Richard Ferlauto, director of pension and benefit policy for AFSCME, the largest public sector union in the U.S. was responsible for protecting the pensions of its members. Because pensions were invested for decades, Ferlauto like companies that have invested in the union will be driven by long-term interests of shareholders. He believes that this is the need for good corporate governance and effective monitoring by the board of directors. The case explores the history of AFSCME shareholder activity on this front, and in particular its use of shareholder proposals to a vote of shareholders at the annual meetings. So, it looks at the issue of executive compensation, and that compensation is excessive sign of poor management. It also addresses Tell Union wage proposal, which sought to shareholders with an advisory vote on executive compensation. Finally, the case provides detailed information on the growth of Countrywide Financial, its collapse, the role he played in the mortgage financial crisis, and excessive compensation of its CEO. "Hide
by Fabrizio Ferri, James Weber Source: Harvard Business School 28 pages. Publication date: April 15, 2009. Prod. #: 309101-PDF-ENG
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