Union Leaders Want To Restructure Corporations

Union leaders target Wall Street
Union leaders are pushing to reshape the boards of directors of some of America’s largest companies, hoping to use government bailouts as leverage to fundamentally alter the way the companies are run in the years to come.
In a previously unreported May 18 letter to Treasury Secretary Timothy Geithner, the leaders of the American Federation of State, County and Municipal Employees and the AFL-CIO called for the resignation of Michael Armstrong and John Deutch as directors of Citigroup.
“In our view, these directors had catastrophically failed to protect shareholders
from excessive exposure to credit, market, liquidity and operational risk,” wrote AFSCME President Gerald McEntee and AFL-CIO President John Sweeney. “Companies like Citigroup that have received taxpayer assistance under the Troubled Asset Relief Program should be held to the highest corporate governance standards.”
The union leaders have not yet received a reply from Treasury.
Both unions endorsed Obama in June 2008, and their members campaigned hard for him in the general election.
The union-led campaign against corporate directors already has claimed the job of American International Group board member James F. Orr III, chairman of the Rockefeller Foundation. He decided not to stand for reelection in late May, along with two other AIG board members. McEntee was among the shareholder activists who sent a March 31 letter to government trustees blasting Orr for his service on the AIG board’s compensation committee at the time it approved millions of dollars in controversial bonuses to some of the very AIG employees whose bad market bets brought the company down.
In the latest case, the union leaders say they object to the April 21 reelection of Armstrong and Deutch because the two men received 1.1 billion votes against their election. And although they received 2.7 billion votes for reelection, the union claims that 1.7 billion of those votes were cast by stockbrokers on behalf of shareholders who otherwise would not have voted their shares. So-called broker voting is allowed under corporate governance rules, but the unions complain that the brokers vote in lock step with management and that elections in which they cast ballots on behalf of their clients are not a true reflection of shareholder intent.
For its part, Citigroup defends the targeted board members.
“Citi’s board of directors have diligently carried out their responsibilities during one of the most severe market downturns in decades,” said spokeswoman Molly Millerwise Meiners. “The board also rotated committee chairs and members in July 2008. There is no basis for any recommendations against directors."

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