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November 20, 1997

CREF nixes proposal to eliminate tobacco stocks from its account

Participants in the College Retirement Equities Fund (CREF) voted at TIAA-CREF's annual meeting on Nov. 10 to reject a resolution urging CREF to divest its holdings in tobacco investments.

CREF is the $119 billion variable annuity component of the $211 billion TIAA-CREF pension system for higher education. CREF's largest single account, the CREF Stock Account, holds about $1.4 billion in tobacco stocks; most of it, $1.1 billion, is invested in Philip Morris Companies.

Only participants in CREF's Stock Account were eligible to vote on the proposal. Of those voting, according to TIAA-CREF, 27.2 percent voted for divestment, 67.4 percent voted against it and 5.4 percent abstained. More than 205,000 CREF participants, about 16 percent of those who received ballots, voted.

"CREF participants again have defeated this resolution decisively," TIAA-CREF President and Chief Executive Officer John H. Biggs noted in a prepared statement after the meeting. "In fact, today's vote is close to how participants voted on a very similar resolution a year ago." Biggs added: "I continue to believe the real reason for the small vote supporting this resolution is that the CREF Social Choice Account gives TIAA-CREF participants an excellent tobacco-free option." Although the divestment proposal was defeated, Douglas Kelly, secretary of Educators for Tobacco-Free Investments by TIAA-CREF, the group that sponsored the proposal, said he was "heartened" by the support the measure had received, according to The Chronicle of Higher Education.

In other action, a resolution filed by CREF participants in the CREF Social Choice Account sought to restrict the account from investing in mutual funds, banks, insurance companies or other financial service organizations unless CREF determined that those institutions follow the restrictions of the Social Choice Account.

Of the votes cast by Social Choice Account members, 37 percent were for the resolution, 54.2 percent were against it and 8.8 percent abstained.

Filed under: Feature,Volume 30 Issue 7

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