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IBEW-NECA Proxy Voting Service 2012 Report Greg A. Kinczewski January 31-February 1, 2013 VP/Gen.Counsel The Marco Consulting Group IBEW-NECA Employee.

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Presentation on theme: "IBEW-NECA Proxy Voting Service 2012 Report Greg A. Kinczewski January 31-February 1, 2013 VP/Gen.Counsel The Marco Consulting Group IBEW-NECA Employee."— Presentation transcript:

1 IBEW-NECA Proxy Voting Service 2012 Report Greg A. Kinczewski January 31-February 1, 2013 VP/Gen.Counsel The Marco Consulting Group IBEW-NECA Employee Benefits Conference

2 The Marco Consulting Group Three Goals of IBEW-NECA Proxy Voting Service  Discharge trustees fiduciary duties  Engage companies to enhance shareholder value  Educate companies on benefits of union construction

3 The Marco Consulting Group Trustees Fiduciary Duties  DOL Says: − Proxy Voting is Fiduciary Act of plan asset management − Actively influencing corporations consistent with ERISA − Can delegate to agent must still monitor

4 The Marco Consulting Group Trustees Fiduciary Duties  IBEW-NECA Proxy Voting Service Provides − Proxy Voting Policy − Annual Explanation of All Votes Cast − Annual Executive Summary on Votes, Developments  DOL Says − Model for all Taft-Hartley Benefit Plans

5 The Marco Consulting Group Trustees Fiduciary Duties  2011 passage of Dodd-Frank gave trustees new responsibility  Advisory vote on executive compensation − U.S. executive pay 343 times average worker

6 The Marco Consulting Group Trustees Fiduciary Duties  Results of Second Year of Widespread Say on Pay Votes − Rejections Grow From 41 in 2011 to 59 in 2012 − Average Vote Ticks Upward One Percent to 91% − Focus on Underperforming/Overcompensating Outliers

7 The Marco Consulting Group Trustees Fiduciary Duties  MCG approval remains stable − 40%  Analysis goes beyond outliers − Performance or time vesting awards? − Dilution − Golden parachutes − Excise tax gross-ups

8 The Marco Consulting Group Trustees Fiduciary Duties  Continual Engagement and Education is Key

9 The Marco Consulting Group Engage Companies to Enhance Shareholder Value  Shareholder proposals − Informal meetings with companies − Annual shareholder meeting

10 The Marco Consulting Group Engage Companies to Enhance Shareholder Value  IBEW-NECA Join Coalition of 14 Activists Institutional Investors  Engage 10 Companies With Low 2011 SOP Votes − Abbott − Masco − Allstate − McKesson − Dean Foods − Northern Trust − EOG Resources − Staples − Limited Brands − Total System Services  Package of Four Reform Proposals − Independent Chair − No Gross Ups of Excise Taxes − No Accelerated Vesting in Change of Control − Substantial Retention of Equity Awards

11 The Marco Consulting Group Engage Companies to Enhance Shareholder Value 18 Go To Vote  27% Independent Chair − Majority Vote at Mckesson  38% No Gross Ups of Excise Taxes  40% No Accelerated Vesting  22% Substantial Retention of Equity Awards  35 proposals eligible for vote

12 The Marco Consulting Group Engage Companies to Enhance Shareholder Value  2013 Plans for Coalition − Proposals will not be refiled at seven 2012 targets due to responsiveness − Proposals will be refiled at three 2012 targets due to non- responsiveness − Three new companies targeted for reform package − Four new companies targeted for new specific performance standards proposal

13 The Marco Consulting Group Engage Companies to Enhance Shareholder Value  Five Proposals Withdrawn − Independent Chair at Total System Services − Independent Chair at Allstate − No accelerated vesting at Masco − Declassify board at Centurylink − No accelerated vesting at Duke Energy  Eight proposals go to vote − No accelerated vesting at DirecTV, 31% − No accelerated vesting at Windstream, 22% − Equity retention at Comcast, 11% − Independent Chair at Abbott Laboratories, 19% − Cumulative Voting at Autonation, 15% − Equity retention at Limited Brands, 19% − Equity retention at Dean Foods, 32% − No accelerated vesting at McKesson, 44%  Specific IBEW-NECA 2012 Results

14 The Marco Consulting Group Engage Companies to Enhance Shareholder Value  Specific Performance Standards − Abercrombie & Fitch  Independent Chair − Abbott Laboratories − Kroger  No Accelerated Vesting − Autonation − Comcast − DirecTV − McKesson − Verizon − Windstream  Equity Retention − Centurylink − Dean Foods − FirstEnergy − Time Warner  IBEW-NECA Plans for 2013

15 The Marco Consulting Group Educate Companies on Benefits of Union Construction  On time  On budget  Meet industry standards  Minimal need for repair

16 The Marco Consulting Group Educate Companies on Benefits of Union Construction  Annual Survey of Planned Construction By Publicly Traded Companies Kroger Co. 1KROGER COMPANYTennesseeKnoxville1,980,281Prop 2KROGER COMPANYKentuckyLexington2,972,500MPl 3KROGER FUEL CENTERVirginiaVirginia Beach226,305WoDr 4KROGER FUEL CENTER SW014TexasWillis600,000WoDr 5KROGER GROCERY STOREKentucky 1,000,000MPl 6KROGER GROCERY STOREVirginiaRichmond7,419,781WoDr 7KROGER GROCERY STORE 334Texas 168,000WoDr 8KROGER GROCERY STORE 590TexasCrowley500,000WoDr 9KROGER GROCERY STORE GA-694GeorgiaMilledgeville7,823,500WoDr 10KROGER GROCERY STORE R-514VirginiaRichmond9,152,438WoDr 11KROGER GROCERY STORE Y625ArkansasConway3,570,000CoDr 12KROGER STOREOhioColumbus5,000,000Dsgn 13KROGER STOREOhioLiberty Township6,000,000Dsgn 14KROGER STORE A402OhioMadeira Township1,300,000Dsgn 15KROGER STORE A432OhioCincinnati600,000Dsgn 16KROGER STORE A531OhioCincinnati600,000Dsgn 17KROGER STORE D436MichiganFrankenmuth1,300,000MPl 18KROGER STORE D465MichiganImlay City1,300,000MPl 19KROGER STORE D620Michigan 1,600,000Dsgn 20KROGER STORE D639MichiganSouth Lyon1,300,000MPl 21KROGER STORE D704MichiganShelby Township1,300,000MPl 22KROGER STORE FUEL PUMPSOhioDublin100,000Prop 23KROGER STORE J947IndianaDanville500,000Sche 24KROGER STORE J957IndianaNoblesville1,300,000Dsgn 25KROGER STORE J972IndianaFort Wayne500,000WoDr ……………… 51SMITH'S FOOD & DRUG STORE 77UtahSalt Lake City500,000WoDr Total Project Value$94,963,805

17 The Marco Consulting Group Educate Companies on Benefits of Union Construction  MCG sends letter to HCA holdings  MCG and IBEW local 124 attend HCA holdings annual shareholder meeting  Raise issues with chairman/CEO and head of construction

18 The Marco Consulting Group Cost of Discharging Fiduciary Duties, Engaging and Educating Companies  $3,125 per portfolio  $750 for portfolios less than $10 million  $25,000 maximum fee

19 The Marco Consulting Group Right Thing For Fiduciary  Right thing for Fiduciary  Smart thing for Taft- Hartley Trustee

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