August 2014 Newsletter
Fighting the Growing Pay Gap
As the gap between CEOs and workers continues to widen, it is important that we make the best use of the hundreds of billions of dollars that union affiliated pension funds currently have invested in actively and passively managed funds.
At only three-and-a-half years old, with nearly $5 billion in total assets, the Equity Index Fund is the fastest growing fund in the AFL-CIO’s history.
The Fund ensures that unions have a place to invest their dollars in a way that gives workers a voice as owners of companies in which their pension plans invest. This is accomplished by generating more than just competitive returns, but also through shareholder activism and voting 100 percent in accordance with AFL-CIO Proxy Voting Guidelines.
Together we can build an economy that works for all!
AFL-CIO Investment Trust Corporation
Heather Slavkin Corzo is Director of the AFL-CIO Office of Investment.
Following the protest, Nazma Akter, a union organizer and former garment worker from Bangladesh, presented a shareholder proposal at Ralph Lauren’s annual meeting on behalf of the AFL-CIO Reserve Fund. The proposal urges Ralph Lauren to disclose to shareholders its assessment of human rights risks in its supply chain.
The actions at Ralph Lauren were prompted by the company’s refusal to sign the Accord, which was developed in response to the collapse of the Rana Plaza factory complex in Dhaka, Bangladesh, in April 2013. More than 1,100 garment workers died and 2,500 others were injured in that horrific industrial accident.
More than 180 international retailers and apparel companies have signed the Accord, which seeks to improve working conditions for factory workers in Bangladesh. Ralph Lauren refuses to sign the international agreement.
“Human rights risks for companies doing business in Bangladesh have become a central concern after the tragedy at Rana Plaza on April 24, 2013,” Ms. Akter told Ralph Lauren’s board of directors, senior management and shareholders attending the meeting.
The New York State Comptroller Thomas DiNapoli and a coalition of socially responsible investors supported the AFL-CIO shareholder proposal.
The AFL-CIO Equity Index Fund votes 100 percent in accordance with the AFL-CIO proxy voting guidelines and supported this important proposal.
Shepard Burr is President of the ASB Investment Management division of ASB Capital Management, LLC.
Through the second quarter, the Fund again ranked in the top 9% of the Lipper US/All Share Classes/S&P 500 Index universe for the year-to-date, 1-year, 2-year, and 3-year periods. For the 1-year period, it beat the Lipper universe average manager performance by .64 percentage points!
The Fund’s excellent performance, low investment fee, proxy voting standards, and shareholder activism make a compelling case for union, Taft-Hartley, and public pension plan investors.
Making an Impact!
Here are 5 recent examples of how the AFL-CIO Equity Index Fund is working to reform executive compensation.
1. Boston Properties. The AFL-CIO Equity Index Fund submitted a shareholder proposal to limit accelerated vesting of senior executives’ equity awards during a change of control. A majority of shareholders voted for the proposal.
2. McKesson. The AFL-CIO Equity Index Fund submitted a shareholder proposal urging specific performance standards for executive pay, which was withdrawn after the company made numerous compensation changes.
3. Nabors Industries. The AFL-CIO Equity Index Fund submitted a shareholder proposal urging specific performance standards for executive pay. Although the proposal was not adopted, a majority of shareholders voted against the company’s say-on-pay proposal.
4. Oracle. The AFL-CIO Equity Index Fund submitted a shareholder proposal urging specific performance standards for executive pay for Oracle’s upcoming shareholder meeting this fall. A majority of shareholders voted against the company’s say-on-pay proposal in 2013.
5. Quest Diagnostics. In response to the AFL-CIO Equity Index Fund’s 2013 shareholder proposal, the company adopted new limits on the accelerated vesting of equity awards in a change of control.
Union Spotlight: BAC Local 4
Bricklayers Local 4, based in Indiana and Kentucky, has more than 3,300 members. Local 4 helps area workers deal with unfair treatment, discrimination, and other workplace issues, and helps balance the power that area employers have over individual employees.
Nationally, the International Union of Bricklayers and Allied Craftworkers (BAC) is comprised of bricklayers, pointers/cleaners/caulkers, stone and marble masons, cement masons, plasterers, tilesetters, and terrazzo and mosaic workers. BAC has more than 100,000 members in the United States and Canada.
“The AFL-CIO Equity Index Fund helps ensure that union pension dollars are working to advance our shared values rather than working against us. In short, it allows us to invest in ourselves,” says Ted Champ, President of BAC Local 4.
What AFL-CIO State Federation Presidents are Saying About the AFL-CIO Equity Index Fund:
“As the gap continues to widen, it is important, now more than ever, that we invest the billions of dollars that union pension funds currently have in active S&P 500 index funds through the AFL-CIO Equity Index Fund.”
– Sam Lathem
Delaware State AFL-CIO
“If we were able to move just 10 percent of union pension dollars currently invested, or $56 billion, to the AFL-CIO Equity Index Fund, imagine the impact we could have if that money could be proxy voted 100 percent in accordance with AFL-CIO Voting Guidelines. We could change the direction of the country and hold corporate America accountable.”
– Mike Williams
“If you are a union trustee and not currently invested in the AFL-CIO Equity Index Fund, then please reach out to us immediately to set up a meeting to discuss the Fund. It is a no-brainer—with one of the lowest known management fees (only 1.5 basis points) of any index fund out there and the only index fund endorsed by the AFL-CIO.”
– Charlie Flemming
Georgia State AFL-CIO
“The AFL-CIO Equity Index Fund has the benefit of helping the labor movement by voting in line with the AFL-CIO Proxy Voting Guidelines 100 percent of the time.”
– Randy Perreira
Hawaii State AFL-CIO
“If you are angry about the fact that in 2013, S&P 500 companies made an average profit of $41,249 per employee and CEO pay has sky-rocketed while worker pay is stagnant, then join the labor movement in investing our values through vehicles like the AFL-CIO Equity Index Fund.”
– Rian Van Leuvan
Idaho State AFL-CIO