U.S. Chamber Study Refutes Value of Union Pension Activism

Politically-driven proposals fail to increase shareholder value

WASHINGTON, D.C.—The U.S. Chamber of Commerce today unveiled a study by Navigant Consulting showing that shareholder activism by union pension funds provides no benefit for pension plan participants, and may actually reduce shareholder value at targeted companies. The Chamber released the study at a briefing keynoted by departing SEC Commissioner Paul Atkins in his last public speech.

Shareholder proxy resolutions have become an increasingly popular tool for labor officials to pressure companies into adopting social or political proposals that are unrelated to improving the company's economic performance. Over the last year, the Chamber has obtained guidance from the U.S. Department of Labor stating that such politically motivated proxy activity may violate the fiduciary duties of union pension trustees, as required under ERISA.

The Navigant study analyzed the short-term effects of five union-backed shareholder proposals from the 2007 proxy season, and the long-term effects of five union proposals from 2004-2005. Examples from the study include proxy resolutions requiring companies to disclose political contributions, take action on carbon emissions, and adopt proposals making it easier to unionize. In each case, the study found no empirical evidence that the resolutions provided any benefit to shareholders.

"With so many union pension funds already in bad financial shape, union members can't afford to let their leaders play politics with their retirement savings," stated Steven J. Law, chief legal officer and general counsel for the U.S. Chamber. "Union-driven proxy activity is becoming a huge drain on resources, and the fact that it generates zero economic benefit for retirees or shareholders should get the attention of the Labor Department and the SEC."

The Chamber study comes one day after the launch of the Workforce Freedom Initiative, a national grassroots advocacy program to stop organized labor's anti-growth agenda, starting with the Employee Free Choice Act. This legislation would essentially abolish secret ballot elections in union certification campaigns, exposing workers to intimidation. The multimillion-dollar effort will galvanize small business owners, workers, community leaders, and citizens to preserve the rights and freedoms of Americans in the workplace.

To view a copy of the study, please click here.

www.uschamber.com

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