Teachers Insurance and Annuity Association-College received a blow from their shareholders in late August, when a "no" vote rejected its proposed fee increase on nine of its funds. But TIAA-CREF is not giving up. On the contrary the company is considering holding a second vote on the matter, The Wall Street Journal reports.
TIAA-CREF is reportedly loosing money, so the fee increase is a necessity for the company. Though the fund is non-for-profit TIAA-CREF considers itself otherwise.
Observers of the matter say that the idea of a second vote is unfavorable and that "the message would be clear that they are trying to defy shareholders' wishes," said Christopher Davis of Morningstar. But TIAA-CREF says that is not the case since several state college-savings plans, which are shareholders, told the company that "there was a degree of confusion about the impact," said Stephanie Cohen Glass, a spokeswoman for TIAA-CREF.
After meeting with Herbert Allison, the chief executive of TIAA-CREF, the pension board of California is "willing to take [the vote] up again," said Michael Roth, a spokesman for California's state Treasurer.
The deciding "no" votes caught TIAA-CREF off guard because they came from the 529 clients, the state-managed college savings plans whose management fees are fixed. "We did not want to send a message that we were encouraging higher fees," said Missouri Treasurer Sarah Steelman. But performance played a role as well, she added. "We have to weigh the interest of our account owners."
TIAA-CREF's contract with Missouri is about to expire, and the state is looking for other bids on the account. Two years ago, TIAA-CREF lost the contract with New York when the fund proposed to increase fund fees after the contract expired.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.