CalSTRS 2013 Proxy Season Advances Majority Voting Standard
Focus on small cap companies proves to be the right move.
WEST SACRAMENTO, CA – The California State Teachers’ Retirement System (CalSTRS) today announced overwhelming corporate governance success during the 2013 proxy season, as 77 of the 82 companies engaged adopted a majority vote standard in corporate board elections.
The majority voting standard requires that a sitting board member receive a majority of the shareholder votes cast in order to remain on the board. This contrasts with the plurality vote standard, which allows a board nominee to be elected with a single affirmative vote. As a long-term asset owner, CalSTRS believes that corporate directors work on behalf of shareowners and that the ability to change boardroom representatives, through a majority voting standard, is fundamental to shareholder democracy.
“Our 93 percent success rate this year is particularly satisfying, because we changed our focus from large to small cap companies,” stated CalSTRS Director of Corporate Governance, Anne Sheehan. “The small cap sector of the Russell 2000 Index has a dismal rate, with only about one third maintaining a majority voting standard, so moving 77 companies from a strict plurality standard is a huge step in the right direction.”
CalSTRS engagement with 82 companies to adopt a majority voting standard resulted in:
|Adoption of a majority voting standard resulting in the withdrawal of the proposal.||42|
|Adoption of a majority voting standard without a proposal being filed.||24|
|Proposals that went to vote and passed.||11|
|Proposals that went to vote and failed.||5|
|Average shareholder support received by passing proposals.||74.5%|
|Average shareholder support received by failed proposals.||38.2%|
The California State Teachers’ Retirement System, with a portfolio valued at $170 billion as of July 31, 2013, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. For 100 years, CalSTRS has served California’s public school educators and their families, who today number 862,000 from the state’s 1,600 school districts, county offices of education and community college districts.