
Sisters of Notre Dame of St. Louis
Sisters of Notre Dame – Toledo
Sisters of Notre Dame de Namur, Boston, MA
Sisters of the Holy Names of Jesus & Mary
Sisters of St. Francis of Philadelphia
Unitarian Universalist Association
United Church of Christ Pension Boards
United Methodist Church – General Board of Pension & Health Benefits
Ursuline Sisters of Tildonk, US Province
Retiree Organizations
Association of Ameritech & SBC Retirees
Association of U.S. West Retires
Non-Profit Institutional Investors
Manhattan Country School
Oneida Tribe of Indians of Wisconsin
ABOUT SOCIAL INVESTMENT FORUM
The Social Investment Forum (http://www.socialinvest.org) is the national
membership association dedicated to advancing the concept, practice, and
growth of socially and environmentally responsible investing. SIF's nearly
500 members include financial planners, banks, mutual fund companies,
research companies, foundations, and community investing institutions.
Contact information above
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Investor Network List of Companies
AMONG THE COMPANIES RECEIVING “SAY ON PAY”
SHAREHOLDER PROPOSALS IN 2009:
Abbott Laboratories (ABT)
Alaska Air (ALK)
Allegheny Energy (AYE)
Allstate (ALL)
Altria Group (MO)
American Express (AXP) *
American International Group (AIG)
Ameriprise Financial, Inc.
Apple Computer (APL)
AT&T (T)
Bank of America (BAC)
Bank of New York Mellon (BK)
Boeing (BA)
Bristol Myers Squibb (BMY
Burlington Northern Santa Fe (BNI)
Capital One Financial (COF)
CenturyTel (CTL)
Charming Shoppes
Chevron
Citigroup (C)
Citizens Communications (CZN) (now Frontier
Communications (FTR)
Coca-Cola Company (KO)
Colgate-Palmolive (CL)
Comcast (CMCSA)
ConocoPhillips (COP)
CVS / Caremark (CVS)
Dominion Resources (D)
Dupont (E.I. du Pont de Nemours) (DD)
Edison International (EIX)
Electronic Data Systems (EDS)
Eli Lilly (LLY)
Embarq (EQ)
EMC (EMC)
Entergy (ETR)
Exxon Mobil (XOM)
Ford (F)
Freeport-McMoRan Cooper & Gold (FCX)
General Electric (GE)
General Motors (GM)
Goldman Sachs (GS)
Hain Celestial Group (HAIN)
Hewlett-Packard (HPQ) *
Honeywell (HON)
Huntington Bancshares (HBAN)
Intel (INTC) *
International Business Machines (IBM)
Johnson & Johnson (JNJ)
Jones Apparel Group (JNY)
Lexmark International (LXK)
Lockheed Martin (LMT)
Marathon Oil (MRO)
McDonald’s (MCD)
Merck (MRK)
Morgan Stanley (MS)
Northrop Grumman (NOC)
Occidental Petroleum (OXY) *
Oracle
PepsiCo (PEP)
Pfizer (PFE)
PG&E (PCG)
Procter & Gamble
Prudential (PRU)
Pulte Homes (PHM)
Qwest (Q)
Raytheon (RTN)
Rite Aid (RAD)
Schering-Plough (SGP)
Schlumberger Limited (SLB)
Sempra Energy (SRE)
South Financial Group (TSFG)
State Street (STT)
Target (TGT)
Time Warner (TWX)
Tupperware Brands (TUP)
UnitedHealth (UNH)
Valero Energy (VLO)
Wachovia (WB)
Waddell & Reed Financial (WDR)
Wal-Mart Stores (WMT)
Walt Disney Company (DIS)
Wells Fargo & Company (WFC)
XTO
Yahoo (YHOO)
YUM! Brands (YUM)
Zions Bancorporation (ZION)
* - resolution withdrawn in light of
agreement