General Electric Co., Verizon Communications Inc., General Motors Corp. and 18 other companies with large retiree and active-employee health care liabilities that have directors from the health care or pharmaceutical industry will be targets of shareholder resolutions in 2008 and, possibly, vote-no campaigns, said Daniel Pedrotty, director of the AFL-CIO office of investment. The AFL-CIO raised questions concerning the objectivity of 67 directors at the 21 non-health care companies, regarding their ability to act in the interest of the companies and their shareholders, Mr. Pedrotty wrote in a letter sent yesterday to Christopher Cox, chairman of the SEC.
One shareholder proposal will ask boards to review policies on conflicts of interest and how those policies assure director objectivity, and to report findings to shareholders. Another proposal will ask boards to adopt principles for health care reform that include universal and affordable coverage.
“If there is not a degree of responsiveness about director independence (concerning potential conflicts), we could have a vote-no campaign” to oppose re-election of the directors in question, Mr. Pedrotty said.
Renee J. Rashid-Merem, GM spokeswoman, said in a statement, “No member of the GM board has a conflict of interest resulting from a relationship with the drug industry that interferes with his or her ability to exercise independent judgment that is in the best interest of GM and its stockholders. As outlined in GM’s proxy, all directors of the GM board are required to adhere to the company’s code of ethics policies, and in their capacity as directors, they have a duty to act solely in the best interest of GM.”
Robert A. Varettoni, Verizon spokesman, said, “We believe the independence and objectivity of our board members is beyond reproach.”
Peter J. O’Toole, GE spokesman couldn’t be reached for comment.