The $146.5 billion New York State Common Retirement Fund, the $54 billion UAW Retiree Medical Benefits Trust and the $11.3 billion Illinois State Board of Investment joined with 14 other global institutional investors and organizations calling on Aetna and 19 other companies to disclose their political spending.
In a joint letter to Richard J. Harrington, chairman of the audit committee of Aetna's board of directors, the group of investors, which represents a combined $922 billion, “asks the committee to describe the policies, processes and controls it relies on to both evaluate the risks associated with political activity as well as to determine whether such risks are aligned with the best interests of the company and its shareholders.”
The letter, signed by officials of the institutions, noted “several recent academic studies (found) corporate expenditures on political activities may be negatively correlated with shareholder value.”
The investor group declined to identify the other companies it is targeting, said Eric Sumberg, spokesman of the Albany-based New York state pension fund.
The investor group, which wrote similar letters to the other companies, looks to their boards “to ensure that there are robust policies and procedures on this issue and that disclosure of all payments made related to political spending and lobbying are publicly available …” the letter said. “Without this information, investors cannot fully evaluate whether their dollars are being used effectively to advance value creation, or if capital is diverted to pursue activities that create undue risks for the company and its shareholders.”
Mr. Sumberg said the group isn't planning to introduce a shareholder proposal on the issue. “It's too early to tell,” he said.
Meredith Miller, chief corporate governance officer at the Ann Arbor, Mich.-based UAW trust, who is coordinating discussions with the companies, couldn't be reached.
Mr. Harrington and Aetna media relations couldn't be reached for comment.
The New York state fund has 1.4 million Aetna shares, valued at $51.5 million.
Other members of the group are the AFL-CIO Office of Investment, Co-Operative Asset Management, Ethos Foundation (Switzerland), F&C Management, Hermes Equity Ownership Services, Middletown Works Hourly & Salaried Union Retirees Health Care Fund, MN, PGGM Investments, SEIU Master Trust, UFCW Pension Plan for Employees, Wespath Investment Management, Nathan Cummings Foundation, International Brotherhood of Teamsters and the Unitarian Universalist Association of Congregations.