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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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October 17, 2008 4:03 PM ET
New interpretive guidance released today by the Department of Labor certainly has triggered a lot of sound and fury from unions and corporate interests battling over how proxies should best be used. But the guidance may, ultimately, signify nothing—or at least, no change in current policy. The guidance states that pension funds subject to the Employee Retirement Income Security Act (Erisa) cannot promulgate or vote for proxy proposals that have no economic benefit for a fund’s retirees. Pension funds would need to keep “proper documentation” of proxy voting decisions and, in some cases, cost-benefit analyses. The guidance largely echoes existing law, and would not affect governance proposals on things like say-on-pay, majority voting or poison pills, all of which the agency said “are reasonably likely to affect the economic value of the plan.” Where the guidance would come into play is on social or political proposals. According to the guidance, “the mere fact that plans are shareholders in the corporations in which they invest does not itself provide a rationale for a fiduciary to spend plan assets to pursue, support or oppose such proposals.” The guidance is vague in its wording and has been interpreted differently by groups on both sides. The U.S. Chamber of Commerce, which last year asked the agency to address the issue, sees the guidance as a win. Glenn Spencer, executive director of the chamber’s workforce freedom initiative, which opposes card-check unionization tactics, said the guidance “slams the door shut” on expansive views of the proxy held by certain unions. Mr. Spencer noted that union pension assets have been shrinking in value in recent years, citing research by the Hudson Institute that found only 19% of union pension funds were fully funded in 2005. He argued that unions use political proposals to pressure companies to allow more workers to unionize, thereby boosting their pension assets. But Damon Silvers, general counsel at the AFL-CIO, said the Labor guidance does not hinder—and will not deter—the union from filing proposals such as the one last year requiring certain companies to back universal health care. “Will it change how we do things? Absolutely not,” he said. The AFL-CIO and several other unions that sponsor pension plans have proposed requiring companies to disclose political contributions, which the chamber has said offers little benefit. The Labor Department guidance said requiring corporate directors and executives to disclose personal political contributions would likely be forbidden, but it did not comment on proposals such as the AFL-CIO’s. Public pensions like the California Public Employees Retirement System and socially responsible investing funds like Walden Asset Management that are active in the proxy arena are not governed by Erisa and would not be subject to the guidance.
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