Release Date: May 27, 2004
New York, NY Hilton Hotels Corporation (NYSE: HLT) shareholders will vote today on a proposal urging declassification of Hilton's board of directors. The resolution, filed by Amalgamated Bank's LongView Investment Funds, asks the board to adopt a policy whereby all directors stand for election annually. The proposal would allow the new system to be phased in so as not to affect the unexpired terms of previously elected directors.
Under Hilton's current system of staggered elections, roughly a third of the directors face election each year. Eliminating the classification system would give stockholders a yearly opportunity to register their views on the performance of the board collectively and each board member individually.
"Although LongView supports annual elections as a matter of policy across the board, we have particular reason to feel that this change is merited at Hilton," said Moye. "Without a sufficiently independent board to provide oversight, shareholders must be able to provide this function through an annual vote for each director." Only 7 of Hilton's 13 directors are independent of management, and Hilton's chair, William Barron Hilton, is a company insider. The Council of Institutional Investors (CII) recommends that two-thirds of all board members be independent.
Supporters of annual elections of all directors include major institutional investors such as the Teachers Insurance and Annuity Association-College Retirement Equity Fund (TIAA-CREF) and the California Public Employees' Retirement System. TIAA-CREF's corporate governance guidelines note that a classified voting system "can restrict a board's ability to quickly remove an ineffective director." CII, representing over 130 pension fund members whose assets exceed $3 trillion, states that its number one corporate governance policy concern is annual elections of all directors.
In 2003, investors filed proposals on board declassification at 48 companies. Following shareholder votes, a number of companies moved to implement annual elections, including Lucent Technologies, SBC Communications and Merck.
The LongView Funds currently hold 168,514 shares of Hilton common stock. The annual shareholder meeting will be held this morning in Los Angeles, California.
Founded in 1923, Amalgamated Bank invests workers' retirement savings through its LongView Funds. With $8 billion in assets under management, LongView actively votes its proxies and sponsors shareholder initiatives for corporate reform. Amalgamated Bank is available online at www.amalgamatedonline.com.
