TIAA-CREF updates governance stance for more “robust” dialogue with companies

TIAA–CREF, the US institutional investing giant with $453bn (€327.4bn) in assets under management, has updated its corporate governance policy to facilitate “a more robust” dialogue between companies and shareholders.
The 37-page statement addresses executive pay, board elections, political contributions, and labour and human rights.
The revision is intended to inform people about the corporate governance and social responsibility practices it expects of companies in its portfolio. It also discloses how TIAA–CREF would vote on proxy resolutions at the more than 8,000 companies it invests in around the world.
“We’ve updated our guidelines to facilitate a more robust dialog between companies and their shareholders and to encourage more sustainable value creation,” said TIAA–CREF’s chief executive Roger Ferguson.
TIAA–CREF has updated the policy, last revised in 2007, to reflect the developments in corporate governance, social and environmental policies, and the convergence of best practices across global markets. It also reflects the enhanced shareholder rights granted by the Securities and Exchange Commission under the Dodd-Frank Act.
Thus it will use Dodd-Frank “say-on-pay” votes to encourage companies to clearly disclose how executive compensation policies drive long term shareholder value. It adds that it prefers firms to offeran annual non-binding vote on executive pay, or “clearly articulate” why it’s being offered less frequently.

In contested elections of corporate directors, TIAA–CREF will generally vote for candidates it believes will best represent the interests of long-term shareholders. And it may support shareholder resolutions asking that the roles of Chairman and CEO be separated.
TIAA–CREF says it will generally support reasonable (RI’s emphasis) shareholder resolutions on political expenditures, labour and human rights standards and greenhouse gas emissions/climate change.

On the issue of divestment, the document states that its policy of preferring engagement to divestment is a “matter of principle” based on various considerations. “We believe that divestment does not offer TIAA–CREF an optimal strategy for changing the policies and practices of portfolio companies, nor is it the best means to produce long-term value for our participants and shareholders.”
Only in the “rarest of circumstances” and as a last resort, would it consider divesting from companies judged to be complicit in genocide and crimes against humanity and the most serious human rights violations.
And it also states that it will not generally support shareholder resolutions seeking to alter the investment policies of financial institutions or to require divestment of tobacco company stocks.