For immediate release
April 9, 2014
Concerned policyholders question proposed changes to corporate by-laws
Springfield, Mass. — Insurance giant MassMutual saw an unexpected challenge to its corporate governance at the usually-staid annual meeting today, according to UNITE HERE.
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 Services business.
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 and Public Citizen. 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 and also a member of the labor union, 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. 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 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.
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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 governance practices.