July 20, 2009 Press Release
Contacts:
Pat Clark, 718-852-2808;
Jim Keady, 732-988-7322, JWKeady@aol.com
(see info on our campaign at www.makeTIAA-CREFethical.org)*
AT THE CREF ANNUAL MEETING, SHAREHOLDERS SAY
"HOW HYPOCRITICAL CAN YOU BE; LET ME COUNT THE WAYS"
(July 20, 3 p.m., TIAA-CREF headquarters, 730 Third Avenue, New York, NY)
TIAA-CREF (TC), the nation's largest pension system, proclaims itself a leader in corporate/social responsibility, as well as in customer relations, YET
While other leaders work to give shareholders a binding vote on executive compensation levels, TC own shareholders get only an "advisory" vote on its compensation policies, policies with enough wiggle room so that its new CEO made 8 million dollars for eight months work in 2008 . This is far too high for a non-profit whose academic and non-profit clients earn far less. TC would dare not give its clients a real "say on pay." Admirably, even their CEO realized that the originally approved package of 10 million dollars was too high and voluntarily took a cut.
Over recent years, TC has blamed computer problems for nightmare scenarios for customers who had troubles with money transfers, missing payments, and removing money. Some even filed complaints with the SEC (see http://www.consumerismcommentary.com/2006/01/11/problems-with-tiaa-cref/#comments ).
TC has had a string of governance fiascos over the last half dozen years:
- After SEC complaints, two of its trustees were removed because of financial conflicts of interest. Yet TC preaches the need for independent trustees.
- Its former CFO Elizabeth Monrad, was investigated by the SEC and DOJ for financial conspiracy (at her previous job), leading to an 18 month prison sentence.
- An insufficient background check led to hiring someone who had previously committed criminal acts that should have precluded her hiring. Her actions at TC led to a breech in security and a subsequent lack of candor by TC about both the breech and the employees removal. The employees boss filed a lawsuit against TC for having been fired as a scapegoat.
- It supported a proposed SEC resolution making it harder for shareholders to resubmit resolutions (public outcry resulted in not adopting the measure).
- It opposed its own shareholders' resolutions on three issues that good governance folks supported: a) separating the Chairman and CEO positions so they are held by different people; b) reconstituting the independent TC committee that nominated some trustees; and c) adopting principles set forth in the Conference Board Commission on Public Trust and Private Enterprise (TC later changed its policies on, at least, the former of these concerns).
- It will pay its former general counsel millions in compensation over several years while he holds that same position at the Treasury, setting up potential conflicts of interest.
Though its tagline is "financial services for the greater good," TC invests in some of the worst corporate actors , like 1. Coca-Cola, 2. Nike, 3. Wal-Mart, 4. Reynolds American/ British American Tobacco, and 5. Costco (in Mexico). The 1.4 million strong American Federation of Teachers passed a resolution critical of TCs investment in the first three of these companies — and demanded that it hold these companies accountable on labor issues:
- Statement about Coke
- "With child labor recently found in a Nike factory in Malaysia, slave wages recently reported in a Nike apparel factory in Indonesia, and union organizers recently fired in a Nike shoe factory in Vietnam, it feels like it is the late 90s all over again," said Jim Keady, the founder of Team Sweat, which is pressing Nike to end their sweatshop abuses. "In light of these current reports and given TIAA-CREF's bargaining position with Nike given its large investment in the company, it is time that TC's principals did something that was actually going to make a difference in the world," said Keady. For starters, TC could demand that Nike disclose the wage rates for workers at all of its factories around the world.
- Wal-Mart continues to exploit its workforce, build its profits on sweatshop labor, and damage local communities by constructing huge stores---and then abandoning hundreds of them. "To the extent that TIAA-CREF is one of the largest institutional investors in Wal-Mart stock, they are complicit in the socially irresponsible behavior of the world's largest retailer," said Al Norman, founder of Sprawl-Busters. "CREF has lost touch with its higher education investors by continuing to invest heavily in Wal-Mart."
- Statement about Reynolds American/ British American Tobacco
- As recognized by the High Commission on Human Rights and Amnesty International, Costco, in Cuernavaca, Mexico, violently repressed activists and illegally destroyed important natural areas, as well as 3000 year old archeological sites. "By divesting from Costco, TC would send a message that could extend well beyond Mexico, to others elsewhere committing such crimes," says Prof. Jaime Lagunez of the Citizens Coalition.
After years of lobbying, TC finally agreed to talk to some of these companies. Unfortunately, that "quiet diplomacy" has led to nothing substantive — after three years with Coke, e.g. TC can and should do more. Its Policy Statement on Corporate Governance states "While quiet diplomacy remains our core strategy, …, TIAA-CREF’s engagement program involves many different activities and initiatives, including… engaging in public dialogue and commentary, … engaging in collective action with other investors, … seeking regulatory or legislative relief,… commencing or supporting litigation." And TC press releases say "engagement is a multi-step process...;TIAA-CREF believes that we should explore the ways in which to influence the companies' behavior and thereby help bring about positive social change;" that they "… sometimes threaten tougher actions." It is noteworthy that a 1/24/09 New York Times article asserted that changes in Wal-Mart’s environmental practices were prompted by the aggressive work of activist groups.
Recently, TC, under pressure from Investors Against Genocide and a looming resolution on its July 20 meeting ballot, changed a long standing policy, agreeing to divest from its portfolio companies in Sudan, unless they took meaningful steps to respect human rights. TC needs to extend that get tough policy to human rights abuses seen in sweatshops, murders of union activists, and otherwise. Reform these companies or dump them.
*Sprawl-Busters, Press for Change, Campaign to Stop Killer Coke/Corporate Campaign, Inc., Campaign for a Commercial-Free Childhood, Social Choice for Social Change, Citizens Coalition (Frente Civico), Team Sweat, National Community Reinvestment Coalition, United Students Against Sweatshops, Canadian Committee To Combat Crimes Against Humanity (CCCCH), Corporate Accountability International (formerly Infact), World Bank Bonds Boycott