Seventh "official" TIAA-CREF (TC) Coalition Update --mainly for TC participants with an interest in social responsibility by TC

Hello TIAA-CREF (TC) interested folks: As usual, various activities are going on and various communications going out to different TC-related social concern constituencies. Here are some of those communications--or parts of them. They will help you see the breadth of the campaign and, as usual, give many ways you can get involved as we carry on with momentum gained surrounding the Dec.15, TC annual shareholder meeting. The pieces below include the following: Bye, Neil 1) --Contacting TC in support of a new socially responsible fund. Emerging out of the shareholder meeting is a private meeting with several top TC officers about possibly establishing a new, very progressive socially responsible fund. The meeting date had to be pushed back to April, but your calls will definitely still help 2) Contacting relevant TC trustees in ways we can discuss or leading/participating in a small demonstration at a local TC office (keeping the pressure on has helped) 3) Announcing the next TC annual meeting, which has been moved up to this Summer. And there is a looming deadline date of February 12 to file a shareholder resolution. We encourage you to do so to raise social awareness (among a potential three million people in TC’s pension system) It is relatively painless to do so and we can help. 4) Our sending of a letter to the TC CEO as a follow-up the annual meeting. Here are a few points that will be raised 5) Presenting here an updated version of what we call the “TC inconsistencies” piece—outlining various ways that they are inconsistent in their social responsibility and governance policies/actions 6) Presenting TC’s new Policy Statement on Corporate Governance that applies to social responsibility concerns 1) SOCIAL CHOICE FOR SOCIAL CHANGE: Campaign for a New TIAA-CREF Dear TC Colleagues As you saw from our report of the TIAA-CREF annual meeting, they have agreed to a meeting to discuss our proposal for a new socially responsible fund! We have informed them that we hope the meeting will be one in which we together address ways to meet their financial/administrative concerns. (We met with top officers before, but within minutes we knew their intention was to tell us they would not implement our desires.) This is a critical time. To maintain our momentum and insure that the meeting is productive, we ask that you make one call to TC in the next two weeks endorsing such a meeting, and requesting that at this meeting our ideas are fully explored. If you have pledged to place some of your savings in such a new account, let them know. (You still can do so, to increase our current $17 million total—see below). If you don’t intend to pledge, please say that you plan to invest in the new account, if established, if you are so willing and able. Call CEO Herbert Allison at 1-800- 842-2733; 212-490-9000 (you’ll reach his assistant). See the usual piece below that ARE YOU IN THE TIAA-CREF RETIREMENT SYSTEM? Do you want your money to help build housing in low-income communities? To support socially and environmentally responsible smaller companies? SPEND FIVE MINUTES TO SUPPORT OUR PROPOSED NEW TIAA-CREF (TC) FUND THAT WOULD MAKE SOCIAL CHANGE. In the 1980s, participants lobbied TIAA-CREF (TC) for five years to set up a socially responsible fund. Now we're pushing for an improved fund with practices that are becoming standard in socially responsible investing (see specifics below). We've been endorsed by many academic and activist groups, faculty/staff unions, and such individuals as Noam Chomsky and Howard Zinn. In January, 2002, TC's then-CEO John Biggs stated in a New York Times article that he would support creating a new fund that moves in this direction if there was sufficient financial interest. We've now gathered over $18 million in pledges to transfer current TC retirement assets should the fund materialize! In August 2002, TC finally made some changes in their current socially responsible fund. But much is still lacking. HERE'S HOW YOU CAN HELP: -- CONTACT TC in support of the proposed fund, noting one or more of these components: (a) community development investment; (b) social venture capital; (c) stock in particularly responsible small companies; and (d) socially responsible shareholder advocacy. Call CEO Herbert Allison at 800-842-2733; 212-490-9000 (ask for him and leave a message with his assistant). -- VISIT http://www.manchester.edu/links/pledgetofund to pledge to the proposed fund. For the campaign details, visit http://www.manchester.edu/links/socialchoiceforsocialchange -- RECEIVE CAMPAIGN UPDATES (every two weeks); contact nwollman@bentley.edu. -- FORWARD THIS MESSAGE with a short personal endorsement to listserves, organizations, and your colleagues nationally. Also, see http://www.maketiaa-crefethical.org concerning a coalition of national activist groups that seeks for TC to be more socially responsible in its various investments. 