CalSTRS’ governance work recognised

Without full proxy access on the corporate ballot, broader shareholder activity such as majority vote and compensation alignment are set back, according to corporate governance director at CalSTRS, Anne Sheehan, who together with chief executive, Jack Ehnes, has been named on the National Association of Company Directors’ list of 100 most influential corporate governance leaders.

Other industry professionals to be acknowledged on the list include Roger Ferguson, chief executive of TIAA-CREF; Nell Minow, trustee of Governance Metrics International; and Ann Yerger, executive director of the Council of Institutional Investors.

Ehnes (pictured) says: “Coming from such an esteemed organisation as NACD, this honour validates the hard work and dedication that the CalSTRS corporate governance staff have demonstrated in their promotion, encouragement and insistence on exemplary corporate governance from our portfolio companies.”

CalSTRS’ engagement efforts during the 2011 proxy season resulted in the withdrawal of 21 of 26 proposals for a majority vote in corporate board elections.

Sheehan says: “I am most proud of the CalSTRS corporate governance staff and the reputation we’ve been able to build as thoughtful, responsible owners.

“It is a reputation which has allowed CalSTRS to effectively engage our portfolio companies to make the changes they needed to make to enhance their value. Because CalSTRS is a long-horizon investor, we do this with an eye toward boosting the long-term value of the companies we focused on for engagement.

“Engaging companies to improve director election standards has been particularly successful this year because we’ve shown these improvements set the groundwork for sustained performance.”

Sheehan says the biggest single achievement in corporate governance in recent years has been the passage of Dodd-Frank, especially in the area of advancing efforts on “say on pay”. “The legislation also brought to the fore a good deal of attention for the need for greater corporate board diversity in the financial sector,” she says.

Sheehan says in the next year CalSTRS intends to continue its focus on director accountability, diversity on corporate boards, the nomination process for directors, sustainability, compensation alignment and transparency.

“Our most important strategies in pursuit of these goals will continue to be engagement tools such as shareholder proposals, discussions and agreements with companies, as well as coordination with other long-term institutional investors like ourselves,” she says.