When Lockheed Martin Chairman and CEO Robert Stevens addressed the audience convened for NACD’s From Battlefield to Boardroom program, he was asked if remaining politically agnostic should be rethought given calls for cognitive diversity on boards.
“What I encourage from our board members, and frankly, from our executive team,” Stevens said, “is: ‘Understand the political dimensions in America. Understand where you think this country ought to go and why. Get in the game and vote.”’
Stevens’ opinion underscores why our cover story on union activity is must reading for directors. While unions in general may now be fewer in number, their pension-fund arms exert enormous influence on both the American political system and corporate boards. It may be surprising to some directors to learn that union and pension-fund clout is usually inversely proportioned to their ownership in those companies where they advocate for change.
Wal-Mart is a recent case in point. A group of New York City pension funds will vote their 4.7 million shares against five of the retailer’s directors following reports that senior executives stymied an internal investigation into alleged payments of bribes in Mexico. On June 1, at Wal-Mart’s annual shareholders’ meeting, the funds, which hold a tiny percentage of the retailer’s total equity, plan to vote against Chairman Robson Walton, CEO Michael Duke, former CEO Lee Scott, current audit committee chair Christopher Williams and audit committee director Arne Sorenson.
The face-off between business and activists will likely be primetime viewing when, on June 5, Wisconsin Republican Gov. Scott Walker faces a recall election spurred by union members who objected to his efforts to suspend collective bargaining for public employees as part of the state’s budget-reduction program. David H. Koch, a businessman and philanthropist, warns, “If the unions win the recall, there will be no stopping union power.” The recall vote has been cast by The New York Times as “a critical test of labor muscle versus corporate money” and described as a warm-up for a confrontation that will play out during the presidential election, which both sides view as the biggest political showdown in at least 30 years between pro- and anti-union forces. We’ll be watching.
Judy Warner is editor-in-chief of Directorship.com and NACD Directorship.