Organized labor will announce plans today to throw its considerable weight — in lobbying and in shareholder fights — behind efforts to reform stock options, severance pay and pensions.
At a labor rally on Wall Street, John J. Sweeney, the president of the A.F.L.-C.I.O., plans to announce the labor movement's support of several proposals, among them recording stock options as expenses and prohibiting top corporate officials from selling company stock while in office.
Noting that scandals at Enron, WorldCom and Arthur Andersen had cost 28,500 workers their jobs, Mr. Sweeney will call on the Securities and Exchange Commission and the three main stock exchanges to agree to a single higher standard for publicly traded corporations.
"When corporate criminals invade our workplaces and our markets to steal our jobs and our savings, we must react every bit as decisively as when thieves enter our homes and try to bring harm to our loved ones," Mr. Sweeney will tell union members, according to the prepared text of his speech.
Labor unions have already played a role in moving accounting reforms through Congress and in several successive shareholder battles that have brought about changes, among them persuading the Walt Disney Company to stop using the same firm to audit its books and to do consulting work for it. In his speech today, Mr. Sweeney says that labor will step up these efforts — in meetings with executives and in shareholder fights, demonstrations, lobbying and e-mail campaigns.
He promises that the A.F.L.-C.I.O., a federation of 66 unions representing 13 million workers, will work for reforms, company by company, starting with the Standard & Poor's 100. He says unions will use more than $5 trillion in union pension funds to help pressure corporate managers be more responsive and responsible.
He will also call for changes to give pension funds more power to choose directors who do not rubber-stamp the decisions of company executives. He also raises the possibility of banning stock options altogether, and he wants workers to be able to choose representatives on the boards of their 401(k) plans.
Although unions represent only a fraction of the workers at companies hit by corporate scandal, labor leaders say this is an opportune time to rein in executive compensation and to align the interests of executives more closely with those of investors and workers.
"Nearly 100 years ago, robber barons hijacked our country and our wealth by taking advantage of the legal and regulatory voids created by our change from an agricultural to an industrial economy," Mr. Sweeney's speech says. "Now we're faced with 21st century corporate pirates who took advantage of our transition from an industrial to an information economy to kidnap working families and take us back to the past."
Citing the efforts of the Stanley Works to reincorporate in Bermuda, Mr. Sweeney will call for outlawing the use of offshore tax havens, which he says make it easier for companies to evade taxes and accountability. He will also call for revising bankruptcy laws so that workers who lose their jobs because of corporate scandals will not receive a mere fraction of the severance pay due them.
When Enron employees found themselves without jobs and with their 401(k) plans largely wiped out, the federation led a fight in bankruptcy court to obtain more severance pay for 4,200 laid-off workers. Enron said it could pay only a fraction of the severance pay they were owed, but the workers won a $34 million settlement promising up to $13,500 each.
Today, Mr. Sweeney will announce the federation's plans to file a similar lawsuit on behalf of 17,000 laid-off WorldCom workers.
Charles M. Elson, director of the Center for Corporate Governance at the University of Delaware, said: "A lot of folks in the governance area have been calling for a lot of these things for a long time. I think stock options should be expensed, and I don't think C.E.O.'s should be selling their stock when they're still working, except under extraordinary circumstances."
Mr. Elson said the A.F.L.-C.I.O.'s pledge to play a larger role should give a big lift to the corporate overhaul movement.
"Labor has been a very active voice in the governance area and a very successful voice," he said.
Mr. Sweeney joined a labor demonstration yesterday at the Stanley Works in New Britain, Conn., to protest its plan to reincorporate in Bermuda. On Wednesday, he plans to lead a labor rally at the headquarters of Fidelity Investments in Boston, the world's largest large mutual fund company, to protest its policy of not disclosing how it votes in shareholder battles.
After his speech today, Mr. Sweeney plans to meet with Richard A. Grasso,
the president of the New York Stock Exchange, and Henry M. Paulson Jr., the chief
executive of the Goldman Sachs Group, to discuss his ideas for corporate overhaul.
Copyright 2002 The New York Times Company