During the 2005-2006 fiscal year, CalSTRS voted on a variety of proxy issues including financial, corporate governance and social issues. 8,121 votes were cast on proxy issues of corporations whose shares were owned in the Investment Portfolio. These proxy issues were presented on 3,050 companies.

The major proxy issues voted on are summarized below:

1. Election of Directors: CalSTRS generally votes in favor of directors unless the proxy statement shows circumstances contrary to policy. Examples of such circumstances include: greater than 50 percent board representation by company executives or otherwise affiliated directors, potential conflict of interest due to other directorships or employment, providing legal or investment banking advice and poor board meeting attendance (less than 75%).
   
   

   Number Voted: 2,857
   Voted For All: 843 (29%)	Split Vote: 1,480 (52%)	Against All: 534 (19%)

   
   
   
2. 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 for. Examples of such services are: consulting, information system design and implementation, investment banking support and excessive non-audit fees (greater than 30% of the audit fees billed).
   
   

   Number Voted: 2,170

   For: 1,886 (87%)

   Against: 283 (13%)

   
   
   
3. 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.
   
   

   Number Voted: 1,460

   For: 464 (32%)

   Against: 996 (68%)

   
   
   
4. Approve Merger/Acquisition—Management: CalSTRS generally votes in favor of the acquisition or merger of one company into another.
   
   

   Number Voted: 205

   For: 189 (92%)

   Against: 16 (8%)

   
   
   
5. Corporate Actions/Corporate Governance Issues: These are issues related to spin-offs, incorporation, stock issuance, and stock splits. CalSTRS votes on these proposals on a case-by-case basis.
   
   

   Number Voted: 231

   For: 77 (33%)

   Against: 208 (67%)

   
   
   
6. Miscellaneous Issues—Management: CalSTRS will vote in favor of other miscellaneous business recommended by management unless the issue to be voted on is contrary to policy. These issues are voted on a case-by-case basis.
   
   

   Number Voted: 596

   For: 257 (43%)

   Against: 339 (57%)

   
   
   
7. Shareholder Proposals: CalSTRS votes on a variety of shareholder proposals. Examples of the issues voted on 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 also voted on a case-by-case basis.
   
   

   Number Voted: 526

   For: 425 (81%)

   Against: 101 (19%)