CalSTRS 2012 Proxy Season Successful in Advancing Majority Voting
CalSTRS Reports Overwhelming Success Regarding Adopting a Majority Voting Standard in Director Elections
WEST SACRAMENTO, CA – CalSTRS, the California State Teachers’ Retirement System, reports overwhelming success regarding adopting a majority voting standard in director elections with the 95 companies engaged in the 2012 proxy season.Eighty-two of those companies adopted a majority voting standard.
The majority voting standard requires that a sitting board member receive a majority of the shareholder votes cast in order to continue to serve as the shareholders’ representative. Many companies use the plurality vote standard in which a nominee can be elected with a single affirmative vote. CalSTRS believes the alignment of interest is greater between boards of directors and shareholders when elected under a majority, rather than a plurality, vote standard.
“CalSTRS’ 86 percent success rate this year clearly indicates that companies recognize the importance of providing shareholders with a meaningful voice in the voting process,” said CalSTRS Director of Corporate Governance Anne Sheehan. “Today’s economic challenges underscore the importance of board accountability. Holding directors to a reasonable election standard is a fundamental step in maintaining the integrity of a company’s leadership and the trust of its shareholders.”
CalSTRS’ engagement with 95 companies to adopt a majority voting standard resulted in:
- Adoption of a majority voting standard by 34 companies, without a proposal being filed.
- Submission of 61 proposals related to majority voting on corporate boards.
- Withdrawal of 48 of the 61 proposals, after the companies made significant progress to implement a majority voting standard.
- Of the 13 proposals that went to vote, nine passed with more than 75 percent average shareholder support.
CalSTRS continues to engage four companies where the proposals failed despite high shareholder support.
Less than 10 percent of companies in the Standard & Poor’s 500 index still maintain a strict plurality standard. This is in stark contrast to the Russell 2000, an index of small to mid-sized companies, where more than two-thirds of the companies still maintain a plurality standard.
The California State Teachers’ Retirement System, with a portfolio valued at $150.6 billion as of June 30, 2012, is the largest teacher pension fund and second largest public pension fund in the United States. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans, as well as disability and survivor benefits. CalSTRS serves California’s 856,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.