Contact : Eric
Sumberg, firstname.lastname@example.org, (212) 669-3535
May 20, 2015
COALITION OF PENSION FUND FIDUCIARIES RELEASE JOINT LETTER ON
(New York, NY)
– On Wednesday, New York City Comptroller Scott M. Stringer, New York
State Comptroller Thomas P. DiNapoli, Chicago Treasurer Kurt A.
Summers and California Controller Betty T. Yee released a joint letter
highlighting their concerns about the overuse of buybacks at portfolio
companies, including McDonald’s, which holds its Annual General
Meeting tomorrow in Oak Brook, Illinois.
The full text of the
is below and attached:
As fiduciaries to pension funds with over $860 billion in assets and
responsible for the retirement security of 4.3 million participants,
we rely on companies to deliver sustainable, long-term value.
Sustainable economic growth depends on companies investing in their
future through innovation, human capital, and growth. Companies must
pursue a balanced approach to capital allocation, both reinvesting in
their long-term health and distributing profit to shareowners.
We are concerned, however, that many companies have lost their
balance. Productivity growth in companies used to be aligned with
commensurate wage growth – a rising tide that drove decades of
economic prosperity. Growing corporate coffers of cash facilitated
rising capital expenditures. And U.S. companies were at the forefront
of crucial innovation.
Today, however, 95 percent of corporate earnings are being
distributed to shareowners, prompting us to question whether companies
are adequately reinvesting for sustainable returns over the long-term.
If the pendulum swings too far in favor of returning capital to
shareowners, the future viability of the companies in which we invest
may be placed at risk.
Trillions of dollars have been spent on share buyback programs in
recent years. Buyback programs are one effective means to return
capital to shareowners. However, in order to maximize shareholder
value for the long-term, companies must also adequately invest in the
future. Growth requires investment.
One timely illustration is McDonalds, which holds its annual
shareowner meeting this week. McDonalds is facing serious performance
challenges. But despite a recently announced and much needed
turnaround plan, the company continues to direct capital towards an
aggressive share buyback program.
Eric Sumberg (Stringer) 212-669-3535
Matt Sweeney (DiNapoli) 212-383-1388
Katie Hickey (Summers) 312-744-3356
John Hill (Yee) 916-445-2636
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