Whereas:

American corporations are participating in an increasing level of merger and takeover activity. The merger activity of targeted companies is resulting in massive sums of corporate debt generated by attempts by corporations to buy back their own securities at rising prices to retain control, and the adoption of "poison pills" to prevent mergers or takeovers.

Whereas:

Public pension funds that hold the stocks of the targeted corporations are now becoming involved in sponsoring opt-out proposals to allow shareholders, rather than boards of directors, to decide whether a company should merge or be acquired. Regardless of their level of involvement in initiatives to block mergers, the public pension funds are experiencing increased levels of risk in these investments, and possible reductions in rates of return.

Whereas:

At the same time, many of the takeovers are being structured as leveraged buy-outs with small percentages of cash, and large percentages of debt obligations to partnerships created for this purpose. The takeover partnerships pools of debt are being assumed by institutional investors, many of which are again, public pension funds. While the funds have earned extraordinary rates of return from some of their investments, the takeover corporations are selling off profitable components of the corporations and closing down less profitable operations in order to pay back the debt. These financing arrangements have resulted not only in a massive loss of jobs in some areas, but also have had a major impact on local economies.

Therefore be it resolved:

AFSCME reaffirms its position that public pension funds belong to the plan participants and their beneficiaries and that the assets should be invested for their exclusive benefit with reasonable levels of risk and rates of return. Within that framework, we deplore the use of public pension funds in unproductive merger and takeover activity, especially that which results in loss of jobs and undermines local economies.

Be it further resolved:

AFSCME shall seek to increase union representation on pension boards and investment boards.

Be it further resolved:

AFSCME supports new and improved measures to prevent the further erosion of otherwise stable companies in takeover attempts. Such measures might include strengthening of restrictions on insider trading; tightening regulations to limit the use of junk bonds to finance corporate takeovers; and requiring that contracts, including labor contracts, of the corporation be binding on successor owners. We support the use of the shareholder resolutions to place corporate control in these activities in the hands of shareholders rather than in corporate boards.

Be it finally resolved:

Public pension funds must avoid the shifting of capital in the money markets to the deal makers and look to more productive uses of their assets that will result in reasonable levels of risk and rates of return and those that may enhance the economy of a state or region.