WASHINGTON (Reuters) - Three major Wall Street banks this week lost their bid to block a union-backed shareholder proposal calling for the banks to disclose so-called “golden parachutes” that executives can earn if they leave to work for the government.
The Securities and Exchange Commission told Citigroup, Goldman Sachs and Morgan Stanley they cannot exclude the AFL-CIO’s shareholder proposal from their corporate ballots, according to copies of the letters seen by Reuters.
Spokesmen for the three banks declined to comment on the SEC’s decision.
“Citigroup, Goldman Sachs and Morgan Stanley fought hard to prevent shareholders from having a vote on more transparency around government service golden parachutes,” Heather Slavkin-Corzo, the AFL-CIO’s investment office director, said in an email.
“We are pleased that the SEC did not yield to pressure from the big banks on this important issue.”
The AFL-CIO’s shareholder proposal calls for requiring the banks to prepare a report disclosing the vesting of equity-based awards for senior executives that voluntarily leave to go be public servants.
The report would have to identify which executives are eligible for government service golden parachutes and the estimated value of their packages.
In the labor federation’s petition supporting the measure, it says such disclosure is important because equity-based rewards that vest over time are meant to serve as a powerful incentive for people to remain employed with a company.
Those who choose to resign sooner, the union said, typically forfeit any unvested awards.
The AFL-CIO also cites examples of people who have left the banks to work in government and were paid handsomely, including Treasury Secretary Jack Lew, who previously worked for Citigroup.
The banks made various arguments to the SEC in their efforts to exclude the measure, including claims that they already disclose most of the compensation arrangements at issue.
They also argued that the AFL-CIO’s shareholder proposal was materially misleading.
But in letters responding to their arguments, the SEC said the banks’ public disclosures do not appear to “compare favorably with the guidelines of the proposal.”
The AFL-CIO has been aggressively lobbying to get its measure on the ballots of the banks.
Last month, its president, Richard Trumka, wrote an opinion piece in the Wall Street Journal titled “The Paratroopers of Crony Capitalism: Why give golden parachutes to executives who leave to enter government service?”
Additional reporting by Lauren Tara LaCapra in New York; Editing by Chris Reese and Jonathan Oatis