Yes, the huge California teachers fund is moving into a beautiful new headquarters building along the Sacramento River on June 22, but more importantly they are also taken what Gary Lutin, of the Shareholder Forum, says is "a major step in the development of a clearinghouse for shareholder voting recommendations."
CalSTRS has become the first institutional investor to pre-disclose their voting decisions through Broadridge’s ProxyEdge® integrated vote recommendation service. This will now allow other institutional investors with voting policies similar to CalSTRS to compare and align their votes with them.
ProxyEdge is Broadridge’s suite of electronic voting services that help simplify the management of institutional proxies by providing access to third-party recommendations and/or pre-disclosure of third-party vote decisions. ProxyEdge allows institutions to manage, track, reconcile and report proxy voting through electronic delivery of ballots, online voting, and integrated reporting and record keeping to help institutions satisfy their SEC requirements.
MaryEllen Andersen, Vice President, Issuer & Institutional Relations at Broadridge, says, "By pre-disclosing votes via ProxyEdge, institutional investors which have voting policies similar to CalSTRS are able to weigh their proxy decisions against those of CalSTRS, enabling greater voting consistency among like-minded investors." (CalSTRS Turns to Broadridge for Electronic Voting Proxy Services, Earth Times, 5/27/09)
In addition, and much more important to retail shareowners, CalSTRS has joined an exclusive group of nine respected institutional investors whose votes are announced in advance on Proxy Democracy. CalSTRS will make its votes known before the annual meetings
of its more than 3,800 holdings in North America. Last year CalSTRS cast more
than 47,000 individual proxy votes.
"CalSTRS has called for greater transparency from its portfolio companies and we intend to lead
the way with comprehensive disclosure of our votes,” said Anne Sheehan, CalSTRS director of
corporate governance. “Information is vital for shareholders to make informed decisions about
the companies they own and CalSTRS intends to let fellow shareholders, as well as management,
know how we intend to vote." "Announcing our votes in advance will open the door to engagement with more of our
companies. This discussion will bear fruit in better corporate governance practices," Sheehan
said. CalSTRS will also archive its votes starting from 2007 on
ProxyDemocracy.
CalSTRS was already among the leaders in corporate governance. This move should accelerate that position as it will enable other funds look to see how CalSTRS is voting before they cast their own votes. I’m sure none will simple copy CalSTRS but their recorded votes may give them pause and should lead to more dialogue among institutional investors about their reasons for voting. The nine funds now listed on ProxyDemocracy are beginning to change how retail shareowners vote.
In other news, CalSTRS will discuss their policies regarding placement agents at an upcoming June 3 board meeting. See a letter from Nicholas Bienstock, a managing partner at New York-based private real estate firm Savanna Investment Management LLC included in the agenda. (Find it here; search for ‘placement agents’ to get to the exact link.) Although their existing policy is stricter than most, CalPERS is looking to enhance disclosure requirements. (Placement Agent Furor: The (Smaller) GP Strikes Back, WSJ
Private Equity Beat, 5/26/09) (posted 5/27/09)
Previously, CalSTRS asked 300 of its portfolio companies to develop
comprehensive executive compensation policies and to allow
shareowners advisory votes on those policies. (CalSTRS Guidelines Offer Substance on Executive Pay, press release, 5/5/09) The CalSTRS principles offer companies a five-part approach that calls for:
- A clear overarching philosophy that aligns the interests of shareholders and management
- A well designed, comprehensive compensation policy that takes a detailed look at all of its components Transparency through a plain-English description of a well-crafted compensation plan
- Accountability through a responsible compensation committee
- A compensation committee comprised of independent directors using only independent advisors and consultants
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