2) We are continuing, as well, with actions at the local level. We have had several small demonstrations at local TC offices (3-6 people) and folks in our campaign have contacted a number of trustees individually.. We especially would like a few more before we meet with TC officers in April. Are you willing to lead/participate in a small demo or visit a trustee if there is an opportunity in your area? (Does anyone have a contact in the Yale– New Haven area that might be helpful here?) 3) As TC had noted earlier as a possibility, they moved up their annual meeting to June. Sorry-- not a whole year break before big planning again, but I am dedicated to working hard again on that come Spring. FOR NOW, PLEASE CONSIDER SUBMITING A SHAREHOLDEER RESOLUTION CONCRNING YOUR CAUSE. It is a fairly simple process, though it does require a TC participant to officially file and a 500 word statement. I can help with both. One negative is that, unfairly, resolutions must be filed by February 12. Think it over (fast!) and let me know. 4) I will soon prepare a letter for TC CEO Herbert Allison, with coalition group reps as c-signers, I hope. It would be a follow-up response to annual meeting statements made by Allison—and refer to SR aspects of the new TC Policy Statement on Corporate Governance. It would a) raise Dennis Brutus’s issue about the TC VP’s statement at the annual meeting about financial concerns overriding any conceivable social; b) deal with TC’s stating that their portfolio companies (and themselves) should take social issues into account for ALL their investments because it affects shareholder value; (c) ask them to report on how, specifically, they do take social issues into account; (d) ask them why come out against divestment or asking companies to leave countries when it might improve shareholder value; and (e) assert that they have a moral choice, too, in their investing—it’s not up just to TC participants to do so. I note these issues here in case anyone wants to make suggestions on the front end—or even co-write with me! 5) Here are examples of the type of inconsistencies and hypocrisies practiced by TIAA-CREF in regards to corporate governance and social responsibility. I can go further into the below as you wish, and can respond to anything they raise in response. I also can put you in contact with folks having specific expertise on the issues raised below. Plus there are three particular TIAA-CREF trustees/directors who are on a committee dealing specifically with governance and social responsibility issues. I can put you in contact with them. And there is a mid-level TIAA-CREF employee who is willing to talk to media about TIAA-CREF and inconsistencies regarding socially responsibility in its investments. The identity of the person needs to be kept out of the story, but you would most certainly be able to determine that the person is indeed a TIAA-CREF employee. Neil Wollman TIAA-CREF DOES NOT PRACTICE WHAT IT PREACHES: I) TIAA-CREF claims to be and is seen as a leader in promoting corporate governance reform and championing shareholder rights. Their newly revised (December, 2003) Policy Statement on Corporate Governance states that their governance program for its portfolio companies is intended to "...improve long-term value for our participants.." and to "balance the rights of shareholders and the needs of the board and management to direct and mange effectively the corporation's affairs." YET: 1) At its December, 2003 annual meeting, it opposed its own shareholders' resolutions on three important governance issues that good governance folks support: a) Chairman and CEO positions must be held by different people (the Conference Board Commission on Public Trust and Private Enterprise recommended such a split); b) reconstituting the independent committee that nominated some trustees; c) Adopting the principles set forth in the conclusions of the Conference Board Commission just noted in "a)" above. I have contact information for the resolution filers, as we have a small group of participants that put forth all three governce resolutions that were on the shareholder ballot. 2) After attendees concerned about social responsibility issues persistently raised serious questions at the 2001 annual meeting, the 2002 meeting was held in a much less accessible city. This resulted in a much lowered attendance. And in contrast to the past, almost no trustees were present at the 2002 meeting. To their credit, TIAA-CREF returned to New York for their December, 2003 meeting. 3) For that meeting, TIAA-CREF again got ballots out late, so much, in fact, that they had to delay the meeting date. Also, for the second time in three (or four) years, they had mistakes on the ballot that hurt the chances of shareholders filing resolutions. This is all for a group that is self/other acclaimed as a model of good corporate governance. We do welcome some recent (December 2003) changes made by TIAA-CREF on several governance concerns. It took various lobbying attempts by participants to help bring this about, but we do appreciate their eventual responsiveness. 