harnessing public pension power
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Harnessing Public Pension Power . Using Corporate Governance to Protect Fund Assets During a Time of Economic Crisis. Greg A. Kinczewski Vice President/General Counsel Marco Consulting Group. NCPERS 2009 Public Safety Conference. Horrible Last Two Years. Worst Recession Since 1930s - PowerPoint PPT PresentationTRANSCRIPT
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Harnessing Public Pension Power
Greg A. KinczewskiVice President/General Counsel Marco Consulting Group
Using Corporate Governance to Protect Fund Assets During a Time of Economic Crisis
NCPERS2009 Public Safety Conference
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Horrible Last Two Years Worst Recession Since 1930s
$15 Trillion Lost From American Economy
$1 Trillion From State and Local Benefit Fund Equity
Unemployment At 26-Year High
S&P 500 Drops 55.3%
NY Financial Brokers Lose $35 Billion
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How Has Wall Street Reacted?
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How Has Wall Street Reacted?
$18.4 Billion in 2008 Bonuses
Sixth-Highest in History
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How Has Wall Street Reacted? Goldman Sachs 2008:
− Earnings: $2.3 billion− TARP Funds: $10 Billion− Bonuses: $4.8 billion
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How Has Wall Street Reacted? Morgan Stanley 2008:
− Earnings: $1.7 billion− TARP Funds: $10 billion− Bonuses: $4.475 billion
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How Has Wall Street Reacted? J.P. Morgan Chase 2008:
− Earnings: $5.6 billion− TARP Funds: $25 billion− Bonuses: $8.6 billion
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...They At Least Had Earnings
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American International Group $170 Billion Bailout by U.S.
Prevents Bankruptcy
$1 Billion in Retention Bonuses 2008-2009− $450 Million to Financial
Derivatives Unit That Collapsed Economy
− One-Third Returned After Public Furor
− Dozen Employees Resign
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Merrill Lynch Bank of America Buys at Bargain
Price in December, 2008− Merrill Lynch lost $25 Billion in
2008− Fourth Quarter Loss of $5 billion
Greater Than Anticipated− BofA Says No Bonuses to Merrill
Lynch Without Its Approval in Acquisition Proxy
− BofA Already Authorized Bonuses of $3.6 Billion to Merrill Lynch
− SEC Sues BofA For Failure To Disclose Bonuses
$33 Million Settlement Judge Rejects, Trial Set for
February 1, 2010
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NCPERS Members File 2009 Proposals The Kansas City Firefighters, Miami Firefighters, and Philadelphia
Public Employees Filed Shareholder Proposals In 2009 To Curb Corporate Excesses
Easy To DoEligibility: Own $2,000 of Stock Continuously for Two Years− Cost: Minimal− Key: Support From Other Institutional Investors
And Effective
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2009 Shareholder Proposals On Independent Compensation Consultants
Shareholder Approval of Golden Coffins
Say on Pay
Disclosure and Board Oversight of Political Contributions
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Independent Compensation Consultant
Independent Compensation Consultant Policies Adopted By:− Johnson & Johnson− Metlife
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Approval of Golden Coffins
Shareholder Approval of Golden Coffins Adopted By:− Occidental Petroleum
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Pay Proposal
Shareholder Say on Pay Proposal− Receives 53% at Pulte
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Disclosure and Board Oversight of Political Contributions
Disclosure and Board Oversight of Political Contributions− Receives 41% at Citigroup
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NCPERS Members Planning Proposals NCPERS Members Planning
Proposals in 2010− Say on Pay ?− Bonus Banking− Asymmetrical Pay− No CEOs on Compensation
Committees− Independent Chairman of Board
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Make Sure Your Votes Are Being Cast Right Way on Those Proposals Have A Proxy
Voting Policy
Direct Your Proxy Voting Agent
Consider Cosponsoring Proposals
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Make Sure Your Own House in Order
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Best Governance Practices Governance Principles
Risk Management Approach
Investment Policy Statement
Forward Agenda
Annual Board Self-assessment
Key Performance Measures − Administrative Objectives − Investment Oversight − Member Services− Regulatory Compliance
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Questions