AFL-CIO trumpets shareholder power Sweeney urges members to use tactic to fight high executive pay, downsizing

April 14, 1996|By BOSTON GLOBE

Speaking recently before the Council of Institutional Investors, AFL-CIO President John J. Sweeney urged members to use their power as shareholders to oppose excessive downsizing and skyrocketing executive pay.

"We must challenge the two most salient trends in corporate life today," said Mr. Sweeney. "One is destructive downsizing. The other is the widening gap between the pay of a handful of top executives in the companies we own and everyone else in American society."

Mr. Sweeney was warmly applauded by the group, a coalition of public-employee, union and corporate pension fund owners that collectively control $800 billion in assets.

Shareholder activism seems to be on labor's agenda more and more these days: Unions are assuming a higher profile at annual meetings and using shareholder resolutions to weigh in on everything from corporate governance and executive compensation to labor rights abroad.

"Essentially, labor is saying, 'Unions are not going to be confined to the picket line,' " said Harley Shaiken, a labor relations professor at the University of California at Berkeley.

In 1994, slightly more than 70 union-related resolutions were filed with the Securities and Exchange Commission in the hope of garnering shareholders' votes, more than twice the number filed in 1993. By 1995, there were 106. So far this year, 95 have been filed, according to the Investors Responsibility Research Center, a nonprofit group in Washington.

"There is definitely a more aggressive edge to what unions are doing, and there is also a more aggressive edge to businesses that are against what they are doing and want to keep them out of proxy statements," said Kenneth Bertsch, director of the social issues program at the center.

Indeed, many corporate managements argue that union-driven shareholder activism is simply an improper way to extend contract disputes or unionization efforts into a wider forum.

"All of these proposals are questionable tactics at best," said James R. Allen, vice president of public relations at Consolidated Freightways Inc. in Palo Alto, Calif. "It's harassment. They are attempting to do what they can't do at the bargaining table by using the proxy to achieve their own aims."

Religious organizations and public pension funds such as the massive California Public Employees Retirement System have long been at the forefront of shareholder activism. More recently, union funds have added their voices to the chorus.

Some of the activity stems from changes in SEC rules allowing shareholders greater freedom to communicate among themselves and permitting them to solicit votes in proxy battles.

Earlier, shareholders who wished to solicit votes were required to file materials with the SEC, a process many regarded as too time-consuming.

Still, observers believe Mr. Sweeney's call to arms may signal even more activity this year as labor makes an effort to increase its ranks and boost its power.

In an interview, Mr. Sweeney said the AFL-CIO is developing a data bank to help its 83 member unions' pension funds monitor the actions of corporate boards, review corporate policies and prepare shareholder resolutions.

"We feel we have got to be more involved in the investment of our members' pension funds," he said. "Economic growth cannot be sustained without rewarding working people's efforts. But lately, a lot of workers have been receiving pink slips as their reward."

Typically, union-backed shareholder resolutions are filed by the trustees of union retirement funds or by current and retired members who own stock.

Pub Date: 4/14/96

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