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Corporate Governance

Proxy Voting | Company Initiatives | Regulatory | Studies

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Proxy Voting

Proxy Voting Guidelines

The AFL-CIO Proxy Voting Guidelines have been developed to serve pension fund trustees as a guide for voting their funds' shareholder proxies. The goal of the guidelines is to assist trustees in exercising their ownership rights in ways that achieve long-term value by supporting important shareholder initiatives on corporate accountability. These initiatives include board of directors proposals, corporate governance, proposals concerning employee relations, executive compensation and corporate responsibility issues. The Proxy Voting Guidelines also provide an in-depth discussion of fiduciary duties of plan trustees described under the Employee Retirement Income Security Act (ERISA).

Proxy Voting Guidelines (PDF)

Key Votes Survey

The AFL-CIO Key Votes Survey rates the voting practices of investment managers by surveying how they voted on proposals representing a worker-owner view of value. This worker-owner view emphasizes management accountability and good corporate governance. These proposals are assessed by the AFL-CIO Proxy Voting Guidelines and managers are ranked by the percentage of votes cast in accordance with the guidelines.

2009 Key Votes Scorecard (PDF)

2008 Key Votes Survey (PDF)
2008 Key Votes Survey Manager Voting Records (PDF)
2008 Key Votes Survey Non-Responders (PDF)

2007 Key Votes Survey (PDF)
2007 Key Votes Survey—Individual Investment Managers (PDF)

2006 Key Votes Survey (PDF)
2006 Key Votes Survey Management Scorecards (PDF)
2006 Key Votes Survey Non-Responders (PDF)

2005 Key Votes Survey (PDF)
2005 Key Votes Manager Scorecards (PDF)
2004 Key Votes Survey (PDF)
2003 Key Votes Survey (PDF)
2002 Key Votes Survey (PDF)

AFL-CIO Proxy Votes

See how the AFL-CIO voted on shareholder proposals, director elections and executive compensation plans during the proxy season:

AFL-CIO Reserve Fund, January-February 2007 (PDF)

AFL-CIO Reserve Fund, March-December 2007 (PDF)

AFL-CIO Staff Retirement Fund, January-February 2007 (PDF)

AFL-CIO Staff Retirement Fund, March-December 2007 (PDF)

AFL-CIO Reserve Fund, January-July 2006 (PDF)
AFL-CIO Reserve Fund, August-December 2006 (PDF)
AFL-CIO Staff Retirement Fund, January-July 2006 (PDF)
AFL-CIO Staff Retirement Fund, August-December 2006 (PDF)

Proxy Vote Alerts

If you are an investment professional, sign up to receive AFL-CIO shareholder alerts regarding proxy voting, including updates to the AFL-CIO Key Votes Survey.

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Company Initiatives

AFL-CIO Calls on Subprime Lenders to Halt Foreclosures

As the top five Wall Street firms hand out a record $38 billion in bonuses, the AFL-CIO called for an immediate one-year moratorium on subprime mortgage foreclosures. A sample letter sent to Citigroup is below. In addition to Citigroup, copies of the letter were sent to Countrywide, Merrill Lynch, Bear Stearns, Morgan Stanley, Wells Fargo, Lehman Brothers, JP Morgan Chase, Goldman Sachs, Washington Mutual and RBS.

Press Release, Dec. 20, 2007 (PDF)
Letter to Citigroup, Dec. 20, 2007 (PDF)

AFL-CIO Discloses Health Care Director Conflicts

In a report to the U.S. Securities and Exchange Commission (SEC), the AFL-CIO expressed concerns about widespread conflicts of interest by directors from the health care industry on the boards of the largest U.S. corporations. A follow-up letter to companies listed in the report requested certain information regarding the companies' conflict of interest policies and involvement in health care- and employee benefits-related decisions. The letters and report are below.

