By Carter Bundy
Got shares? Most of us do. If you don’t have a 401(k), you might have an IRA. You might be lucky enough to work for a company that chips in for your nest egg. So if half of us or more own huge, publicly-traded companies, how do we keep getting ripped off by Enron, Worldcom, Exxon-Mobil and Home Depot? Shareholders – that’s probably you if you’re reading this – are the big losers when execs walk away with $400-million golden parachutes.
Don’t the owners of a company get some kind of say in who runs the company, who is on the board of directors and on major decisions that dramatically affect shareholder value? Of course they do, and it happens all the time in smaller companies.
But our publicly traded companies are so huge that it’s hard for any shareholder – or even group of shareholders – to watchdog management and directors. Even if you own $1 million worth of Home Depot shares, you really aren’t a very big fish. And how the heck would you ever get others to support your ideas for better returns anyhow?
Fortunately, there’s a well-established and growing movement led by big-fish shareholders to regain control of the companies we own. There are high net-worth individuals who support it. Large groups of investors support it. Heck, even some smart companies are beginning to embrace it. Most of all, this policy, called corporate governance, is starting to yield better shareholder returns.
Here’s the big surprise: Unions support it.
Why? Because when shareholders get the chance to vote on whether Home Depot should give a CEO a $210-million golden parachute, they’re likely to ask, “Why should I spend my money like this?” In the case of Home Depot, CEO Bob Nardelli, in six years, presided over a loss of 6 percent of shareholder value while rival Lowe’s shares exploded by 40 percent. Why would shareholders fork over a $210 million reward to a guy who got clobbered by the competition?
The most significant shareholder in
Public employees are the biggest group of shareholders in
Fight for your right… to profit
Nothing happens on its own, though. Investments don’t magically increase in value. Someone has to choose the investments, and then, for them to really grow, the owners have to watchdog those investments.
As a union representing nearly 1.5 million public employees, it’s probably fair to say that there’s no higher priority for AFSCME than to ensure the viability of public employees’ pensions. That means getting good returns and fending off rip-offs like Bob Nardelli’s retirement package.
So when the corporate governance movement came into its own this decade, it’s hardly surprising that AFSCME set aside its normal political leanings to form alliances with wealthy investors and institutions, many of whom are normally ideologically opposed to unions.
AFSCME has one goal, and one goal only when it comes to investing: Increase shareholder returns while minimizing risk. When corporations rip off shareholders, public employees and taxpayers are the biggest losers. AFSCME fights against that corporate fraud. To those familiar with investing, that means supporting corporate governance.
Yellow journalism
Unfortunately, the Albuquerque Journal’s editorial board seems quite literally to have never heard of corporate governance. For such a far-right, corporate-oriented paper, one would think they’d at least be familiar with the concept.
Instead, columnist David Roybal was confused about the basics of corporate governance; news writer Andrew Webb got it right but gave it little ink; and, capping off a two-week assault on AFSCME, the Journal editorial page embarrassed itself by effectively calling corporate governance social liberalism.
They listened to one person, former Sen. Fabian Chavez, who also called corporate governance “social liberalism.” When staunch Roswell Republican Sen. Rod Adair supports the idea, as he did in this year’s session in committee, only someone with limited understanding of corporate governance would call it a “liberal” policy.
Had the Journal or Chavez done any research, they’d know that of the thousands of corporate governance proposals supported by AFSCME in shareholder meetings and in entities like PERA over the last decade, not a single one had some strange “social liberal” policy attached to it.
By the way, T.H. Lang, the PERA elections ended on Sept. 21, not Sept. 28 as your editorial said. So the third of your ill-informed pieces – which ran Sept. 23 – didn’t have any impact. Nice research.
Newsflash, T.H.: sometimes even people you don’t like have good ideas. We all get that you don’t like unions. Fine. But AFSCME and wealthy Republicans (and Dems and Greens for that matter) look beyond labels and party on this issue to unite with other shareholders, generating better returns for employees and taxpayers.
At least the Trib does research. Anybody else going to miss them? I know shareholders will.
Bundy is the political and legislative director for AFSCME in