Legal Intern, Manhattan Institute's Center for Legal Policy
Manhattan Institute's Center for Legal Policy Director James Copland discussed trends from his recent Proxy Monitor season-end report in a Washington Examiner Op-Ed last week. In the article, Copland highlights labor union's increased shareholder activism, which potentially favors union interests over the goal of increasing value for all shareholders:
Stymied by marketplace pressures and government constraints, labor unions are turning to the corporate ballot box, attempting to exercise the shareholder voting power of employee pension funds to muscle American corporations in their preferred direction. In a recent column in the Washington Post, Harold Meyerson praised unions for "using the voting power of their pension funds" to organize "shareholder opposition to excessive executive pay and corporate political donations."
Aside from the underlying merits of Meyerson's beef with American corporations, the problem with his mechanism is that employee pension funds, under the federal Employee Retirement Income Security Act, or ERISA, are supposed to focus solely on increasing shareholder returns and safeguarding workers' financial interests. Even if a company's actions are damaging to organized labor, labor pension funds shouldn't be advancing union interests at the cost of jeopardizing their beneficiaries' retirements by undercutting the profitability of the companies in which the funds invest.
For more analysis of the 2012 Proxy Monitor season-end report, see Point of Law's podcast featuring Copland discussing his latest research.