Wednesday, 9 May 2007

Union shareholder activism US-style

A glimpse of what the UK labour movement could be developing? Thanks again to John for flagging it up.

Workers, Shareholders Demand Reform at Verizon
Bernard Pollock of the AFL-CIO field staff reports on yesterday’s union actions at Verizon’s annual shareholders’ meeting.

Workers and shareholders let Verizon know they want a major shift in the way the company operates as more than 1,250 people rallied outside the Verizon meeting yesterday. The rally included hundreds from the Communications Workers of America (CWA), Electrical Workers (IBEW), United Steelworkers (USW) and scores more from nearly 30 international unions. Union members scored a victory when a shareholder vote on top executive’s pay packages was determined too close to call.

AFL-CIO Secretary-Treasurer Richard Trumka, IBEW President Edwin Hill, USW Secretary-Treasurer Jim English, USW District 10 Director John DeFazio and CWA District 13 Administrative Assistant Marge Krueger addressed the crowd, along with Pennsylvania AFL-CIO President Bill George and Allegheny County CLC President Jack Shea. Union workers at the company own approximately $3 billion in Verizon stock.

At the meeting, shareholders voted in the largest numbers ever for three proposals submitted by the AFL-CIO:

46 percent voted for the “Golden Parachutes” proposal, which would close substantial loopholes in Verizon’s policy on retirement packages. Verizon’s current policy allows shareholders to vote on severance agreements that exceed 2.99 times base salary plus bonus, but does not include retirement benefits, stock awards or tax reimbursements in the calculation. The proposal would encourage Verizon to eliminate the perverse incentive created when executives look forward to a windfall if they fail to provide good leadership for the company.

47 percent voted in favor of the “Compensation Consultants” proposal, which would safeguard the independence of pay consultants by requiring Verizon to disclose information to shareholders necessary for a full assessment of its consultants’ independence. This proposal is especially important at Verizon, whose former compensation consultant also performed hundreds of millions of dollars of business in other areas for the company.

More than 49 percent voted in favor of “Say on Pay,” which would require Verizon to submit executive compensation packages to a nonbinding shareholder vote.
The strong votes on the shareholder proposals indicate that shareholders will continue to demand for reform at Verizon, Trumka said.

The record votes at today’s meeting send a strong and powerful message to Verizon that shareholders will not stand for excessive CEO compensation. The question remains: Will Verizon listen, respond and reach out to investors, or will it continue to ignore the strong message that was sent today to clean up its corporate governance?

From the AFL-CIO blog.

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