CalPERS to Adopt PCAOB Audit Independence Proposal
The CalPERS Board adopted a three-pronged plan to advocate majority vote election procedures for corporate directors. Currently, a plurality vote system is used in most corporate elections, in which directors can be elected by the vote of a single share unless they are opposed by a dissident candidate.
"Majority vote will give shareowners the power to hold directors accountable for their actions and their performance, and elect the best person for the job," said Rob Feckner, CalPERS Board President.
Under the plan, CalPERS will:
- Seek to implement majority vote policies at individual companies through company bylaw and charter amendments;
- Pursue changes to state laws to implement majority vote where feasible;
- Seek to implement the majority vote concept at the Securities and Exchange Commission and major stock exchanges; and
- Amend CalPERS Corporate Governance Core Principles and Guidelines to advocate majority votes for corporate directors.
In a related action, CalPERS Board also adopted a staff recommendation to use the recently released Public Company Accounting Oversight Board (PCAOB) auditor independence proposals as a guideline for the pension fund's proxy votes this season. The PCAOB, which oversees the accounting profession, proposed to bar auditors from advising clients about tax shelters and other money-saving measures.
CalPERS will withhold proxy votes from auditors who violate the proposed standards in the System's U.S. equity holdings that are part of an internal Wilshire 2500 Index Fund. The Board also gave its investment staff the power to vote against individual corporate audit committee members where there are signs of egregious behavior.