General Information

In 2015-16, the total number of proposals decreased slightly by 0.6 percent compared to 2014-15 while the total number of meetings voted on was not significantly different.

The number of proposals for domestic proxies voted on in 2015-16 decreased slightly by 1.2 percent compared to 2014-15 while the number of U.S. meetings voted on was not significantly higher for the same time period.

The total number of proposals on foreign proxies voted on remained relatively unchanged in 2015-16 compared to 2014-15 while the number for foreign meetings voted on increased slightly by 1.6 percent.

For domestic proxies, there was a decline in the number of shareholder proposals for traditional governance issues, such as board declassification, the right to act by written consent or the right to call a special meeting.

However, proxy access, which gives shareholders the right to nominate directors at U.S. public companies, continued to be the dominant governance issue this proxy season as such proposals made up more than 32 percent of the governance proposals staff voted on in 2015-16. As in 2014-15, the large number of proxy access proposals in 2015-16 was attributable to the New York City Comptroller of New York City Pension Funds submitting 72 proxy access proposals to companies as part of its Board Accountability Project. Other investors also submitted proxy access proposals at other companies.

Overall, CalSTRS supported 83, or approximately 98 percent, of the 84 proxy access proposals in 2015-16, primarily because these proposals were modeled after the Securities and Exchange Commission’s original proxy access proposal, which allowed an investor or a group of investors holding an aggregate of three percent or more of the company’s shares for three or more years, the right to nominate director candidates on the proxy.

In 2015-16, there was slight increase in the number of social proposals, which was due to the slight increase in the number of political contributions and lobbying proposals. In contrast, the number of compensation-related proposals decreased slightly since 2014-15 while the number of environmental proposals remained relatively unchanged, although fossil fuel and sustainability risks continued to be a high concern for shareholders.

Overall, staff believes the market, as a whole, is showing improved governance as many large companies have adopted governance best practices and are open to shareholder engagements on various issues related to compensation, board composition and/or ESG.  Nonetheless, some companies remain outliers by retaining excessive executive pay packages or archaic governance practices. Staff continues to monitor the portfolio and vote all proxies in accordance with the CalSTRS Corporate Governance Guidelines approved by the Board.

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