CalSTRS Reports Corporate Governance Success in 2010 Proxy Season
Shareholder proposals result in progressive changes benefiting companies’ performance and value.
WEST SACRAMENTO, CA – The California State Teachers’ Retirement System (CalSTRS) withdrew 21 of 28 shareholder proposals filed during the 2010 proxy season after successfully engaging companies to make corporate governance changes.
As the lead or co-filer of the proposals, CalSTRS sought poison pill certification by shareholders, declassification of the board of directors, increased board diversity, the appointment of independent board chairs, and sustainability reports on environmental, social and governance (ESG) issues. In the majority of cases, CalSTRS engagement efforts resulted in progress on corporate governance matters and improved corporate performance.
“We prefer to engage companies in discussions on these matters rather than go through with shareholder proposals,” said Anne Sheehan, corporate governance director at CalSTRS. “If engagement leads to substantial progress on the issue, we withdraw the proposal.”
- CalSTRS submitted nine proposals on board diversity. All but one was withdrawn after the companies amended their governing documents to ensure that diversity was one characteristic they considered when developing a pool of board candidates. In two cases, at NutriSystem Inc. and Liberty Global Inc., the companies added a woman to their board so the proposals were withdrawn. Although the board diversity proposal at EXCO Resources, Inc. did not pass, the company amended its Nominating and Corporate Governance Committee charter to address the concerns of CalSTRS.
- CalSTRS submitted six proposals on environmental matters. Four were withdrawn as companies agreed to improve their climate risk management disclosure efforts or agreed to prepare sustainability reports.
- Seven CalSTRS resolutions went to a vote at annual corporate meetings during the 2010 proxy season. A resolution to ratify poison pills at Ball Corporation passed with 70.2%, and a proposal to declassify the board at Precision Castparts Corp. passed with more than 67%. Votes on executive compensation at Waddell & Reed Financial, Inc., climate-related proposals at Chesapeake Energy Corporation and ConocoPhillips and reimbursement of nomination expenses at Forest Laboratories, Inc. did not pass but received considerable shareholder support. CalSTRS continues to work with the companies on these issues.
The California State Teachers’ Retirement System, with a portfolio valued at $134.3 billion, is the second largest public pension fund in the United States. It administers retirement, disability and survivor benefits for California’s 848,000 public school educators and their families from the state’s 1,400 school districts, county offices of education and community college districts.