Carl McCall's Secret Self

A Look Inside the Bizarre World of His Pension-Fund Proxy Votes

McCall even refused to support 11 resolutions on South Africa between 1993 and 1995, most of which attempted to apply the standards of corporate conduct drafted by the South African Council of Churches to aid the transition to majority rule. Developed with the support of the African National Congress, this framework summoned companies to cooperate with an agenda that included training, job creation, workers' rights, black-owned businesses, and environmental protection.

Ironically, while sitting out the other rights controversies, McCall supported every resolution relating to discrimination against Catholics in Northern Ireland. Even sponsoring resolutions to impose the MacBride anti-discrimination principles on companies whose management resisted them, he demonstrated that he did believe the fund's leverage could be used to advance at least one human rights cause—one with a vast political constituency in New York. He also became the first state comptroller to sue pension funds to buy tens of millions in Israeli bonds.


McCall: His corporate coziness pitted him against Mexicans, Mandela, the environment, human rights in Burma and China, the Arctic refuge, and every form of disclosure.
photo: Richard B. Levine
McCall: His corporate coziness pitted him against Mexicans, Mandela, the environment, human rights in Burma and China, the Arctic refuge, and every form of disclosure.

One of the companies embroiled in the Burma scandal was Halliburton—the Texas oil company run by Dick Cheney when it signed on to the pipeline deal. Cheney has come under fire—now and during the 2000 presidential campaign—for what The Washington Post called his "generous retirement package that included about $13.6 million in stock and stock options," as well as $1.2 million in salary payouts.

Yet when the International Brotherhood of Electrical Workers introduced a resolution in the spring of 2001 assailing the Cheney package and asking the board to set up a performance-based compensation system for the five top executives, McCall voted against it. He simultaneously voted for another resolution that did not mention Cheney and asked only that future stock-option policy be performance based. In dozens of other votes over the years, McCall has backed linking options to performance but opposed linking total compensation—a position inconsistent with the guidelines he's published, which state that the fund "does not support incentive compensation plans which are not specifically related to corporate and individual performance."

The Cheney vote was just one of a host of curious McCall votes on compensation matters. In 1999, he voted for an Enron management resolution authorizing multimillion-dollar cash bonuses for Ken Lay and Jeff Skilling. He opposed shareholder resolutions at QWest and Conseco—two other companies dominating the current headlines—that would have increased disclosure or altered the way of calculating executive compensation. The resolutions focused on accounting tricks and transparent corporate piracy—including a $107 million package for Gary Wendt at Conseco.

Not even Michael Eisner's $640 million Disney salary over three years—or his grabbing 26 percent of all of the company's stock options in a single year—could attract McCall's support for a 2001 resolution limiting options to 5 percent for any executive. His vote on each of these proposals appears to be in conflict with one of the "four basic principles of corporate governance" that have guided comptroller policy since 1985, namely that "compensation should be a reflection of performance."

McCall has also repeatedly voted against increasing disclosure about executive compensation—for Welch at GE, as well as a host of other New York companies that have laid off thousands, like IBM and Eastman Kodak. In 2000 he even opposed executive salary disclosure at Con Ed, a public utility. Similarly, he's routinely opposed resolutions seeking fuller disclosure of corporate lobbyists, campaign contributions, and revolving-door hires from the public sector. His consistent votes against disclosure fly in the face of his policy guidelines, which state that "the Fund believes that disclosure of contributions is a vital element of the Board's accountability to shareholders."

As much as the comptroller attempts to defend these positions as market decisions locked in by fiduciary duty, he has bowed to personal or public preferences in at least two areas—equal employment and tobacco. His early votes on both in the '90s were often pro-management, even on affirmative action. He also voted against 34 tobacco resolutions in a row between 1993 and April 1996, specifically opposing attempts to restrict the targeting of African Americans and minors.

While he voted against another 11 tobacco resolutions in 1996, he finally turned the corner in '97, supporting most resolutions since. Apparently without any self-consciousness,McCall assailed Governor Pataki last year for delaying some of his appointments to the Tobacco Use Advisory Board, actually offering in a letter the stats on how many New Yorkers got lung cancer while Pataki pondered. In fact, as late as May 2001, McCall voted against a CalPERS-backed resolution at UST Corporation that tried to reduce the availability of smokeless or chewing tobacco to minors.

As with so much else in his proxy voting history, McCall's tobacco record leaves a lot to chew on.

Research assistance: Ross Goldberg, Nate Schweber

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