4) As noted above, it eliminated the independent committee that nominated some trustees. 5) Ie supported a proposed SEC resolution making it harder for shareholders to resubmit resolutions (public outcry resulted in not adopting the measure). 6) TIAA-CREF claims that they take no government subsidies--and they shouldn't as a large pension fund. However, they do admit to taking "financial incentives," including an "incentive" of $1.17 million from the City and County of Denver. 7) Though a leader in reigning in excessive CEO salaries for their portfolio companies, their former CEO John Biggs sat on the boards of two companies that gave excessive CEO compensation (Biggs was on the compensation committee for one board and apparently approved a high salary for the other (we have details, including a St. Louis P-D expose on the excessive compensation). Their current CEO Herbert Allison received an excessive pay package, including a yearly compensation of over $9 million and a $24 million severance deal! This is for a non-profit serving mainly low-paid college personnel. They took much heat from shareholders on this at their 2003 annual meeting. 8) While filing a shareholder resolution, David Gordon, University of Washington, received negative treatment from one of TIAA-CREF's top governance people and chief counsel Peter Clapman. 9) Getting 30% and 35% of the vote on two resolutions they filed was labeled as "very substantial" and a "large portion of shareholders, " respectively, in two press releases they distributed. A resolution filed against them that got 30% was labeled by their CEO as "soundly defeated." 10)In November, '03, TIAA-CREF sold at least one component of its insurance practice to Met Life. Some of those 46,000 participants involved who have studied the issue feel that TIAA-CREF was both deceptive on this transaction and placed them in financial jeopardy. I can provide an extensive letter sent to TIAA-CREF on this matter by one well-informed participant. II) TIAA-CREF says that it factors social concerns into all investment decisions and that doing so builds long term shareholder value (TIAA-CREF: A Concerned Investor). Their Policy Statement on Corporate Governance says that companies should take into account issues such as "environmental impact" "... the corporation's communities and its constituencies... egregious repression of human rights", YET: 1) It won't reveal how it does so. And they say they don't divest so that they can have influence with companies, but, again, they won't say how or when they have done so or how they have had influence with companies regarding social responsibility. 2) They also say that socially concerned participants have a choice and can invest in their socially screened Social Choice Account. This is their response to requests for divestment of certain stocks. But morality should not be confined just to the individual investor. TIAA-CREF has a choice, too, in what they invest in for all their funds. Would they, hypothetically, invest in profitable slave trade and say, " Well, its your choice, if you want to avoid slave trade you can always invest in our socially responsible fund." 3) There is much attention given to the human rights situation in pre-war Iraq, yet brutalities exist in other countries and situations in which investment by TIAA-CREF lends support to such injustice. TIAA-CREF holds shares in Nike and Wal-Mart-sweatshops; Unocal-- helps keep afloat the Burmese brutal dictatorship; Philip Morris/Altria--- Marlboro is the deadly #1 cigarette brand; Even TIAA-CREF's socially responsible fund holds stock in Costco, which has engaged in ecological destruction and caused the illegal arrest of environmentalists and others in Mexico. 4) After an "offer" from their CEO in a New York Times article (January, 2002), one campaign gained over $17 million in pledges for a new socially responsible fund that would include low-income area community development and other " positive investing." Now TIAA-CREF is stonewalling on that (their most recent excuse about filing a shareholder resolution is easily addressed). CREF trustees Bevis Longstreth, Willard Carleton, and Robert Vishny can be contacted to see why TIAA-CREF is again not listening to their shareholders on this matter. This comes on the heals of two earlier campaigns to promote social responsibility for TIAA-CREF's investing. After years of excuses, certain desired changes were finally made. However, much is still lacking. (At this writing, TIAA-CREF has finanlly agreed to meet with campaign leaders about the proposed new socially responsible fund. Campaign participants appreciate that offer and please ask me for an update.) 5) TIAA-CREF invests in companies that follow practices inconsistent with its own internal company ethics policies (details can be given). 