The Chicago Teachers’ Pension Fund, like several other pension funds, owns shares in Pearson, one of the largest publishers of educational materials. The fund’s shareholders drafted the following resolution so Pearson PLC could vote on it at the next shareholders’ meeting:
Requisition by members pursuant to section 338 Companies Act 2006 for notice of a resolution as set out below, to be voted on at the 2016 Annual General Meeting of Pearson PLC, and for circulation of a statement in support of that Resolution pursuant to section 314 Companies Act 2006.
To the Company Secretary, Pearson PLC:
We the undersigned, being 100 members holding shares in the Company on which there has been paid up an average sum, per member, of not less than £100 per member,
Hereby require you, in accordance with section 314 of the Companies Act 2006, to give to members of the Company entitled to receive notice of the next Annual General Meeting notice of the following resolution, being a resolution that may properly be moved and is intended to be moved at that meeting, and to circulate to members receiving that notice a copy of the annexed statement with respect to the matters referred to in that resolution:
THAT the Board of Directors of Pearson PLC immediately conduct a thorough business strategy review of Pearson PLC including education [commercialization] and its support of high stakes testing and low-fee private schools and to report to shareholders within six months.
Request for a business strategy review of Pearson PLC’s current efforts in education commericailization
We believe that Pearson PLC (“Pearson” or the “Company”) is suffering a crisis of confidence precipitated by a confused business strategy. The evidence is presented by our reaction to the share price, which at the last Annual General Membership Meeting (AGM) held on 24 April 2015, was trading at approximately $20.68. On 15 December 2015, Pearson stock sold for roughly $10.70.
This represents a drop in price of over 40% in only seven months. This significant drop in share price calls into question the board’s efforts to address the lack of confidence in the Company.
We believe that the current strategic business plan has failed to produce the profits or the potential for profits that investors need. Therefore, it is time that Pearson conducts a business strategy review.
We urge you to vote FOR this resolution.
Pearson announced plans in January to lay off 10 percent of its workforce, according to an article in the Financial Times, after losing high-stakes testing contracts with several large clients, including Texas and New York.
The pension fund is calling on the company to stop relying so much on testing in the US as a source of revenue. This draft resolution may be a sign that the pension fund’s managers expect interest in this line of business to decrease as a result of the Every Student Succeeds Act, which gives states greater flexibility in terms of how they measure student achievement.
The national news publication Politico quoted American Federation of Teachers President Randi Weingarten as saying that “Pearson could be a company that provides educational products and services critical to the success of students around the world; instead, it has decided to embark on a politically risky path of high-stakes testing and low-fee private schools.”
The AFT is affiliated with the Chicago Teachers Union, whose members contribute to the Chicago Teachers’ Pension Fund.
Pearson PLC, based in London, is the company behind the PARCC tests, which are being used this year in both Maryland and Illinois but have been withdrawn in several other states. The PARCC consortium once had more than 20 state members but now includes about seven.