Brocade Communications Shareowners Support CalSTRS, CalPERS Resolutions
Sacramento, CA – Brocade Communications shareowners today supported proposals by California’s two largest pensions to do away with the company’s supermajority vote requirement and to elect all directors annually.
Despite Brocade Communications management’s opposition, shareowners passed both Proposal #6, filed by the California Public Employees Retirement System (CalPERS), and Proposal #7, filed by the California State Teachers’ Retirement System (CalSTRS), receiving a majority of the votes cast.
The vote on both non-binding resolutions took place at the company’s annual shareowners’ meeting in San José, Calif. The two related proposals are considered necessary to ensure a more responsive board of directors.
The CalSTRS proposal sought to combine three classes of directors, elected once every three years, into a single class elected annually. The CalPERS proposal sought to remove Brocade Communications’ two-thirds supermajority vote requirement to change the company’s bylaws.
“The Brocade supermajority vote rule substantially impeded the ability of shareowners to hold management accountable,” said CalPERS Senior Investment Officer Eric Baggesen. “Shareowners need a reasonable means by which to address a company’s underperformance if there is to be the type of positive change all shareowners want.”
“It’s obvious Brocade’s shareowners understand the positive impact a responsive board has on the long-term financial performance of companies,” said CalSTRS Director of Corporate Governance Anne Sheehan. “I am confident that Brocade’s directors have heard the message from shareowners and, in so doing, will act in the best interest of the company to position it for future growth and long-term value.”
In the days leading up to the Brocade annual meeting, three leading independent proxy advisors, RiskMetrics Group, Glass Lewis & Co., and Egan-Jones Proxy Services, recommended shareowners support the CalSTRS and CalPERS resolutions. A fourth leading U.S. proxy advisor, Proxy Governance, also recommended shareowners support the CalPERS proposal.
CalSTRS, which owns approximately two million shares of the company, has a $114 billion portfolio and is the second-largest public pension fund in the United States. It administers retirement, disability and survivor benefits for California’s 833,000 public school educators and their families from the state’s 1,400 school districts, county offices of education and community college districts.
CalPERS, which is the nation’s largest public pension fund with approximately $175 billion in market assets owns approximately 974,000 Brocade shares. It provides retirement benefits to more than 1.6 million State, school, and local public employees, retirees and their families, and health benefits to nearly 1.3 million members.