Press Release

Shareholder Letter Assails Pearson Business Strategy as Annual Meeting Looms

For Release: 

Wednesday, April 13, 2016

Contact:

Andrew Crook
o: 202-393-8637 | c: 607-280-6603
acrook@aft.org

WASHINGTON—As shareholder pressure mounts on educational conglomerate Pearson ahead of its annual meeting, the Chicago Teachers' Pension Fund has dispatched a wide-ranging letter to global shareholders, making the business case for the Pearson board to urgently rethink its strategic direction.

The letter, backed by the American Federation of Teachers and a coalition of pension funds, labor unions and individual shareholders holding 193,000 Pearson shares, was sent in support of Shareholders Resolution 19, to be debated at the Pearson annual general meeting in London on April 29. It calls on Pearson to end its controversial association with unpopular "high-stakes" K-12 tests and its involvement with school privatization in the developing world. Shareholders representing 70 percent of Pearson's total stock will receive the letter.

Buttressed by in-depth data and analyst opinion, the letter spells out how Pearson's current strategy has failed to produce long-term growth while seriously eroding shareholder value. Pearson shares have plunged 38 percent in the past 12 months, and its latest restructuring in January, which slashed its global headcount by 10 percent, was panned by analysts who pointed to a lack of real engagement with its structural problems.

The letter outlines how Pearson's mishandling of the U.S. K-12 school testing market through its involvement in high-stakes testing has poisoned its brand in its core market of the United States, which comprises 66 percent of group revenue. And it notes how regulatory and competitive changes, notably the Every Student Succeeds Act, are rolling out just as market dynamics and greater freedom for schools to choose providers lower traditional barriers to market entry.

As popular media figures like John Oliver and Louis C.K. continue to train their gaze  on Pearson's shortcomings, the brand contagion risks spreading to its other core business, U.S. higher education. And Pearson's support for private schools in the developing world is adding to the backlash while narrowing other potential market opportunities.

American Federation of Teachers President Randi Weingarten said: "For the last two years, we have tried, to no avail, to make Pearson understand its business practices were damaging both public education and its bottom line. This year, as Pearson shareholders, we have joined with other labor unions, pension funds and individuals to tell the board and other shareholders that Pearson's management's hyperfixation on high-stakes testing in the Global North and its privatizing of public education in the Global South have been bad for business, bad for students and bad for the community."

Weingarten will speak directly to Shareholders Resolution 19 from the floor of the Pearson annual general meeting on April 29 in London.

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The AFT represents 1.7 million pre-K through 12th-grade teachers; paraprofessionals and other school-related personnel; higher education faculty and professional staff; federal, state and local government employees; nurses and healthcare workers; and early childhood educators.