US - The board of the US$207bn California Public Employees' Retirement System (CalPERS) has voted unanimously in favour of a bill requiring that unopposed board director candidates should have a majority vote from shareholders before reappointment.
If enacted the majority-vote rule under the bill, S.B. 1207, by senator Richard Alarcon, would take effect on 1 January 2007. Under a proposed amendment to the bill, an incumbent director who fails to win a majority vote of approval by shareowners would be required to resign in 90 days of the election.
The bill has the potential to affect 23 California-incorporated companies and does not affect contested elections, claimed CalPERS.
“In uncontested elections, there were several cases in the 2004 proxy season where directors receive significantly less than 50% of the shares voting, yet remained on a company’s board,” said Rob Feckner, CalPERS board president.
“This legislation will hold directors accountable for their performance and help elect the best person for the job.”
Several companies have adopted some form of majority-vote rule including Intel, Pfizer and Disney according to the CalPERS board investment committee. However, many boards to have adopted majority vote-rules still have final say over who holds the seats.
CalPERS has also announced new efforts to gather information on corporate production of greenhouse gases and other environmental threats.
The fund will identify companies in the transportation, utilities and oil and natural gas sectors that fail to meet minimum standards of environmental data disclosure.
CalPERS will also follow a new corporate governance guideline in acting on shareowner proposals for the “timely, accurate reporting of environmental risks - especially those associated with climate change.
By Daniel Flatt
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