CalPERS backs Stringer’s ‘proxy access’ push with shareholder letters

Series of letters to fellow shareholders to build support ahead of AGMs

The California Public Employees Retirement System (CalPERS), the largest US public pension fund, has shown its support for New York City Comptroller Scott Stringer’s ‘proxy access’ campaign by writing to fellow shareholders in eight large US companies urging shareowners to back proposals on giving institutional investors greater access to the director nomination process.

CalPERS and Stringer have written similarly worded letters to shareholders in companies including Duke Energy, Cabot Oil & Gas and Arch Coal (see full list below) in which they urge support for their non-binding proposals on proxy access at forthcoming annual meetings.

The funds, which have a combined $468bn in assets under management, are calling shareholders with 3% ownership for three continuous years at the companies to have the ability to nominate up to 25% of the board.

It the latest development in Stringer’s Boardroom Accountability Project (BAP), launched in November 2014, which has targeted 75 companies.

The BAP initiative kicked off last week, when shareholders voted by 66% in favour of Stringer’s non-binding resolution at natural gas firm EQT Corporation, the first target company to hold an AGM this year.

“This resounding vote in favor of meaningful proxy access at EQT is a sign of things to come for the nearly 100 boards facing these proposals this spring,” Comptroller Stringer said. “The message from investors is clear: shareowners expect a voice on the boards of companies they own. The onus is now on EQT’s board to respond.”

CalPERS and Stringer’s letter to Duke Energy and the rest argues that proxy access is “fundamental to a sustainable system of corporate governance”.Proxy access became arguably the hottest topic in this year’s voting season after the controversial Whole Foods episode which drove it up the agenda at the Securities and Exchange Commission.

At one company, Arlington, Virginia-based energy group AES Corp., CalPERS and Stringer are asking shareholders to vote against a management proposal that they say represents an “overly challenging” ownership threshold of 5%. AES points to the fact that Stringer is targeting 75 companies means that its “one-size fits all” standard is not appropriate for it.

To date, six of the original 75 companies at which proxy access resolutions were filed have agreed to implement what Stringer terms “meaningful reform”. They include Abercrombie & Fitch; Big Lots; Splunk; Staples; United Therapeutics; and Whiting Petroleum. A seventh company, Apache Corporation, has agreed to support the resolution. In total, at least 16 companies, including Bank of America, Citigroup, GE, Prudential Financial and Yum! Brands have taken similar steps to implement meaningful proxy access since November.

For further information, contact CalPERS Investment Officer and Global Head of Proxy Voting, Todd Mattley via email or phone (916-795-0565). Stringer’s full focus list is available here.

The companies targeted by the CalPERS letters:

Duke Energy (AGM date: May 7)
Alexion Pharmaceuticals (May 6)
Cabot Oil & Gas (April 23)
St Jude Medical (May 7)
Arch Coal (April 23)
American Electric Power (April 21)
Paccar Inc (April 21)
AES Corp (April 23)