Peabody Shareholders Back Reform—Again. Will Peabody Listen This Time?

by James Parks, May 5, 2006

Shareholders of Peabody Energy today voted overwhelmingly in support of a resolution sponsored by the AFL-CIO calling for the annual election of the company’s board of directors.

Last year, more than 70 percent of Peabody’s shareholders voted for the same resolution, but Peabody so far has failed to implement it. “We are pleased that Peabody Energy shareholders have again expressed their tremendous support for our reform proposal,” said AFL-CIO Secretary-Treasurer Richard Trumka. “We hope that this year, Peabody Energy will respond to the will of the shareholders and implement annual elections for its board of directors.”

The shareholder resolutions came one day after Peabody agreed to add internationally accepted workers’ rights guarantees to its corporate code of ethics, including the right to form a union.without management interference.

Currently, the board of Peabody, the world’s largest private coal company, is divided into three classes, with some one-third of all directors elected each year to three-year terms. The federation and the Mine Workers (UMWA) also supported two additional resolutions designed to strengthen management accountability to shareholders.

The AFL-CIO, through its Capital Stewardship program, is leading a campaign to give shareholders a bigger say in the nomination and election of company directors.

Hundreds of nonunion miners at Peabody’s facilities across the country have requested assistance from the UMWA to form a union. In December, the union responded by launching the Justice at Peabody campaign.

As part of the campaign, members of the Religious Leaders for Coalfield Justice met April 28 in St. Louis with senior Peabody officials and presented a petition signed by 500 clergy members from across the country asking the company to be neutral in workers’ efforts to form a union and agree to a majority sign-up process. Under the process, also known as card-check, an employer agrees to recognize a union when a majority of eligible employees signs cards indicating a desire for a union.

Also at the Peabody shareholders’ meeting today, the AFL-CIO supported two other worker-sponsored resolutions that won significant shareholder support. The Sheet Metal Workers’ National Pension Fund submitted a resolution urging the board to require that directors be elected by a majority of votes cast at an annual shareholders meeting and the Service Employees Master Fund proposed creating a committee to respond to any shareholder proposal that receives a majority of the votes cast.

Says Trumka:

The significant vote that each of these proposals received demonstrates that shareholders are concerned about the need to improve management accountability at Peabody Energy. We look forward to Peabody enacting corporate governance reforms that will move the company towards greater accountability.

Four months ago, Peabody management tried to quash a union-sponsored resolution that asked the company to abide by workers’ rights standards set by the U.N.’s International Labor Organization (ILO). When the federal Securities and Exchange Commission denied the company’s request to exclude the shareholder proposal from its proxy statement, Peabody agreed to the changes if the union would voluntarily withdraw its proposed resolution.

The guarantees Peabody accepted include recognizing workers’ right to freely choose a union and bargain collectively, refraining from using forced or prison labor and providing a safe and healthy workplace.   

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