TIAA-CREF, a major pension fund outfit for educators, led the charge at Disney's annual meeting for "reforming" the DIS board. TIAA-CREF generated a great deal of publicity with its vote, which was around 35% in favor of the proposed reforms.
I find it interesting, however, that TIAA-CREF's own performance would not earn the outfit any bragging rights. As reported in thestreet.com today:
"The largest of their pension accounts, CREF's $104 billion Stock Account, which aims to track the market, has posted a 10-year cumulative return of 341.3% through the end of last year. That's compared with 416.4% for the Vanguard Index: 500 Portfolio.
Meanwhile, its $4.6 billion CREF Growth Account, which aims to return more than the market, has returned 117.9% over three years. That's compared with 124.9% for the Vanguard 500."
The foregoing investment results hardly amount to a stellar performance. Maybe TIAA-CREF needs to spend more time looking at its own management skills before campaigning against a company that greatly outperformed the majority of the funds' remaining investments.
When I want a large institutional investor to shake up a board, I will look to a Michael Price, or a James Cramer, because they will focus on creating shareholder value. For that reason I don't invest in companies in which the voting power is concentrated in a closely held class of stock (the New York Times, for example). I'm not sure what TIAA-CREF is doing, however, other than perhaps trying to justify its own management's existence given its gross under-performance of the Vanguard index funds. Given TIAA-CREF's track record, the outfit's clients would be better served if TIAA-CREF fired its management and turned over all the money to Vanguard.
The only bragging rights TIAA-CREF has been earning is the right to tell the outfit's underserved investors that TIAA-CREF was in the forefront of complaining about hypothetical management problems. Hip, hip, hooray! |
