1.
NEW FLORIDA LAW WILL REQUIRE FRS SUDAN AND IRAN DIVESTITURE:
Florida
Governor Charlie Crist has signed into law the Protecting
Florida’s Investments Act (SB 2142). The
law requires the State Board of Administration, which is
responsible for an investments of the Florida Retirement
System, to identify all companies in which public monies
are invested that are doing certain types of business in
or with Sudan and Iran. The law requires SBA to create
and maintain certain scrutinized companies lists that name
all such companies, and requires SBA to divest of all publicly
traded securities of scrutinized companies under certain
conditions. A scrutinized company is defined as any company
that meets any of the following criteria:
- The company has business operations
that involve contracts with or provision of supplies
or services to the government
of Sudan, companies in which the government of
Sudan has any direct or indirect equity share, consortiums
or projects
commissioned by the government of Sudan or companies
involved in consortiums or projects commissioned
by the
government
of Sudan (subject to certain percentages of the
company’s
revenues linked to Sudan).
- The company is complicit in the Darfur genocide.
- The company supplies military equipment within Sudan,
unless it clearly shows that the military equipment
cannot be used to facilitate offensive military actions
in Sudan
or the company implements rigorous and verifiable
safeguards to prevent use of that equipment by forces
actively participating
in armed conflict.
- The company has business operations
that involve contracts with or provision of supplies
or services to the government
of Iran, companies in which the government of Iran
has any direct or indirect equity share, consortiums
or projects
commissioned by the government of Iran or companies
involved in consortiums or projects commissioned
by the government
of Iran (subject to certain percentages of the
company’s
revenues linked to Iran).
By its terms, the law does not purport to apply to any
pension system other than the Florida Retirement System.
(Chapter 2007-88).
2. FLORIDA FIREFIGHTERS CAN CONTINUE “STREET” CHARITABLE
SOLICITATIONS:
Florida Governor Charlie Crist on May
22, 2007 signed into law the “Iris Roberts Act,” HB
99, Chapter 2007-43. Effective July 1, 2007, an organization
that is qualified under Section 501(c)(3) of the Internal
Revenue Code and registered under Chapter 496, Florida
Statutes, or a person or organization acting on behalf
of that organization, is exempt from local requirements
for a permit for charitable solicitation activities on
or along streets or roads that are not maintained by the
state, under certain conditions. (Generally, permits for
use of any street, road or right-of-way not maintained
by the state are issued by the appropriate local government.)
Some of those conditions are as follows: (1) at least fourteen
prior calendar days notice must be given, (2) there must
be proof of commercial general liability insurance, (3)
organizations may not solicit for a period in excess of
ten cumulative days within one calendar year, (4) all solicitation
must occur in daylight hours, (5) solicitation activities
shall not interfere with safe and efficient movement of
traffic and (6) no person engaging in solicitation activities
shall persist after solicitation has been denied, act in
a demanding or harassing manner or use any sound or voice-amplifying
apparatus or device. The local government may stop solicitation
activities if any conditions or requirements of law are
not met. We bet Jerry’s kids at Muscular Dystrophy
Association are relieved.
3. TOP 100 PLANS FULLY FUNDED:
The top
100 U.S. corporate pension plans in aggregate were fully
funded at the end
of 2006, a major reversal from past years, Pensions & Investments’ review
of annual reports shows. In dollar terms, the largest 100
plans showed an aggregate $37.5 Billion surplus, based
on projected benefit obligations, the first surplus since
P&I began tracking annual reports in 2002. In 2005,
the largest 100 were underfunded by a total of $50.6 Billion;
in 2004, by $69.5 Billion. Significantly higher investment
returns were the largest factor in improved funding. The
Russell 3000 Index, for example, returned 15.72% last year,
compared with 6.12% in 2005. Corporations also took steps
to improve their funding to comply with requirements of
the Pension Protection Act of 2006, signed into law by
President Bush last August. Of the 100 plans, 45 reported
funding surpluses. Only four of the largest 100 plans saw
their funded ratios drop in 2006, compared with 45 in 2005.
The average investment return among the 100 largest defined
benefit plans was 11.5%, up from 9.7% in 2005. The average
expected long-term return on plan assets decreased to 8.4%
from 8.5%.
4. 12b-1 FEES LIKELY TO BE REFORMED,
NOT REMOVED:
Pensions & Investments
reports that review by the U.S. Securities and Exchange
Commission of 12b-1 fees more likely will result in reform
than in outright elimination. Christopher Cox, chairman
of SEC, is chiefly concerned about mutual fund companies
using the fees to pay brokerage commissions and underwrite
fund marketing expenses. To the degree that 12b-1 fees
are used for record-keeping and administrative services,
they should be okay. And even if the fees are scrapped
altogether, mutual funds are expected to find new ways
to pay record keepers and other service providers to retirement
plans. Originally authorized by SEC in 1980, 12b-1 fees
were intended to help the then-struggling mutual fund industry
underwrite distribution expenses -- essentially the costs
associated with recruiting new investors. Under National
Association of Securities Dealers regulations, 12b-1 assessment
on assets of participant-directed plans and other investors,
including 401(k) plans, are limited to 25 basis points
of a client’s assets in the fund, if the fund wants
to promote itself as “no load.” NASD regulations
permit load funds to carry 12b-1 fees as high as 100 basis
points. The mutual fund industry collected $11.8 Billion
in 12b-1 fees in 2006, up from $10.3 Billion in 2004.
