WASHINGTON - The pension fund of the American Federation of State, County and Municipal Employees filed an appeal with the Securities and Exchange Commission over an opinion issued on shareholder proposals.
AFSCME submitted proposals at six companies calling for shareholder access to corporate proxy statements to nominate candidates.
The SEC's Division of Corporate Finance issued an opinion that Citigroup Inc. could omit the proposal. Corporations often follow the SEC staff view, although it isn't binding, according to AFSCME.
That opinion would affect similar proposals AFSCME submitted. At Citigroup, Sears, Roebuck & Co. and Exxon Mobil Corp., AFSCME submitted proposals for binding changes in company bylaws to allow proxy access for shareholder nominations.
At AOL TimeWarner Inc., Eastman Kodak Co. and Bank of New York Inc., AFSCME filed non-binding resolutions urging the boards to adopt such proxy access to shareholders.
The AFSCME appeal asks the full commission to rule on the proposal submissions.
None of the companies has issued its proxy statement yet.
Now, only the nominees by incumbent directors appear on the corporate proxy ballot. Without corporate proxy access, the only way shareholders can nominate dissident candidates is through distribution of a separate ballot to shareholders, at significant expense to the dissident group.
AFSCME President Gerald W. McEntee, who also is chairman of its $600 million pension fund, has sought institutional support from 150 major public employee pension funds in letters sent to fund officials. The funds have $1 trillion in assets.
"Informally, people think this is a very important issue and they are excited about it," said Richard C. Ferlauto, director-pension and benefit investment policy in the office of field services, AFSCME.
The six AFSCME proposals would allow a shareholder or group of shareholders owning at least 3% of a company to have its nominee for director appear on the company's proxy card and include a 500-word statement in support of the nominee in the corporate proxy statement.
"We are committing our shareholder season to proxy access and moving the (Securities and Exchange Commission to support it) and, if necessary litigating in the courts," Mr. Ferlauto said.
"We expect companies may try to keep the resolutions off the ballot," Mr. Ferlauto said. "We wanted to test the ability to put a binding resolution on the ballot," he added, explaining the reason for filing two different kinds of proposals.
Mr. Ferlauto said the six companies were chosen for the campaign because of unfriendly shareholder relations in general, among other reasons.
"Shareholders have to have the ability to put people on board to bring real accountability to corporations," he said.
AFSCME submitted a number of other proposals at other companies, notably the resolution calling for Tyco International Ltd. to reincorporate to Delaware from Bermuda.
Shareholders voted March 8 in favor of keeping the Bermuda base, defeating the AFSCME proposal 73.6% to 26.4%.
Despite losing, AFSCME officials called on the board to appoint a committee of independent directors and involve shareholders in an examination of reincorporating in the United States.
Mr. Ferlauto said H. Carl McCall, former comptroller of the state of New York who as a management nominee was elected to the Tyco board, has agreed to lead that effort to try to set up such a committee.
"A predicate for all reform to restore honesty and integrity is to (reincorporate back in the U.S.)," Mr. Ferlauto said.
AFSCME filed similar reincorporation proposals at Ingersoll-Rand Co. Ltd. and McDermott International Inc., respectively incorporated in Bermuda and the Bahamas.
Their proxy statements haven't been issued yet.
"These companies created offshore shell corporations in order to escape paying U.S. taxes and reduce the legal rights of shareholders," according to a statement from the fund.
"The effort follows on the heels of a major shareholder victory this summer when Stanley Works decided against reincorporating in Bermuda after an outcry from public pension funds and multiemployer plans called the move into question."