Unions Seek To Influence Health Care Debate With Proxy Fights, Editorial States

Main Category: Public Health
Also Included In: Health Insurance / Medical Insurance
Article Date: 02 Oct 2007 - 11:00 PST

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The Securities and Exchange Commission is "debating a change in the proxy rules for corporate shareholders, and to understand the perils, look no further than the new AFL-CIO campaign to strongarm business into providing 'universal health care,'" a Wall Street Journal editorial states. The Journal adds, "Big Labor is trying to use its proxy leverage to sway business into endorsing a political goal that may be contrary to shareholder interests." According to the Journal, SEC is considering a "'direct access' rule that would give certain shareholders more power in determining the makeup of corporate boards," and the "biggest supporters of this rule are union-dominated pension funds, which claim this is about greater 'shareholder democracy.'"

The editorial cites an AFL-CIO initiative under which "the union plans to try to influence -- really, intimidate -- corporate boards with proxy fights," and the union also "intends to ask companies to file reports on political contributions by directors and executives, especially those who support candidates who oppose universal care." The Journal states that these "threats should raise eyebrows" at the Department of Labor because of requirements that "union officials who administer pension funds do so in a way that protects and enhances retiree assets." DOL guidelines permit shareholder activism as long as "there is a 'reasonable' expectation that the pension-fund actions are 'likely to enhance the value of the plan's investment in the corporation,'" the editorial notes.

It continues that if U.S. businesses "are suddenly forced by proxy resolution to spend even more, the cost will have to come out of their bottom lines and, by extension, their share price," adding, "There is thus no 'reasonable expectation' that such policy by proxy would enhance the value of a pension's investment. Quite the opposite." The Journal concludes that DOL and SEC "should be using the latest AFL-CIO campaign to lay down some limits for union leaders who want to risk their members' retirement money in pursuit of a partisan agenda" (Wall Street Journal, 10/1).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.