5. CEO PENSIONS FARING WELL:
The world
of corporate pensions may be shrinking, but it is still
fairly robust at S&P
500 companies, according to cnnmoney.com. And that is true
for no one more so than the current crop of the companies’ already
highly paid chief executive officers, who have accrued
retirement benefits worth over $2 Billion today. Two-thirds
of S&P 500 companies still offer defined benefit pension
plans for their employees, but an estimated 73% also offer
their top executives an additional pension-like plan known
as a Supplemental Executive Retirement Plan (SERP). An
examination of proxy statements from 353 S&P 500 companies
reveals that 258 CEOs had defined benefit pension plans
and SERPs, in which they had accumulated $2.6 Billion in
benefits to date. While both traditional pensions and SERPs
are entirely funded by the employer, SERPs. are much more
lightly regulated, and companies have a lot more flexibility
in how they design them. Another big difference in the
two is their retention potential. With a traditional plan,
the longer an employee’s tenure, the greater his
pension benefit because benefits accrue more quickly at
the end of one’s career. So leaving the company after
only a few years means a much smaller pension. That is
not necessarily the case with a SERP. While SERPs may have
restrictions based on years of service dictating when and
how much a CEO will be paid, in reality, when a CEO leaves
for another company, his new employer is likely to offer
so-called “make whole” or “golden hello” provisions,
which essentially duplicate the value of his old SERP in
his new job. It’s good to be the king.
6. ANOTHER STUDY ON CEO RETIREMENT PAYOUTS:
Speaking
of chief executive officer retirement payouts, Reuters
reports that CEOs of big U.S. companies are more likely
than their smaller-company counterparts to get a company-funded
pension plan, a benefit rapidly disappearing for the average
American worker. While almost three-quarters of CEOs at
S&P 500 companies are eligible for supplemental executive
retirement benefits paid for by the corporation, only a
quarter of small-company CEOs are eligible for such benefits.
At the same time, over the last three decades corporate
America has scaled back company-funded pensions for rank-and-file
employees. U.S. investor activists have complained that
the top executives have accumulated unreasonably large
amounts of money in Supplemental Executive Retirement Plans,
known as SERPs. One example is former UnitedHealth Group
Inc.’s CEO William McGuire, who is potentially eligible
for a lump sum of $91.3 Million in retirement benefits.
(In the spirit of full disclosure, it is true that McGuire’s
retirement pay is currently frozen and subject to an injunction
by a Minnesota federal court amid a flurry of shareholder
lawsuits over the company’s stock options award practices.
A report from UnitedHealth Group Inc. last year concluded
that many of McGuire’s option grants likely were
backdated.) It’s really good to be the king.
7. FLORIDA A.G.O. REITERATES THAT E-MAILS
ARE SUBJECT TO PUBLIC RECORDS LAW:
The Florida Attorney
General has
reiterated that e-mail messages made or received by agency
employees in connection with official business are public
records and subject to disclosure in accordance with Section
119.07(1)(a), Florida Statutes, in the absence of an exemption.
Such messages are also subject to the statutory restrictions
on destruction of public records. The fact that information
is electronically generated and transferred rather than
contained on paper does not alter its character as a public
record under the Public Records Act. Thus, e-mail communication
of factual background information and position papers from
one official to another is a public record and should be
retained in accordance with the retention schedule for
other records relating to performance of the agency’s
functions and formulation of policy. However, private e-mail
stored in government computers does not automatically become
a public record by virtue of that storage. Inasmuch as
the Attorney General’s position on this subject has
been well documented by prior opinions, we often wonder
why people ask the same questions over and over again.
Florida Attorney General Advisory Legal Opinion (Informal)
June 8, 2007.
8. FLORIDA PUBLIC RECORDS LAW AMENDED:
The
foregoing Informal Attorney General Opinion makes reference
to Chapter
2007-39, Laws of Florida, effective July 1, 2007, which
creates new subsections (1)(b) and (c) of Section 119.07,
Florida Statutes:
(b) A custodian of public records or a person having custody
of public records may designate another officer or employee
of the agency to permit the inspection and copying of public
records, but must disclose the identity of the designee
to the person requesting to inspect or copy public records.
(c) A custodian of public records and his or her designee
must acknowledge requests to inspect or copy records promptly
and respond to such requests in good faith. A good faith
response includes making reasonable efforts to determine
from other officers or employees within the agency whether
such a record exists and, if so, the location at which
the record can be accessed.
The new language should streamline the process of public
record inspection and avoid undue delay in that regard.
9. WOMAN CHARGED WITH THEFT OF TOILET
PAPER...FROM COURTHOUSE:
Police blame a woman for stealing
toilet paper from a courthouse, and while they are chuckling,
the theft charge could land
her in jail. According to Associated Press, workers at
the courthouse had noticed toilet paper rolls were disappearing
much faster than usual. The woman was caught last week
after an employee saw her taking three rolls of two-ply
(is that twice as bad as one-ply?) tissue from a storage
closet. The miscreant insisted it was the first time she
had pilfered toilet paper, but declined to answer further
questions on advice of counsel. The misdemeanor normally
carries a sentence of less than a year in jail. However,
the thief could face more time if convicted under the state’s
habitual offender law, because she has prior theft convictions.
The woman did not work at the courthouse, and it was unclear
as to why she was there. Oh, by the way, the woman’s
name is -- we are not making this up -- Suzanne Butts.
(This item reminds us of the case where thieves broke into
a police station and stole all the toilets. When questioned,
the chief candidly admitted “We have nothing to go
on.”) 10. QUOTE OF THE WEEK:
“The obscure we see eventually;
the completely apparent may take longer.” Edward
R. Murrow
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