6) T-C is of three minds regarding social responsibility. (a) "T-C does not express approval or disapproval of any particular business activity or company." They make only financial judgments. (b) T-C acknowledges certain activity as being socially responsible (such as good environmental practice). But they are desirable (only) because they add to long term shareholder value. (c) Finally, they have supported social responsibility for its inherent good. (e.g., they talk about their investing in companies engaged in "socially beneficial activities." A benign interpretation of these three faces on social responsibility is that they are just confused on the issue or haven't thought out things as they should. A more likely interpretation is that they pick and choose different interpretations for their own self-interest. 7) See www.maketiaa-crefethical.org for details on the work of the coalition of groups trying to get TIAA-CREF to be more socially responsible in its investing 6) Full policy statement is at https://www5.tiaa-cref.org/bookstore/detail.do?id=146. And the press release announcing the new statement is at the bottom here. Social Responsibility Issues TIAA-CREF believes that building long-term shareholder value is consistent with directors’ giving careful consideration to issues of social responsibility and the common good. We recognize that efforts to promote good corporate citizenship may serve to enhance a company’s reputation and long-term economic performance, and we encourage boards of both U.S. and international companies to adopt policies and practices that promote corporate citizenship and establish open channels of communication with shareholders, employees, customers, suppliers and the larger community. In particular, we believe that the following concerns should be among the issues that companies address: • The environmental impact of the corporation’s operations and products. • Equal employment opportunities for all segments of the population. • Employee training and development. • Evaluation of corporate actions to ensure that these actions do not negatively affect the common good of the corporation’s communities and its constituencies. In developing our proxy voting guidelines for social issues, we seek to balance fiduciary responsibility with a commitment to corporate social responsibility and a belief that companies should be allowed flexibility in dealing with these issues. We will evaluate whether or not a resolution is practical and reasonable when it seeks action on the part of a corporation, and whether or not the shareholder resolution process is the appropriate forum for addressing the issues raised by proponents. We may be sympathetic to the concerns raised by proponents but may not believe that the actions requested of the corporation provide an effective remedy for those issues. In such instances, TIAACREF will vote to abstain. 23 TIAA-CREF Policy Statement on Corporate Governance This approach to proxy voting is applied to a wide array of social issues. Our guidelines for voting on some of the more frequent issues are as follows: Environmental Resolutions TIAA-CREF generally will support resolutions that request reasonable disclosure about the environmental impact of a corporation’s operations and products. TIAA-CREF generally will not support proposals that would require companies to take highly specific actions or adopt very specific policies aimed at improving the environment. Exceptions may be made in cases where companies have extremely poor environmental records. Human Rights Resolutions TIAA-CREF generally will support resolutions that request reasonable reports concerning company activities in countries with records of repression of human rights. TIAA-CREF generally will not support resolutions that would mandate that a company take specific actions (such as withdrawing from a country) for the sole purpose of promoting a particular agenda. Tobacco-Related Resolutions TIAA-CREF generally will support proposals that call for increased disclosure about the risks of tobacco use and those that aim to reduce youth access to and use of tobacco products. TIAA-CREF generally will not support proposals that would require investment or divestment of a company’s assets and/or pension funds. We believe that each participant should have the choice of whether or not to invest in an account that uses non-financial criteria for its investment program. Labor Issues Resolutions TIAA-CREF generally will support proposals that call for a company to increase the diversity of its workforce and implement non-discrimination policies. 24 TIAA-CREF Policy Statement on Corporate Governance TIAA-CREF will consider on a case-by-case basis proposals concerning labor policies and practices. TIAA-CREF generally will support proposals that include reasonable requests and concern companies or countries where demonstrably egregious repression of human rights is found.