Former California Secretary of State Kevin Shelley joined Berman DeValerio as special counsel in 2006. Since then, he has focused on issues of concern to union funds. The editors of the Securities Fraud Monitor sat down with Shelley to discuss what’s on the minds of union funds these days.
Securities Fraud Monitor: You’re constantly out talking to union fund leaders about their pension funds. Is there one common theme you hear?
Kevin Shelley: The bottom line is that many unions view their pension funds not only as a mechanism to provide security for their members, but also as a tool to advance issues and causes that they care about – changes to corporate governance, executive compensation practices or anti-union practices, for example.
The union movement has evolved significantly over the years. Many have come to realize that they have power not only from a political and organizing perspective, but also from an economic perspective. After all, union pension funds are major shareowners.
SFM: Credit for some of that evolution goes to the Change to Win Coalition, which has been exploring some new territory.
KS: There are exciting developments happening across the union spectrum – lots of new ideas and a tremendous amount of energy – and Change to Win certainly exemplifies that. Just look at Andy Stern of the Service Employees International Union. Here’s a guy who almost always used to find himself in opposition to management. Yet now he’s leading the union effort for a health care reform that involves both labor and management. The labor movement is dynamic, using many different approaches to how they organize and realize their goals, particularly with a current top priority – health care.
And Stern isn’t the only one in the vanguard of change. Just this fall, for example, two prominent union leaders made it to Directorship magazine’s list of the most influential players in corporate governance: Richard Ferlauto of the American Federation of State, County and Municipal Employees (AFSCME); and Damon Silvers of the AFL-CIO.
SFM: How are corporate governance issues shaping the debate within funds?
KS: Certainly corporate governance issues are extremely important to unions, but corporate governance is not just a phrase spoken in a vacuum. What is it that the unions are trying to accomplish here? They want a say in the selection of boards of directors. They want change in public financial disclosures. They want to reduce runaway executive compensation.
These are corporate governance changes that will help to advance their own issues and causes, such as improved health benefits and enhanced working conditions for their members. They don’t want corporate governance changes just for the sake of it.
Just recently, we’ve seen union funds at the forefront of the fight over proxy access. (See related article on page 8.) The fact that AFSCME is ready to launch a legal battle against companies that deny them access shows just how critical this issue has become – and how serious the union funds are in defending and protecting shareholder rights.
SFM: Like labor actions and negotiations, shareholder resolutions have evolved into another important vehicle for effecting change.
KS: The very nature of a Taft-Hartley pension fund involves representation of both labor and management. By its definition, it promotes a greater level of cooperation between both sides to achieve their goals.
I think the labor movement recognizes that you can’t just strike and organize from the outside; you need to work from the inside, too. As the number of union workers has declined in this country, union leaders have learned new and different approaches to both maintain their membership levels and advance their issues. The Service Employees International Union and the AFL-CIO, for example, have been making significant strides as they push board declassification proposals.
SFM: Berman DeValerio shares many of the same goals as the union funds, particularly when it comes to corporate governance. The vast majority of our clients are union members –police officers, firefighters, teachers.
KS: We’re always searching for ways we can help unions because we see eye-to-eye on so many issues. We understand the concerns that unions have on issues of social and economic justice.
SFM: What are some of the things that a firm like ours can do for union funds, aside from litigating on their behalf?
KS: I constantly hear that funds are looking for personal attention. I think our firm’s portfolio monitoring service provides one answer to that need. We take a very individualized approach in addressing the unique needs of each union.
In addition, we have a philosophy of selectivity when it comes to filing cases. We’re always examining potential lawsuits and asking the question: will this help beneficiaries in the long run?
We can also assist with drafting of legislative and ballot initiatives, as we have done in the past for other labor organizations such as the California School Employees Association. In addition, at labor’s request, we have drafted a list of best practices that union funds should consider in selecting counsel.
SFM: You have spent much of your political career fighting for workers’ rights. When you were in the California State Assembly, you were seen as the “go-to” guy for labor. You also authored the state’s Corporate Accountability Act, which mandated new corporate accountability requirements on behalf of consumers and investors.
KS: The rights of workers have been a focus of my entire career, from my start in San Francisco government through my tenure as California Secretary of State. Given my past government experience, I’m able to work closely with union funds to advocate for them in legislative battles over key issues – such as the defined benefits fight now looming in my home state of California.
*In August 2017, our firm name changed to Berman Tabacco. Case references and content published before that date may refer to the firm under our prior name, Berman DeValerio.