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Press Release


November 14, 2007


CalPERS Urges U.S. Senate Committee to Protect Shareowner Access to Corporate Election Ballots
Seeks Strong Message to SEC About Proposed Rule Change


WASHINGTON, DC - The California Public Employees' Retirement System (CalPERS) today asked the U.S. Senate Banking Committee to send a strong message urging federal regulators to leave intact a court decision that gives the company's owners the right to access the company's ballots to seek approval of director election procedures. Chairman Christopher Cox of the Securities and Exchange Commission has proposed moving ahead by asking a partial Commission to approve a proposal that would nullify the court ruling and preclude shareowners from bringing shareowner proposals that will allow shareowners to nominate directors through company ballots.

"This ill-timed proposal before a sub-set of the Commission is unfair, unwise, violates the core principle of ‘do no harm' to shareowners, and is contrary to the very purpose for which the SEC was established," Dennis Johnson, Senior Portfolio Manager, CalPERS Corporate Governance, said at a hearing of the Senate Committee on Banking, Housing and Urban Affairs.

"The Commission should stand for more corporate democracy, not less democracy. For all the sophistication of our markets in the U.S., we continue to lag other countries in corporate democracy. We are the world's only developed economy that keeps shareowners from placing director nominees on company ballots."

Regulators have been assessing proxy access rules since the 2nd U.S. Circuit Court of Appeals, in AFCSME v. AIG in September 2006, overturned the SEC practice of allowing corporations to exclude these types of shareowner proposals from proxy ballots. The proposed SEC rule change would eliminate this proxy access right for the 2008 season. Meanwhile, one Commissioner has left the five-member Commission. Another will leave soon.

During the 2007 proxy season, shareowners submitted three proxy access proposals. One nonbinding proposal passed at Cryo-Cell International Inc., and two others received substantial support (exceeding 42 percent of votes cast) at UnitedHealth Group and Hewlett-Packard Co.

Chairman Cox, arguing for a rollback, says current practice fails to protect shareowners from risk by not disclosing necessary background information about proponents of proxy access resolutions – for example, if a proponent had acquired shares to effect or influence a change in company control.

"Shareowners haven't requested this information," Johnson told the Committee. "And if disclosure of this sort is so crucial, companies that had proxy access resolutions on their ballots this year surely would have expressed concern. None did.

"The SEC failed to act on the proxy access issue for years when it had a full Commission. Why the rush to judgment now? In fact, the right time to take action on such a critical issue is after the thoughtful deliberation of a full, five-member bipartisan Commission," he said.

A copy of Dennis Johnson's full testimony before the Committee can be found in the press room of the CalPERS website at www.calpers.ca.gov.

CalPERS is the nation's largest public pension fund with more than $250 billion in assets under management. It provides retirement and health benefits to approximately 1.5 million State and public agency employees, retirees, and their families. For more information, please visit www.calpers.ca.gov.

Contact Info:
Clark McKinley / Pat Macht
Office of Public Affairs
(916) 795-3991

Additional Resources
CalPERS Senior Portfolio Manager Testimony (DOC, 53 KB)

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