CalSTRS Issues Board Composition Best Practices
Fact sheet is blueprint of investor’s ideal high-performing corporate board of directors.
WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System (CalSTRS) today issued guidelines for what it considers the composition of a high-performing corporate board of directors.
Independent leadership, diversity, board succession planning and accountability measures are among the sought-after qualities CalSTRS outlined in its publication, Best Practices in Board Composition. The document offers insight into what institutional investors such as CalSTRS are looking for in a quality corporate governance structure. Corporate directors can use this resource to organize their boards—given the trend of increased shareholder scrutiny of boards’ actions and performance.
“We think these best practices will help corporate leaders decide how best to structure their boards to optimize long-term corporate performance,” said CalSTRS Corporate Governance Director Anne Sheehan. “At CalSTRS, we invest across the entire market and do so for the long term. The proper structure and governance of a board is key to the successful performance of a company. On the other hand, as long-term shareholders, we want to assure corporate leaders have the right tools to make the best decisions on our behalf.”
The two-page publication succinctly lays out the expectations of long-holding institutional investors to align the interests of corporate boards with those of investors. A deeper look into what CalSTRS values in board composition, and other aspects of corporate governance, can be found in CalSTRS Corporate Governance Principles.
“Directors represent the interests of shareholders within the companies they oversee. We expect them to develop structures and practices that minimize conflicts of interest and keep management interests closely aligned to corporate performance,” Ms. Sheehan added.
The California State Teachers’ Retirement System, with a portfolio valued at $193.1 billion as of May 31, 2015, 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 879,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts.