Insurance giant MassMutual saw an unexpected challenge to its corporate
governance at the usually-staid annual meeting today, according to UNITE
At issue is a raft of proposed changes to the company's by-laws that
could make it more difficult for policyholders to have influence in the
company. The criticism comes as potential problems have surfaced with
customer transparency in another division of MassMutual, the Retirement
MassMutual has encouraged insurance policyholders to approve a number of
by-laws changes, citing benefits of improved "flexibility" for Directors
to determine the date and location of future annual meetings and
"discretion" for the CEO and Chair of the Board to determine the form
and delivery of notice to policyholders for future annual meetings.
Meg Robertson, a policyholder from Amherst, Massachusetts said, "I'm
concerned that the changes will make it harder for me and my fellow
members to speak up at the next annual meeting-or the ones after it."
The changes also have "the potential to disenfranchise the
policyholder-members," according to an open letter to the company from
the Consumer Federation of America (http://www.consumerfed.org/)
and Public Citizen (http://www.citizen.org/).
The groups call the changes "adverse to the interests of MassMutual and
its millions of policyholder-members," noting that the changes may
"empower management insiders and their allies" and make it increasingly
difficult for policyholders to submit an item of business to a regular
annual meeting or call a special meeting of members.
Ms. Robertson, a staff person for UNITE HERE, urged the Board to
postpone a vote on the by-laws amendment until the company resolves the
concerns in the Public Citizen and Consumer Federation of America letter.
Further consumer concerns have been raised by UNITE HERE on a website
called the Wolves of Your Street (http://www.wolvesofyourstreet.org).
The site highlights a 2012 study by ThinkAdvisor and Dalbar Research
evaluating twenty 401(k) management firms for their compliance with new
federal transparency rules. The rules were designed in response to the
2008 financial crisis to protect retail investors from elevated risk.
MassMutual came in last in the study's ranking.
The Wolves Of Your Street also describes how MassMutual subsidiaries
have settled or been fined for over $1 billion since 2011 in response to
allegations such as exposing investors to undisclosed risks or inflating
the value of their assets. Further, MassMutual's Asset Management
business is involved in ownership of a hotel that has lost revenue due
to an ongoing three-year boycott.
"With MassMutual's poor transparency rating in one part of the company,
and now this proposed change to the by-laws in the Insurance Group, I
don't know how I as a MassMutual member can trust that my investment for
my family's future is secure," Ms. Robertson said.
UNITE HERE represents 270,000 workers throughout the U.S. and Canada who
work in the hotel, gaming, food service, manufacturing, textile,
distribution, laundry, and airport industries. UNITE HERE members,
beneficiaries of pension funds with over $60 billion in assets, believe
investors and employees alike are best served by strong corporate
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