In fiscal year 2007-2008, CalSTRS staff voted on 47,481 proxy proposals submitted on the ballots of 3,813 corporations held in the portfolio. Some companies had multiple meetings, and CalSTRS staff voted at 4,114 meetings for portfolio companies in total. In addition to the U.S. market, staff voted in the Canadian, Australian and U.K. markets.

U.S. Proxies

The following is a summary of the major proxy issues voted on in fiscal year 2007-2008.

Election of Directors

CalSTRS generally votes in favor of a director unless the proxy statement shows circumstances contrary to policy. Circumstances contrary to policy may include: potential conflict of interest due to other directorships or employment, providing legal or investment banking advice, and poor board meeting attendance (less than 75%).

VOTED: 16,629 ( 56%, 44%)

Selection of Auditors

CalSTRS will vote in favor of the independent auditors recommended by management unless the auditor provides services that run contrary to what CalSTRS’ policy allows. Such services may include: consulting, information system design and implementation, investment banking support, and excessive non-audit fees (greater than 30% of the total fees billed).

VOTED: 2,617 ( 88%, 12%)

Compensation Plans

(Stock Option Plans, Employee Stock Purchase Plans, etc.) Companies provide a variety of compensation plans for executives, employees, and non-employee directors. Many of these plans provide for the issuance of long-term incentives to attract, reward, and retain key employees. Compensation plans are evaluated based on CalSTRS Financial Responsibility Criteria.

VOTED: 1,380 ( 37%, 63%)

Approve Merger/Acquisition—Management

CalSTRS votes for acquisition or merger on a case-by-case basis using a total portfolio view.

VOTED: 194 ( 85%, 15%)

Corporate Actions/Corporate Governance Issues

These are issues related to spin-offs, incorporation, stock issuance, stock splits, and charter and by-law amendments. CalSTRS votes on these proposals on a case-by-case basis.

VOTED: 1,237 ( 62%, 38%)

Miscellaneous Issues—Management

The most common miscellaneous votes are requests to transact other business or the right to adjourn meeting to solicit proxies. These issues are voted on a case-by-case basis.

VOTED: 419 ( 21%, 79%)

Shareholder Proposals

CalSTRS votes on a variety of shareholder proposals. Votes on proposals include: removing classified boards of directors, requiring an independent board chairman, eliminating poison pills, tying compensation plans to company performance, and requiring shareholder approval for large severance packages. Shareholder proposals are voted on a case-by-case basis.

VOTED: 619 ( 73%, 27%)

Non-U.S. Proxies

In fiscal year 2007-2008, CalSTRS staff voted on 24,352 proxy proposals submitted on behalf of 871 non-U.S. corporations held in our equity portfolio. Proposal topics included: election of directors; ratification of company auditors; ratification of compensation reports; approval of executive and director compensation plans; and, the approval of mergers and acquisitions.

At this point, we do not have the level of granularity in distinguishing proposals that we have for the United States. In the foreign markets, proposals are mostly divided as only management and shareholder proposals.

Management Proposals

CalSTRS votes on management proposals on a case-by-case basis using the guidelines set by the CalSTRS board.

VOTED: 24,163 ( 57%, 43%)

Shareholder Proposals

CalSTRS votes on a variety of shareholder proposals on a case-by-case basis using the guidelines set by the CalSTRS board.

VOTED: 547 ( 16%, 84%)