Commentary on July 20, 2010 Meeting

It's your money!

Click here for advice on attending the next meeting!

TIAA-CREF CEO Roger Ferguson went on to discuss the impact of the financial regulation reform legislation, the need to revamp the nation's retirement system (by making guaranteed income options, viz., annuities, available to everyone), and the emphasis by TIAA-CREF on socially responsible investing (a theme repeated many times during his remarks). He emphasized the latter point by stating that the CREF social choice account now had $10 billion in socially-screened assets under management.

He described how CREF had approached four companies which did business in Sudan and asked them to change their practices. One complied, the remaining three did not; CREF divested its holdings in those three companies.

Continuing with the theme of socially-responsible investing, he stressed the importance of corporate governance, environmental stewardship, and fair labor standards in making investment decisions.

He related that TIAA-CREF had received the highest ratings from all four ratings agencies. He also named several organizations that had cited TIAA-CREF for recognition in regard to workplace diversity (race, gay/lesbian/transgender/bisexual, etc.).

Sloan again took the podium and asked for comments or questions re the qualifications of the nominees for trustees. No one from the audience addressed that topic. Instead what took place were a series of statements and questions (many of which were lengthy and read from a script) re the social implications of various investment decisions by the company. Targets of particular criticism were Caterpillar, Coca Cola, Elbit, Motorola, Nike, RJ Reynolds, and other companies. The common thread in much (but not all) of the criticism was the "illegal, criminal occupation" by Israel of the West Bank, Gaza, and East Jerusalem, as well as Israeli's policy on settlements. These speakers used strong language and urged that TIAA-CREF divest itself of holdings in companies that directly or indirectly enable Israel to continue its policies. This continued into the general Q&A portion of the meeting, over which Ferguson presided. By my count, there were 28 sets of comments offered (several people spoke more than once). Of these 28 sets of comments, 24 addressed politically-tinged topics (in particular, Israel's policies, but also outsourcing of jobs, corporate union busting, exploitation of workers in China, Columbia, Honduras, India, Mexico, and SE Asia, corporate practices that result in the despoiling of the environment, and the need for affordable housing), three addressed investment performance issues (expense ratios, TIAA-CREF's capital base, potential impacts of the Dodd-Frank legislation), and one asked whether the annual meeting might be streamed over the TIAA-CREF website.

==========================================================================================

Statement by Ray Rogers On Coca-Cola Issue

With respect to election of trustees, I want to ask, if elected, will the trustees establish a special committee overseen by the board to thoroughly investigate the allegations and mountain of evidence against Coca-Cola and many of its bottlers for engaging in dreadful labor and human rights abuses?

Also, to fulfill fiduciary responsibilities, will trustees investigate accusations that Coca-Cola's CEO Muhtar Kent lied to shareholders at Coke's annual meeting in April about the status of actions against the company that could result in hundreds of millions of dollars in liabilities to the company and ultimately its investors?

A column in the British newspaper, The Guardian, raised issue with institutional investors planning to sue BP for covering up information that could have warned investors of possible catastrophes waiting to happen. The author asked why have these institutions essentially ignored or not acted on the many warnings of environmental and other groups?

So listen up trustees:

On February 25th, a lawsuit, now in federal district court in New York, was filed charging Coca-Cola and its operations in Guatemala with a campaign of violence that included murder, rape and attempted murder against Guatemalan union leaders and their families. Union leader Jose Vincente Chavez's son and nephew were murdered and his daughter gang-raped in 2008.

Similar allegations of violence directed at union leaders and family members by Coca-Cola bottlers in Colombia working with paramilitary death squads are highlighted in a new film, The Coca-Cola Case. Coke's lawyers unsuccessfully tried to censor the film by threatening legal action against the National Film Board of Canada, one of the most respected documentary filmmakers in the world. The documentary described as an "explosive film" by the Boston Herald, is just now coming to the United States. A synopsis and reviews of the film can be seen on the website TheCoca-ColaCase.org.

In Mexico, Coca-Cola faces a lawsuit from a 16 year employee and top marketing executive accusing the company of wrongful dismissal after he refused an order to institute illegal monopolistic practices effecting 700,000 mom and pop stores throughout the country. Emanating from this lawsuit are charges that Coca-Cola has cheated Mexican workers and the Mexican government out of hundreds of millions of dollars in pay and tax revenues.

Management's response to Coke workers forming a union in the southern Pakistan city of Multan is a story drenched with violence, corruption and escalating criminality. Last month, it was reported that union members have met with death threats, abduction, firings and extortion.

In China, based on an undercover investigation by a group of university students, the press reported that Coke employees are "involved in the most dangerous, intense and tiresome labor, work the longest hours, but receive the lowest wages and face arrears and even cutbacks in their pay." One investigator claimed that Coke violated Chinese labor laws and reported that workers "often worked 12 hours per day for an entire month without a single day off."

