View Director Election Majority Vote Standard Proposal
View Classified Board Shareholder Proposal
View Expedite Disclosure of Vote Results to Proponents of Shareholder Proposals
View Majority Vote Protocol

New York City Comptroller William C. Thompson, Jr., on behalf of New York City Pension Funds, filed shareholder proposals with 20 companies urging that their Boards of Directors adopt corporate governance measures.

This proxy season, Thompson and the Funds have filed one or more of the following shareholder resolutions at each company: repeal of classified boards, director election majority vote standards, majority vote protocol, and vote disclosure results to the proponents of shareholder resolutions.

“The New York City Pension Funds remain steadfast in their long-held commitment to the advancement of needed corporate governance reforms,” Thompson said. “These proposals seek to give shareholders the voice they need in important corporate procedures.”

The proposals were filed on behalf of the New York City Employees’ Retirement System (NYCERS), New York City Teachers Retirement System (NYCTRS), New York City Police Pension Fund, New York City Fire Department Pension Fund, and New York City Board of Education Retirement System (BERS).

Two companies have already agreed to adopt corporate governance measures introduced by the Funds. Convergys Corporation of Cincinnati, OH has agreed to adopt the majority vote protocol, and King Pharmaceuticals of Bristol, TN has agreed to adopt the classified board measures. As a result, the Funds have since withdrawn these proposals.

“I applaud Convergys Corporation and King Pharmaceuticals for taking these steps towards improved corporate governance,” Thompson said. “I am also proud that our Funds are among leading institutional investors advancing reforms on these important issues. These reforms will enhance the long-term interests of the companies and their shareholders.”

Corporate governance shareholder resolutions  also were submitted to the following 18 companies: Affymetrix, Inc. of Santa Clara, CA; Avid Technology of Tewksbury, MA; Belo Corporation of Dallas, TX; Chico’s FAS, Inc. of Fort Meyers, FL; Consol Energy of Canonsburg, PA; Georgia Gulf Corporation of Atlanta, GA; HCC Insurance Holdings, Inc. of Houston, TX; Invacare Corporation of Elyria, OH; Lattice Semiconductor of Hillsboro, OR; Lear Corporation of Southfield, MI; Massey Energy of Richmond, VA; Neurocrine Biosciences, Inc. of San Diego, CA; Newport Corporation of Irvine, CA; Pacific Sunwear of Anaheim, CA; Superior Industries International, Inc. of Van Nuys, CA; and Spectrum Brands, Inc. of Atlanta, GA.

A company with a Classified Board groups directors into classes, typically three, with each class elected at successive annual meetings. The Pension Funds are opposed to the structure because it limits the ability of shareholders to evaluate and elect a company’s entire Board of Directors on an annual basis. As a result, the ability of shareholders to hold directors accountable is weakened.

“The election of directors by classes, minimizes accountability and precludes the full exercise of the rights of shareholders to approve or disapprove annually the performance of a director or directors,” Thompson said.

The Director Election Majority Vote Standard proposal requests that Boards of Directors eliminate the current plurality vote standard and “initiate the appropriate process to amend the Company's governance documents (certificate of incorporation or by-laws) to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of directors.”

“The election of directors is among the most important responsibility of shareowners,” Thompson said. “But in the current plurality system, shareholders’ opinions of Board of Director nominees have no real weight, and companies are free to ignore shareholder wishes. This proposal seeks to change that and give shareholders the voice they need in these important elections.”

Majority vote protocol and vote disclosure shareholder resolutions aim to rectify a company’s non-responsiveness to shareholder proposals. Majority vote protocol proposals have been part of the Comptroller’s efforts over the last five years to advance a corporate governance measure under which companies would establish and disclose to their shareholders a board process for addressing shareholder proposals that are supported by majority votes cast at their annual meetings.

“Investors must vigorously oppose the blatant disregard that many corporate Boards of Directors continue to show for shareholder proposals that win majority votes,” Thompson said. “The disenfranchisement of shareholders is further evidenced in the widespread failure of Boards of Directors to seriously consider and act on shareholder proposals that win majority votes.”

Vote disclosure proposals request that companies provide proponents of shareholder resolutions timely disclosure of the vote results on their proposals. The Pension Funds believe that in so doing, the companies provide an opportunity for good-faith dialogue between proponents of proposals and company representatives on issues of concern.

“By increasing the opportunity for engagement, companies can help reduce the number of shareholder proposals that are resubmitted annually, and establish positive, productive relationships with proponents of proposals,” Thompson said.

Collectively, the Pension Funds own more than 4.7 million shares of common stock in the 20 companies.

The resolutions can be viewed at www.comptroller.nyc.gov.

The New York City Pension Funds have been at the fore of shareholder activism in pressuring many of America’s largest companies to improve workplace conditions, protect the environment, promote human rights abroad, and adhere to accepted corporate governance standards.

Besides Thompson, the Pension Funds’ trustees are:

NYCERS: New York City Finance Commissioner Martha E. Stark (Chair); New York City Public Advocate Betsy Gotbaum; Borough Presidents Scott Stringer (Manhattan), Helen Marshall (Queens), Marty Markowitz (Brooklyn), Adolfo Carrion (Bronx), and James Molinaro (Staten Island); Lillian Roberts, Executive Director, District Council 37, AFSCME; Roger Toussaint, President Transport Workers Union Local 100; and, Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.

TRS: New York City Finance Commissioner Martha E. Stark (Chair); Deputy Chancellor Kathleen Grimm, New York City Department of Education; and, Sandra March, Melvyn Aaronson and Mona Romain, all of the United Federation of Teachers.

New York City Police Pension Fund: Mayor Michael Bloomberg; New York City Finance Commissioner Martha E. Stark; New York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch, Patrolmen’s Benevolent Association; Michael Palladino, Detectives Endowment Association; Edward D. Mullins, Sergeants Benevolent Association; Thomas Sullivan, Lieutenants Benevolent Association; and, Roy T. Richter, Captains Endowment Association.

New York City Fire Department Pension Fund: Mayor Michael Bloomberg; New York City Fire Commissioner Nicholas Scoppetta (Chair); New York City Finance Commissioner Martha E. Stark; Stephen Cassidy, President, James Slevin, Vice President, Robert Straub, Treasurer, and John Kelly, Brooklyn Representative and Chair, Uniformed Firefighters Association of Greater New York; John Dunne, Captains’ Rep.; John J. McDonnell , Chiefs’ Rep., and James J. McGowan, Lieutenants’ Rep., Uniformed Fire Officers Association; and, Joseph Gagliardi, Marine Engineers Association.

BERS: mayoral appointees Schools Chancellor Joel Klein, Alan Aviles, Philip Berry, David Chang, Tino Hernandez, Edison O. Jackson, Richard Menschel and Marita Regan; Patrick Sullivan (Manhattan), Wendy Gilgeous (Brooklyn), and Joan Correale (Staten Island); and employee members Joseph D'Amico of the IUOE Local 891 member and Milagros Rodriguez of District Council 37, Local 372.

# # #