To help union trustees of pension funds decide whether shares held by the funds are voted in labor s interest by fund managers, the AFL-CIO has issued Proxy Voting Guidelines that oppose, for example, a large concentration of options in the hands of executives that are not tied to performance requirements other than stock price. Instead, options should be spread among employees and tied to such measures as industry indexes, employee compensation, or benefits. Further, the guidelines suggest limiting other owners ability to drain corporate resources by opposing blank-check preferred stock and carefully considering dual class voting stocks. In both cases, there is a large potential for the owners of these shares to direct company money into their own pockets to the disadvantage of other stakeholders. Finally, the AFL-CIO uses strong language on retirement income security shareholder proposals that link retirement benefits and the directly linked issues of income and job security to executive pay should be unambiguously supported.
Guidelines serve little purpose, however, unless they are actually put into practice.
Since 1997, the AFL-CIO has identified several key proxy votes. Based on these designated key votes, the AFL-CIO surveys fund managers on how they voted on issues important to organized labor. Key votes address investment only indirectly. Only the last, a vote against a dual class structure at Marriott International, won majority support. Over the years, it has become apparent that there has been an increasing focus on winnable votes.