New York State Common Retirement Fund, Albany, will support separate shareholder proposals at Peabody Energy backed by the AFL-CIO Reserve Fund and the AFSCME Employees Pension Plan, according to a statement from Thomas P. DiNapoli, New York state comptroller and sole trustee of the $152.9 billion pension fund.
The $11 million AFL-CIO Reserve Fund, Washington, proposal includes calling for Peabody Energy to disclosure its spending, policy and procedures governing lobbying activity and membership, and payment to any tax-exempt organizations involved in drafting and endorsing model legislation.
The $1 billion plan of the American Federal State County and Municipal Employees, Washington, calls for Peabody to adopt a policy to require an independent chair of its board of directors. Gregory H. Boyce serves as Peabody's CEO and chair.
“In 2012, Peabody was one of the worst-performing companies in the S&P 500 and has consistently underperformed its peers,” Mr. DiNapoli said in the statement. “The board needs to exercise robust oversight of management. Separating the position of chair and CEO is an immediate action that could be taken that would start to address this issue.”
Brandon Rees, acting director of the office of investment, AFL-CIO, said in an interview, “We welcome the support by Mr. DiNapoli and other institutional investors for this common-sense reform. A lot of companies voluntarily provide this information to investors, and we think Peabody's board should adopt it as a best practice.”
New York State Common owned 788,700 Peabody shares, valued at $16.4 million, as of April 12 according to the statement.
The AFL-CIO Reserve Fund, consisting of union treasury assets, has 200 Peabody shares. The $3 billion AFL-CIO Equity Index Fund, a commingled trust of pension assets that tracks the S&P 500, will vote its 59,000 shares in support of the proposal, Mr. Rees said.
The AFSCME plan has 2,000 Peabody's 269 million shares outstanding, said Lisa Lindsley, director of capital strategies for the union.
Glass Lewis and Institutional Shareholder Services both recommend shareholders vote in favor of the two proposals, while Egan-Jones Proxy Services recommends shareholders oppose both proposals.
Peabody calls on shareholders to vote against both proposals.
The Peabody board “believes that our current policies and procedures regarding direct, indirect and grass-roots lobbying activities, together with the extensive public disclosure about the substance of our efforts, are sufficient to keep shareholders informed about these activities,” according to the company's proxy statement. “As a result, the board has concluded that the proposal is not in the best interests of Peabody and its shareholders.”
Peabody's proxy statement said that “the board believes that the strength of our corporate governance structure is such that the combination of the roles of chairman and chief executive officer do not in any way limit the board's oversight of our (CEO). … (T)he board does not believe that an arbitrary mandate requiring an independent chairman is in the best interests of Peabody and its shareholders.”
Peabody's annual meeting is April 29.