Press Release, Oct. 5, 2007 (PDF)
Letter to SEC, Sept. 28, 2007 (PDF)
Director Conflicts Report (PDF)

Verizon

The board of directors of Verizon Communications Inc. adopted a policy that provides for an annual advisory vote related to executive compensation beginning in 2009. The board also adopted a policy that prohibits the executive compensation consultant retained by the board's Human Resources Committee from performing other services for the company. Finally, the company said it will clarify the types of executive compensation included in severance arrangements already subject to a shareholder vote. Two weeks ago, a group of institutional investors encouraged Verizon to implement the Say on Pay proposal that was passed by a majority of votes cast at the company's 2007 annual meeting. At the 2007 Verizon annual meeting, the AFL-CIO supported a number of proposals designed to strengthen transparency and accountability of executive compensation at Verizon. The press release, institutional investor letter and proposals are detailed in the following documents:

Press Release, Nov. 1, 2007 (PDF)
Letter to Verizon from Institutional Investors, Oct. 17, 2007 (PDF)
Verizon Shareholder Mailing (PDF)
Verizon Presentation (PDF)

Chevron's Operations in Burma

The AFL-CIO urged Chevron to speak out against Burma's brutul crackdown on peaceful demonstrations by monks. Chevron remains the only U.S. company with significant assets in Burma and is in part responsible for the transfer of millions of dollars to Burma's military regime. It also funds a trade association, which lobbies the federal government and Congress against the imposition of economic sanctions on Burma despite the regime's egregious abuse of human rights.

Letter to Chevron, Sept. 28, 2007 (PDF)

TXU Buyout by TPG and KKR

The AFL-CIO formally expressed support for the terms of the buyout of TXU Corp., Texas' largest utility company, by an investor group led by Kohlberg Kravis Roberts & Co. (KKR) and Texas Pacific Group (TPG). The letter and press release are below:

TXU Press Release, Aug. 20, 2007 (PDF)
Letter to Investors Regarding TXU Buyout by TPG and KKR, Aug. 20, 2007 (PDF)

KKR and Och-Ziff Capital Management Group

The AFL-CIO urged the SEC to require KKR and Och-Ziff Capital Management Group LLC to comply with the Investment Company Act of 1940. The press release and letter detailing the concerns are below:

KKR and Och-Ziff Press Release, Aug. 3, 2007 (PDF)
Letter to SEC Concerning the KKR and Och-Ziff Initial Public Offerings, Aug. 2, 2007 (PDF)

The Blackstone Group

The AFL-CIO has cited serious concerns regarding The Blackstone Group's initial public offering, which has attracted much attention as one of the first major public offerings by a private equity and hedge fund firm. The press releases and letters detailing the concerns are below:

Blackstone Press Release, June 20, 2007 (PDF)
Letter to Investors Concerning Blackstone's Initial Public Offering, June 19, 2007 (PDF)

Blackstone Press Release, June 13, 2007 (PDF)
Follow-Up Letter to SEC Concerning Blackstone's Initial Public Offering, June 12, 2007 (PDF)

Blackstone Press Release, May 16, 2007 (PDF)
Letter to SEC Concerning Blackstone's Initial Public Offering, May 15, 2007 (PDF)

CVS Caremark

CVS Caremark director Roger Headrick stepped down from the board on June 26, after facing criticism for his role as the independent lead director during the merger between CVS and Caremark. At the recent 2007 CVS Caremark annual meeting, 43 percent of the votes were cast against Headrick's re-election to the board of directors, though if broker votes for uninstructed shares were not included in the vote totals, a majority of the voted shares would have been cast against Mr. Headrick. The New York Stock Exchange recently proposed a rule that would bar brokers from voting uninstructed shares. Allowing such votes to be counted skews voting results and presents an inaccurate picture of the true wishes of shareholders. Below is the letter sent by the AFL-CIO seeking Headrick's resignation.

Letter to CVS Caremark (PDF)

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Regulatory

Shareholder Proposals Relating to Director Elections

In a partisan 3-1 vote, the SEC attacked the right of investors to nominate corporate directors by implementing a rule that allows companies to bar shareholder access to ballots for board elections. This is the first time the SEC has voted recently to take away investor rights to present shareholder proposals on corporate governance issues. Previously, the AFL-CIO commented on the two rules proposed by the SEC relating to the election of directors, including the one the SEC eventually approved, and recommended that the commission reject both proposed rules. The press release and comment letter are below.

