Shareholder Proposals

General Information

Core Governance Principles – Shareholder

CalSTRS votes on a variety of governance related shareholder proposals. Examples of the issues voted on include: Removing classified boards of directors, requiring an independent board chairman, eliminating poison pills, majority voting in director elections, the right to call special meetings, the right to act by written consent, and requiring shareholder approval for large severance packages. Shareholder proposals relating to core governance rights are almost always supported.

  • Number Voted: 259
  • Voted For: 236 (91%)
  • Voted Against: 23 (9%)

Compensation Issues – Shareholder

Shareholder proposals on compensation issues cover a wide range of topics including retaining bonuses, pay for performance, tax gross-ups and death-benefit packages (golden coffins). Compensation proposals are evaluated based on CalSTRS Corporate Governance Principles.

  • Number Voted: 75
  • Voted For: 55 (73%)
  • Voted Against: 20 (27%)

Social Proposals – Shareholder

Shareholder proposals relating to social issues such as animal rights, human rights, healthcare and diversity are evaluated on a case-by-case basis.

  • Number Voted: 41
  • Voted For: 20 (49%)
  • Voted Against: 21 (51%)

Environmental Proposals – Shareholder

Shareholder proposals relating to environmental issues such as sustainability, greenhouse gas emissions, renewable energy policy and hydraulic fracturing are evaluated on a case-by-case basis.

  • Number Voted: 69
  • Voted For: 26 (38%)
  • Voted Against: 43 (62%)

Political-related Proposals – Shareholder

Shareholder proposals relating to political activities are evaluated under the CalSTRS Corporate Governance Principles on Board Oversight of Political Contributions.

  • Number Voted: 94
  • Voted For: 55 (59%)
  • Voted Against: 39 (41%)

Miscellaneous Issues – Shareholder

The most common miscellaneous shareholder proposals relate to succession planning, capital allocation and company specific issues. These issues are voted on a case-by-case basis.

  • Number Voted: 17
  • Voted For: 5 (29%)
  • Voted Against: 12 (71%)

2013-14 Shareholder Proposals

The following chart illustrates the type and volume of the major shareholder proposals that staff considered during fiscal year 2013-14.

Pie chart: Political Contributions 17%; Other Social 7%; Compensation 14%; Environmental 13%; Independent Chair 12%; Declassify Board 3%; Majority Voting, Directors 6%; Redeem Poison Pill 1%; Written Consent 5%; Right to Call Special Meeting 3%; Proxy Access 3%; Simple Majority Voting 2%; Cumulative Voting 1%; Other - Corporate Governance 10%; Other - Miscellaneous 3%

A year-over-year analysis was also done that compared the number of proposals considered during fiscal year 2013-14 against the number of similar proposals considered during the last seven years.

Shareholder Proposal Yearly Comparison: 2007-08 Majority Vote 29, Compensation 122, Declassify Board 45, Environment 52; 2008-09 Majority Vote 51, Compensation 158, Declassify Board 71, Environment 50; 2009-10 Majority Vote 67, Compensation 149, Declassify Board 45, Environment 56; 2010-11 Majority Vote 37, Compensation 46, Declassify Board 38, Environment 77; 2011-12 Majority Vote 37, Compensation 65, Declassify Board 47, Environment 52; 2012-13 Majority Vote 30, Compensation 95, Declassify Board 36, Environment 47; 2013-14 Majority Vote 31, Compensation 75, Declassify Board 18, Environment 69

An interesting trend is the decline in shareholder proposals relating to traditional governance issues such as board declassification.

The mandatory introduction of Say-on-Pay in 2011 initially appeared to reduce the number of compensation-related shareholder proposals. However, after declining in 2010-11, compensation-related shareholder proposals increased again over the past years as shareholders appear to have renewed focus on having executives retain a percentage of their awarded equity shares as compensation until retirement or preventing executives from receiving their unvested equity awards when their company experiences a change in control event, such as in the case of a merger or acquisition.

Environmental-related proposals have been declining in the past couple of years but increased this fiscal year as shareholders have renewed interest in sustainability and fossil fuel risks.

As for social proposals, the ones focusing on political contributions and lobbying increased from 81 to 94 proposals over the past year. However, the number of proposals on other social issues decreased from 63 to 41 over the same time period.

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