New York, NY - July 14, 2009 - TIAA-CREF (TC), the nation's largest pension system, proclaims itself a leader in corporate/social responsibility, as well as in customer satisfaction. And yet:

• While other governance leaders work towards shareholders having a binding vote on executive compensation levels, TC's own shareholders get only an "advisory" vote on its compensation policies-not a real "say on pay." Indeed, TC's policies enabled their new CEO to make $8 million for eight months work in 2008--far too high for a non-profit whose academic and non-profit clients earn far less. (Admirably, even he realized that the originally approved package of $10 million was too high and voluntarily took a cut.) TC's former CEO ran into a firestorm at one annual meting for his pay level.

• In recent years, TC has blamed computer problems for nightmare scenarios in which customers have faced missing payments and delayed money transfers and withdrawals. Some filed complaints with the SEC (see http://www.consumerismcommentary.com/2006/01/11/problems-with-tiaa-cref/#comments).

• TC has had a string of governance fiascos over the last half dozen years:

  1. Following SEC complaints, two of its trustees were removed due to financial conflicts of interest. Yet TC preaches the need for independent trustees.

  2. Former CFO Elizabeth Monrad was investigated by the SEC and Department of Justice for financial conspiracy at her previous job, resulting in an 18-month prison sentence.

  3. An insufficient background check led TC to hire someone who had previously committed criminal acts that should have precluded her employment. This employee’s actions resulted in a breech of security at TC--which was followed by a lack of candor by TC about both the breech and the employee's removal. This employee's supervisor filed a lawsuit against TC for being fired as a scapegoat.
  
  4. TC supported a proposed SEC measure to make it harder for shareholders to resubmit resolutions. (After a public outcry, the SEC did not adopt the measure).

  5. TC opposed its own shareholders' resolutions on three issues supported by advocates of good governance: (a) separating the Chairman and CEO positions so they are held by different people; (b) reconstituting the independent TC committee that nominated some trustees; and (c) adopting principles set forth in the Conference Board Commission on Public Trust and Private Enterprise. (TC later changed its policies to address the first of these concerns).

  6. TC will pay its former general counsel millions in compensation over several years while he holds that same position at the Treasury. This creates a potential conflict of interest.

• Although its tagline is "financial services for the greater good," TC invests in some of the worst corporate actors: Coca-Cola, Nike, Wal-Mart, Reynolds American, and Costco (in Mexico). The 1.4 million-strong American Federation of Teachers passed a resolution critical of TC's investment in the first three of these companies and demanded that it hold these companies accountable on labor issues:

  1. After years of shareholder lobbying, TC finally agreed to talk to some of these companies. Unfortunately, TC's "quiet diplomacy" over years has led to nothing substantive with the companies. TC can and should do more. Its Policy Statement on Corporate Governance states, "While quiet diplomacy remains our core strategy"¦TIAA-CREF's engagement program involves many different activities and initiatives, including"¦engaging in public dialogue and commentary"¦ engaging in collective action with other investors"¦seeking regulatory or legislative relief"¦commencing or supporting litigation." TC's press releases state that "engagement is a multi-step process...TIAA-CREF believes that we should explore the ways in which to influence the companies' behavior and thereby help bring about positive social change" and that they "sometimes threaten tougher actions." Notably, a January 24, 2009 New York Times article asserted that changes in Wal-Mart's environmental practices were prompted by the aggressive work of activists.

  2. Recently, under pressure from Investors Against Genocide and a looming resolution on its July 20 meeting ballot, TC changed a long-standing policy and agreed to divest from its portfolio companies in Sudan unless they took meaningful steps to respect human rights.

  3. TC needs to extend that get tough policy to other important human rights abuses seen in sweatshops, murders of union activists, or otherwise. Reform these five companies on the concerns below-which go beyond just human rights--or divest from them:

  --Coca-Cola: The Coca-Cola Co. continues their widespread labor and human rights abuses: complicity in death threats to Coke employees and their families in Colombia to bust their union; destroying public water sources in India, Mexico and elsewhere; benefiting from child labor in El Salvador; and continuing to operate in the Sudan. Coke workers in China are reportedly involved "in the most dangerous, intense and tiresome labor, work the longest hours, but receive the lowest wages and face arrears and even cutbacks in their pay." Campaign to Stop Killer Coke Director Ray Rogers stated, "Top executives of Coke have continually lied to the public regarding their abuses and have blocked any real investigations. With nearly one billion dollars in Coca-Cola stock and other substantial investments in various bottlers, it's time that TC took necessary action against Coke that would lead to change in the company's criminal and immoral behavior."

  --Nike: "With child labor recently found in a Nike factory in Malaysia, slave wages recently reported in a Nike apparel factory in Indonesia, and union organizers recently fired in a Nike shoe factory in Vietnam, it feels like the late 90s all over again," said Jim Keady, the founder of Team Sweat, which is pressing Nike to end their sweatshop abuses. "In light of these current reports and given TIAA-CREF's bargaining position with Nike given its large investment in the company, it is time that TC's principals did something that was actually going to make a difference in the world," said Keady. For starters, TC could demand that Nike disclose the wage rates for workers at all of its factories around the world.

  --Wal-Mart: Wal-Mart continues to exploit its workforce, build its profits on sweatshop labor, and damage local communities by constructing huge stores--then abandoning hundreds of them. "To the extent that TIAA-CREF is one of the largest institutional investors in Wal-Mart stock, they are complicit in the socially irresponsible behavior of the world's largest retailer," said Al Norman, founder of Sprawl-Busters. "CREF has lost touch with its higher education investors by continuing to invest heavily in Wal-Mart."

  --Reynolds American: Farm Labor Organizing Committee (FLOC) is challenging Reynolds American concerning the oppressive working conditions of migrant farmworkers in North Carolina. Reynolds' supply system enriches the corporation and its top executives, while isolating itself from the field workers at the bottom. Farmworkers are denied any voice in the system that leaves them working and living in miserable conditions. Corporate Campaign, Inc. Director Ray Rogers stated, "Reynolds, which reported more than $1.3 billion in profits last year and whose top executives voted themselves the privilege to receive up to $60 million each in additional annual bonuses, has the power to improve these conditions. Yet Reynolds has refused to even talk with FLOC about possible solutions. TIAA-CREF should divest all its investments in Reynolds American."

  --Costco: As recognized by the High Commission on Human Rights and Amnesty International, Costco violently repressed activists and illegally destroyed important natural areas as well as 3,000-year-old archeological sites in Cuernavaca, Mexico. "By divesting from Costco, TC would send a message that extends beyond Mexico, to others committing such crimes," says Prof. Jaime Lagunez of the Citizens' Coalition.

*Sprawl-Busters; Press for Change; Campaign to Stop Killer Coke/Corporate Campaign, Inc.; Campaign for a Commercial-Free Childhood; Social Choice for Social Change; Citizens Coalition (Frente Civico); Team Sweat; National Community Reinvestment Coalition; United Students Against Sweatshops; Canadian Committee To Combat Crimes Against Humanity (CCCCH); Corporate Accountability International; World Bank Bonds Boycott

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