US - Several of the largest US pension funds including CalPERS and the pension funds of New York City have signed a letter asking Securities and Exchange Commission chairman William Donaldson to reconsider the SEC's issuance of no-action letters on six proxy proposals submitted by the AFSCME Employees Pension Plan.
Last November, AFSCME submitted shareholder proposals to AOL Time Warner, Bank of New York, Eastman Kodak, Sears Roebuck, Citigroup and ExxonMobil. The advisory proposal sent to the first three companies asked their boards of directors to establish protocols to allow shareholders to nominate directors through the use of the companies’ own proxy statements and proxy cards.
Currently, shareholders may not nominate directors to be included on the three companies proxy materials. A similar, but binding, proposal was sent to the latter three companies; if passed, it would amend those companies' bylaws.
The SEC has jurisdiction over proxy filings and shareholder proposal rules. The release of the non-binding advisory letters - known as ‘no action’ letters - is the first step in a shareholder proposal review process and informs corporations that the SEC will not pursue any enforcement action if a shareholder proposal is omitted from the corporation's proxy materials.
“We consider such inaction to be little more than a pocket veto by the Commission,” reads the letter.
“Moreover, such inaction will raise further questions about the Commission's commitment to expanding the rights of shareholders and facilitating tools they can use to protect their investments,” said NYC comptroller William Thompson.
The letter was signed by NYC’s Thompson on behalf of the City's five pension funds, and by Sean Harrigan, president of the board of administration from the California Public Employees Retirement System; Denise Nappier, Connecticut State treasurer; Jay Rising, Michigan State treasurer, and Keith Johnson, general counsel from the State of Wisconsin Investment Board. The leaders stressed the importance of maintaining a united front on issues concerning shareholder rights and corporate governance. The five signatories represent pension funds holding several hundred billion dollars.
“This is an issue that is of critical importance to shareholders and to the integrity of our system of corporate governance,” the letter reads.
“We consider the handling of the plan's proxy access proposal to be a real test of your leadership in the shareholder rights arena,” added Thompson.
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