CalSTRS statement on SEC proposed regulation

News release Amy Norris

WEST SACRAMENTO, Calif. (November 6, 2019) – In response to the Securities and Exchange Commission November 5 Proposed Proxy Advisor Regulation, CalSTRS issued the following statement:

The SEC proposed new proxy advisor and shareholder proposal threshold rules that will weaken investors’ ability to hold corporations accountable.

CalSTRS voluntarily contracts with proxy advisory firms to obtain cost-effective independent research to help inform our proxy voting and engagement decisions. The proposed proxy advisor rules would require proxy advisors to gain approval from the very companies they are researching before they can release the reports to their investor clients, hampering the proxy voting process which is our fiduciary responsibility. The new rules were predicated upon unsubstantiated allegations of widespread errors in proxy advisor reports. We strongly urge the SEC not to burden investors with requirements that would compromise independence, effectiveness and competition for proxy advisors.

The SEC also proposed tiered ownership rules to submit shareholder proposals and higher thresholds to resubmit proposals. The proposed rules will handicap new governance, social and environmental proposals that might be raised in the future. In addition, the new rules will disenfranchise retail investors contrary to the SEC’s goal of protecting investors.

The proposed rules seek to solve problems that simply do not exist and further diminish the rights of shareholders and their ability to hold corporations accountable.

CalSTRS signed onto the October 24 Council of Institutional Investors letter opposing the Proxy Advisor Regulation.

The Investor Rights Forum website provides more information on the shareholder proposal process.

About CalSTRS

The California State Teachers’ Retirement System, with a portfolio valued at $242.1 billion as of September 30, 2019, is the largest educator-only pension fund in the world. CalSTRS serves California’s more than 949,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts. A hybrid retirement system, CalSTRS administers traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS members retire, on average, after more than 25 years of service with a median retirement age of 62.9 and a monthly pension of approximately $4,475. CalSTRS-covered service is not eligible for Social Security participation. For more data, download the Fast Facts 2018 brochure.

See how CalSTRS demonstrates its strong commitment to long-term corporate sustainability principles in its annual Global Reporting Initiative Sustainability Report.

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