CalSTRS Corporate Governance Advances Majority Vote Standard
Uncontested Director Elections Proposals Meet With 100% Success
WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System announced today that it waged a highly successful proxy season campaign to advance the majority vote standard in board of director elections at public companies. CalSTRS engaged 106 companies, 94 of which adopted the standard before it went to a vote.
“CalSTRS believes one of the most important decisions we make as shareholders is the action we take in exercising our right to choose who represents us in the boardroom,” said CalSTRS Director of Corporate Governance Anne Sheehan. “Majority vote is a proven corporate governance best practice that holds board members accountable.”
CalSTRS proxy season efforts also focused on oil and gas companies reporting of risk management strategies related to methane emission leaks. After initially engaging with 14 companies, CalSTRS submitted six proposals, of which four went to vote. The vote outcomes in three of the four companies ranged from 38.8 percent to 47.6 percent in favor of CalSTRS’ proposals. These outcomes, while not enough to pass, are demonstrative of shareholders’ recognition on how corporate behavior impacts the environment and as a harbinger of future votes. Increased mainstream focus on environmental and climate change concerns is also starting to directly impact how shareholders choose to vote.
“We consider the management of methane emission leaks to yield both significant long-term savings and reduced environmental impacts,” said Ms. Sheehan. “Based on CalSTRS interest in methane emission leaks, and in light of the August 2015 proposed EPA requirements, we looked at portfolio companies exposed to these issues. We consider it part of our fiduciary responsibility to exercise our corporate governance rights to address issues–like risk mitigation and costs–with corporations held in our portfolio to ensure we maximize returns for the benefit of our members.”
The California State Teachers’ Retirement System, with a portfolio valued at $193.4 billion as of July 31, 2016, 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 896,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts.