U.S. Chamber Highlights Drawbacks of Union-Backed Shareholder Activism

Says Special Interest Campaigns May Hurt Shareholders, Questions Card Check Agenda

WASHINGTON, D.C.—The U.S. Chamber of Commerce today highlighted the drawbacks of big labor union-backed shareholder activism during a forum on shareholder proxy proposals and the role of government intervention. The Chamber also presented a study by Navigant Consulting showing that shareholder activism by union pension funds provides no economic benefit for plan participants, and may actually reduce shareholder value.

"Special interest activism does not have a place in the boardroom," said David Hirschmann, president of the Chamber's Center for Capital Markets Competitiveness. "There is growing concern that big labor unions are trying to achieve at the board table what they cannot achieve at the negotiating table—under the guise of shareholder protection."

Examples from the study include "key votes" by the AFL-CIO in annual surveys from 2002-2008 including proxy resolutions requiring companies to disclose political contributions, take action on carbon emissions, and adopt proposals allowing Card Check union organizing.

Backed by government data, the Chamber also cited the widespread underfunding of union pension funds as motivating significant factor in organized labor's push to pass the "Employee Free Choice Act" or Card Check bill (EFCA). The Chamber pointed to a letter from a Teamster union local affiliate to investment firms claiming that, "…EFCA would strengthen defined benefit plans by fueling broad-based economic growth and increased plan participation by newly organized union members."

"Organized labor wants Card Check as a crutch to prop up crumbling union pension funds," said Steven J. Law, the Chamber's chief legal officer and general counsel. "And, rather than focusing on sound investment strategies, many labor officials are using shareholder activism to play politics with workers' retirement savings."

In 2008, the U.S. Department of Labor issued new guidance stating that politically motivated proxy activity may violate the fiduciary duties of union pension trustees under ERISA. Last month, Chamber President and CEO Tom Donohue sent a letter to U.S. Secretary of Labor of Labor Hilda Solis, calling on her to protect retirees from politically driven union activism by using the authority of the Department of Labor to investigate potential abuses.

The study's release takes place against a backdrop of increasing evidence that even the largest union pension funds are facing systemic financial difficulties. For example, the Service Employees International Union National Industry Pension Fund recently informed beneficiaries that it was in "critical status."

To view a copy of the Navigant study and related documents, please click here.

The U.S. Chamber is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

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