CalSTRS Tells SEC its Proposed Rules Ignore Shareholder Interests
SACRAMENTO, CA – The nation’s second-largest public pension fund today told the Securities and Exchange Commission its proposed rules for increasing shareholders’ ability to nominate and elect directors are counterproductive.
The proposed SEC rules, S7-16-07 and S7-17-07, out for public comment through October 2, address the ability of shareholders to nominate directors for election to corporate boards utilizing the company’s proxy materials.
In a letter sent to the SEC today, Jack Ehnes, CalSTRS Chief Executive Officer, criticized the SEC for proposed rules that “reveal an agency that has thrown overboard its mission to serve investors and has adopted instead a policy of promoting the interests of corporate management at the expense of shareholders…”
Ehnes’ letter cites CalSTRS’ strong support of greater communication between boards, executives and shareholders and that “this increased communication should be permitted with only the bare minimum of restrictions. In this regard, both proposed rules are counterproductive.”
The letter states proposed rule S7-16-07 “would permit ‘proxy access’ proposals under a very limited set of circumstances….CalSTRS believes the combination of a high ownership threshold and onerous disclosure requirements effectively gut the usefulness of the proposal.” Competing proposed rule S7-17-07 “would expressly forbid shareholders from making any proposal that would advocate the adoption of ‘proxy access’ procedures for any company.”
CalSTRS’ letter urges the SEC to reject summarily the proposed rules and offers recommendations for new rules that would increase shareholder democracy to strengthen the value of the company.
With a $169 billion investment portfolio, the California State Teachers’ Retirement System is the second-largest public pension fund in the U.S. It administers retirement, disability and survivor benefits for California’s 795,000 public school educators and their families from the state’s 1,400 school districts, county offices of education and community college districts.