NYC Funds Reach Settlement With TransDigm To Protect Shareholder Ability To Call For Pollution Reduction

(New York, NY) — As the federal government rolls back crucial environmental protections and standards, New York City Comptroller Scott M. Stringer and the New York City Law Department today announced the settlement of a lawsuit that will help ensure that shareholders continue to have a say on critical national policy issues by demanding that companies examine and address their environmental practices and impact.

The lawsuit, filed in December on behalf of New York City’s five public pension funds (the Funds) in the United States District Court for the Southern District of New York, alleged that TransDigm Group, Inc. (NYSE: TDG), a multi-billion dollar aerospace company, attempted to illegitimately block a shareholder proposal from the Funds that would require TransDigm to examine and set internal goals for managing its Greenhouse Gas (GHG) emissions — a practice that is becoming an industry norm. As part of the settlement, the Funds’ proposal for reducing GHG emissions will be added to the company’s proxy ballot so that all investors can have a say on whether TransDigm should examine and address its role in climate change.

“The need for climate leadership is more urgent than ever. Yet, just when we need to speed up the pace, federal roll-backs are making polluting easier and could cause generations of damage. That’s why as investors, we’re using our voice to pressure companies to step up and address their role in climate change,” said Comptroller Stringer. “Reducing greenhouse gas emissions is a moral imperative — and it’s better for business. We’ll continue to fight for shareholders rights and to hold companies like TransDigm to the highest standards for business and our planet.”

Corporation Counsel Zachary W. Carter said, “As detailed in our lawsuit, TransDigm unlawfully blocked the Funds from weighing in on one of the most important environmental issues facing society today. As a result of this settlement, the Funds are now being afforded their legal right to have the proposal included in the proxy materials mailed in advance of TransDigm’s upcoming annual meeting.”

Shareholder proposals are an effective tool for major investors to propose necessary changes and express their goals for the company’s long-term growth and direction. The Funds’ proposal requests that TransDigm, “adopt a policy with time-bound, quantitative, company-wide goals for managing GHG emissions, taking into account the objectives of the Paris Climate Agreement, and report, at reasonable cost and omitting proprietary information, on its plans to achieve these targets.”

Many companies, including some of the world’s largest, have already adopted similar goals. Well over 60% of Fortune 100 companies have set GHG emissions targets, including Walmart, Apple, and GM, among others. Moreover, TransDigm’s peer companies in the aerospace and defense industry have set GHG emission goals, including United Technologies, Boeing, Lockheed Martin and Northrop Grumman.

Despite the growing trend, TransDigm pushed back on the Funds’ proposal and initially attempted to exclude the proposal by making a “no-action” request to the Securities and Exchange Commission (SEC), claiming the proposal concerned the “ordinary business” of the company. A “no-action” letter from the SEC would have effectively silenced the legitimate right of shareholders to have a voice in long-term issues facing the companies they invest in.

In response to the no-action request, the Funds filed a complaint in federal district court to challenge TransDigm’s decision to exclude the proposal.  Now, as part of TransDigm’s settlement with the New York City Law Department, the company has agreed to withdrawal its “no-action” request and to allow the Funds shareholder proposal on GHG emissions to proceed to a vote at the company’s annual meeting in 2019.

To view the shareholder proposal, click here.

Comptroller Stringer serves as the investment advisor to, and custodian and a trustee of, the New York City Pension Funds. The New York City Pension Funds are composed of the New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Pension Fund and the Board of Education Retirement System — and are collectively the fourth largest pension system in the United States.

The New York City Law Department represents the Pension Funds in litigation.

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