Press Release, Nov. 28, 2007 (PDF)

Comment Letter on the Proposed Rules Regarding Shareholder Proposals Relating to Director Elections, Oct. 2, 2007 (PDF)

Senate Testimony on Carried Interest

The AFL-CIO submitted testimony for the Hearing on Carried Interest, Part III: Pension Issues, held by the U.S. Senate Committee on Finance.

Testimony on Carried Interest, Sept. 6, 2007 (PDF)

Recommendations to Auditors Regarding Stock Option Abuse

The AFL-CIO announced steps to help accounting firms better detect the manipulation of stock option grants and spur further reform of the audit process. The press release and letters to the four largest accounting firms are below:

Press Release, Aug. 27, 2007 (PDF)
Letter to Deloitte & Touche, Aug. 23, 2007 (PDF)
Letter to Ernst & Young, Aug. 23, 2007 (PDF)
Letter to KPMG, Aug. 23, 2007 (PDF)
Letter to PricewaterhouseCoopers, Aug. 23, 2007 (PDF)

Mutual Fund Director Independence

The AFL-CIO submitted a comment letter that expressed continued support for the independent chair and 75 percent independent board requirements by mutual funds. These rules were among the most important reforms adopted by the SEC in the wake of the mutual fund trading and sales abuse scandals and provide crucial protections for mutual fund shareholders.

Comment Letter for Mutual Fund Director Independence (PDF)

Sarbanes-Oxley Section 404 Guidance

In late 2006, the SEC unveiled guidance to help public companies comply with section 404 of Sarbanes-Oxley. The Public Company Accounting Oversight Board (PCAOB) followed with their proposed auditing standard. View our comment letters for both.

Comment Letter for Section 404 Guidance (PDF)
Comment Letter for PCAOB Auditing Standard (PDF)

Executive Compensation Disclosure

The SEC, in August 2006, approved rules that required more disclosure of the pay and perquisites granted to top executives. The new details of executive pay packages will be released mostly in early 2007, when companies file annual proxy statements. However, the SEC made new rules prior to late December 2006 on how stock options and stock awards are to be disclosed. Read the AFL-CIO comment letter regarding these last-minute changes.

Executive Compensation Disclosure Comment Letter (PDF)

Efforts to Roll Back Regulation

The Committee on Capital Markets Regulation (CCMR), a private-sector panel partly funded by a charity with connections to disgraced formed AIG CEO Maurice "Hank" Greenberg, has proposed to weaken the enforcement powers of state attorneys general, undermine the independence of the SEC, relax Sarbanes-Oxley's internal controls requirements and reduce the liability of directors and auditors for corporate wrongdoing. We urge fund trustees to write to members of the CCMR and ask for an explanation of their anti-investor recommendations. A sample letter is provided, and the members of the CCMR are listed below:

(PDF)

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AFL-CIO Country Watch List

AFL-CIO Country Watch List (PDF)

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Studies

Mutual Fund Proxy Votes

The growth of CEO pay and the mutual fund industry may not be a coincidence. Today’s mutual funds are some of the largest institutional investors, with more than $9 trillion in assets in the United States. Mutual fund assets have grown as many companies switched their pensions into 401(k) plans that use mutual funds. As major shareholders, mutual funds often cast a deciding vote on executive pay proposals, compensation committee director elections and equity compensation plans. While mutual funds have a legal duty to cast these votes in the best interests of their investors, mutual fund firms can have an economic interest in voting with management even if such votes may not be in the interest of fund investors. This conflict of interest stems from mutual fund firms’ desire to sell lucrative 401(k) management and other financial services to the same companies at which they vote proxies on behalf of mutual fund investors. AFSCME, a nationwide union for public employees, and The Corporate Library produce a report each year examining the proxy voting of mutual funds. These reports show many mutual fund companies have been enabling companies to offer extravagant CEO salaries.

Failed Fiduciaries, 2007 (PDF)
Enablers of Excess, 2006 (PDF)

Investment Products Review

Investment products that claim to be "worker-friendly" by providing collateral benefits continue to grow, yet no systematic effort to evaluate these claims existed until the AFL-CIO Investment Product Review was published. The Investment Product Review grades investment products that claim to be worker friendly by evaluating these products with a uniform rating system. The review examines the products in four separate categories and criteria are developed for each. These categories include real estate and mortgages, public equity, private capital and international funds.

2002 Investment Product Review (PDF)