Hazardous child labor still remains a major component of Coke's sugar production in El Salvador; and in India and Paw Paw, Michigan Coke faces potential multimillion dollar fines for overexploitation and contamination of public water sources.

In 2006, Coca-Cola was dropped from CREF's Social Choice account because the company does not meet the criteria as a socially responsible company. Nevertheless, outside the Social Choice Account, TIAA-CREF invests well over a billion dollars in The Coca-Cola Company and its bottlers.

Thus TIAA-CREF and its participants at universities and NGOs throughout the country are supporting and profiting from a corporate system that operates like a criminal syndicate with impunity.

So what will TIAA-CREF trustees do to help, in a more forceful and meaningful way, to end these horrible injustices by Coca-Cola and its bottlers?

###

Statement by Shirley Irons of Corporate Campaign, Inc. on Outsourcing Issue

Before I cast my vote for election of trustees, I want to know what their position is on the corporate phenomenon of outsourcing jobs.

The scheme of outsourcing or subcontracting jobs by rich companies to avoid and bust unions and to pay minimum wages and benefits is a serious and growing problem. It is destroying a middle class and widening the gap between rich and poor.

In countries like Colombia, Guatemala and China where a strong union can mean the difference between life and death, outsourcing is jeopardizing not only decent livelihoods but lives as well.

The vast majority of Coke workers in Colombia, for example, who wear Coke uniforms, drive Coke trucks, work in Coke plants and help make huge profits for Coke are subcontracted or outsourced workers. These workers receive minimal pay, meager, if any, benefits, are fired if they try to join a union and have no job security or stability.

In April 2007, sixteen Coke subcontracted workers were fired for joining SINALTRAINAL, the Colombian food workers union. This was a warning to all outsourced workers in the Coca-Cola System: You have no rights! Do not join a union!

In the new film, "The Coca-Cola Case," which Coca-Cola's lawyers tried to censor, two outsourced Colombian truck drivers wearing Coca-Cola uniforms are interviewed:

They state: "If we are robbed of $100 or $200, it comes out of our pocket; we have to pay for insurance; our uniforms; Coca-Cola rents us the truck—we have to pay for it every day; And also for any lost or broken bottles and crates;"

"What does the company provide?"

"Zip! Zilch! Nothing at all!...The worker is responsible for everything."

"Are you unionized?"

"No. You can't join the union or you'll be fired. They don't want the union to grow."

"How many hours did you work today?"

"We started at 6 this morning until 9 pm.

"How much did you make? "

"15 dollars."

That's 15 dollars for 15 hours. Annual compensation for the CEOs of Coca-Cola since 2001 have ranged from 20 million to more than a 100 million dollars.

Is TIAA-CREF involved in outsourcing which is really a method of turning employees into non-employees? If so, how many TIAA-CREF workers have been subcontracted or are on the chopping block to be outsourced? And from what facilities, in what job categories, and for what reasons? If you do not have the answers, will the board of trustees make sure answers to these questions are provided to participants on a regular basis?

###

Statement by Diane Mason of Corporate Campaign, Inc. on Tobacco Issue

Before voting for election of trustees, I want to know if they will support a motion to divest from all fund portfolios, investments in tobacco companies.

TIAA-CREF can never live up to its slogan "Financial Services for the Greater Good" as long as it continues to invest in the tobacco industry and companies like Reynolds American, parent of RJ Reynolds Tobacco Co.

Tobacco kills millions of people each year from cancer, heart disease, emphysema and a range of other horrible illnesses and diseases. The costs to the global economy exceed $500 billion a year in direct medical expenses, lost productivity and environmental harm according to recent studies and news reports.

Investing in and supporting companies like Reynolds Tobacco indicts us even more. Reynolds is built on the backs of tens of thousands of migrant farmworkers who harvest their tobacco leaf in the fields of North Carolina under conditions that many describe as modern day slavery.

Farmworkers there suffer from disgraceful and inhumane living and working conditions. Work-related injuries and illnesses such as heat stroke, green tobacco sickness and pesticide contamination often prove debilitating and lethal.

And as irresponsible companies like Coca-Cola benefit from hazardous child labor in its sugar production in El Salvador, so too does Reynolds benefit from hazardous child labor in the tobacco fields of Malawi.

In June, Reynolds' board member Betsy Atkins was forced to make a choice: either resign from the board of directors of Reynolds American or Chico's, the national retail chain of women's boutique stores. This happened as a result of a national Corporate Campaign by the Farm Labor Organizing Committee with the support of Ray Rogers and others to win justice for farmworkers in the tobacco fields of North Carolina.

Ms. Atkins resigned from Reynolds. Perhaps TIAA-CREF will make the right choice and divest from Reynolds and the rest of the tobacco industry before being forced to do so. ###