During fiscal year 2014-15, CalSTRS staff voted on 52,057 proposals at 4,840 meetings held for 4,170 companies in our non-domestic Public Equity portfolio. The proposals covered a variety of topics including the election of directors, the appointment of company auditors, the ratification of compensation reports, the approval of executive and director compensation plans, and the approval of mergers and acquisitions.
Shareholder proposals are not as common outside the U.S. since it is mostly a North American practice, with the vast majority of shareholder proposals submitted to U.S. and Canadian corporations.
Due to the differences in proxies between jurisdictions, we do not have the level of granularity in distinguishing proposals that we have for the United States.
2014-15 Proxy Year in Review
The major proxy issues voted on during this past fiscal year are summarized below:
Election of Directors
CalSTRS generally votes in favor of a director unless the proxy statement shows circumstances contrary to policy. Examples of such circumstances 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 percent), or a lack of board independence.
- Number Voted: 20,611
- Voted For: 3,307 (16%)
- Voted Against: 17,304 (84%)
Appointment of Auditors or Authority to Set Auditor’s Fees
CalSTRS will vote in favor of the independent auditors recommended by management unless the auditor provides services that run contrary to those indicated in CalSTRS’ policy. Examples of such services are: consulting, information system design and implementation, investment banking support, and excessive non-audit fees (greater than 30 percent of the total fees billed).
- Number Voted: 2,365
- Voted For: 1,650 (70%)
- Voted Against: 715 (30%)
(Stock option plans, equity compensation 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 the .
- Number Voted: 3,251
- Voted For: 2,364 (73%)
- Voted Against: 887 (27%)
Advisory Vote on Compensation/Compensation Policy
- Number Voted: 1,607
- Voted For: 1,296 (81%)
- Voted Against: 311 (19%)
CalSTRS votes on acquisitions or mergers are done on a case-by-case basis utilizing a total portfolio view.
- Number Voted: 316
- Voted For: 307 (97%)
- Voted Against: 9 (3%)
Corporate Actions/Corporate Governance Issues
These are issues related to spin-offs, incorporation, stock issuance, stock splits and charter and bylaw amendments. CalSTRS votes on these proposals on a case-by-case basis.
- Number Voted: 14,919
- Voted For: 12,109 (81%)
- Voted Against: 2,810 (19%)
Miscellaneous Issues – Management
The most common miscellaneous votes are requests to transact other business or the authorization to carry out legal formalities. These issues are voted on a case-by-case basis.
- Number Voted: 1,803
- Voted For: 1,614 (90%)
- Voted Against: 189 (10%)
CalSTRS votes on a variety of shareholder proposals. CalSTRS votes on shareholder proposals on a case-by-case basis utilizing the guidelines set by the CalSTRS Board.
- Number Voted: 366
- Voted For: 50 (14%)
- Voted Against: 316 (86%)
In foreign markets, CalSTRS had a much lower level of support for shareholder proposals. CalSTRS supported 74 percent of shareholder proposals in the United States compared to only 14 percent in the foreign markets.
The lower support level is primarily due to the fact that shareholder proposals in the foreign markets are often overly prescriptive or mandatory rather than being advisory.