WASHINGTON— The American Federation of Teachers has hit back at global education conglomerate Pearson’s response to a union-backed shareholder resolution condemning the company’s failing business strategy.
The AFT document, titled “Pearson: The Whole Truth,” has been posted to a special-purpose website, pearsonres.org, and takes issue with Pearson’s earlier release, which the AFT believes presents highly selective and cherry-picked information that denies shareholders a complete picture of the firm’s deep financial problems.
A powerful international alliance of trade union-backed pension funds, representing 193,000 Pearson voting shares, including the Chicago Teachers’ Pension Fund, the UNISON Staff Pension Fund, Trade Union Fund Managers, and 130 individual shareholders, has submitted a shareholder resolution to be heard at the company’s annual general meeting scheduled for late April. It urges Pearson to restore shareholder value by reassessing its commitment to high-stakes testing in the United States, where it makes 60 percent of its profits, and end its unpopular experiments with low-fee private schools in the developing world.
In January, Pearson ordered 4,000 job cuts (10 percent of the company’s workforce) across its worldwide operation, after a serious misreading of the U.S. educational landscape forced a new round of cost containment. After its share price fell 40 percent in the last half of 2015, a January “business review” was criticized by analysts from Liberum Capital, Panmure Gordon, Kepler Cheuvreux, Macquarie, Barclays and Credit Suisse.
In U.S. schools, a growing “opt out” movement of parents and students against standardized tests, which are crucial to Pearson’s business model, is again gathering steam ahead of May’s peak testing season. The Every Student Succeeds Act, signed in December, has oriented the education market away from test-and-punish policies. Meanwhile, Pearson’s brand continues to be battered by its support of privatized schools in Africa and Asia.
The AFT believes Pearson’s response to the shareholder resolution shows management has a tin ear to the rapidly changing education landscape and the concerns of shareholders, many of whom have their hard-earned retirement savings invested in the company. The best way to rebuild shareholder value is for Pearson to get behind public education as a valued business partner.
A Pearson Shareholder Forum to discuss the resolution will be held at the Mandarin Oriental Hotel in Washington, DC on Tuesday, March 22 from 4:00 p.m. to 5:30 p.m. as part of the Council of Institutional Investors Spring Conference. Late last month, Trade Union Share Owners convened a well-received meeting of Pearson investors in London.