CalSTRS 2014 Proxy Season Advances Majority Voting Standard
Focus on small cap companies continues to create positive governance changes
WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System (CalSTRS) today announced overwhelming corporate governance success during the 2014 proxy season, as 86 of the 93 companies it engaged adopted a majority voting standard in corporate board elections.
“Our 92 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 is dominated by a legacy standard of plurality voting. Moving 77 companies to what is recognized as a best governance practice confirms shareholders’ widespread support and the appeal of majority vote.”
CalSTRS Corporate Governance engagement with 93 companies to adopt a majority voting standard resulted in:
|Adoption of a majority voting standard resulting in the withdrawal of the proposal.||53|
|Adoption of a majority voting standard without a proposal being filed.||33|
|Proposals that went to vote and passed.||6|
|Proposals that went to vote and failed.||1|
|Average shareholder support received by passing proposals.||85%|
|Average shareholder support received by failed proposals.||41%|
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. As a long-term asset owner, CalSTRS believes that corporate board directors work on behalf of shareowners. The ability to change boardroom representatives through a majority voting standard is fundamental to shareholder democracy.
The California State Teachers’ Retirement System, with a portfolio valued at $186.6 billion as of July 31, 2014, 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. CalSTRS serves California’s 868,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.