In a First, CalSTRS Pension Fund Specifies Voting Stance on Proxy Access Proposals

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By Yin Wilczek

Feb. 13 — The California State Teachers' Retirement System for the first time has spelled out in its governance principles that it will support proxy access proposals with the 3 percent/three year eligibility threshold and oppose other resolutions with more “onerous” requirements.

In a Feb. 11 release, the public pension fund—the second largest in the nation with assets of about $188.8 billion—specified its position in updated corporate governance principles that it adopted at a Feb. 6 meeting.

The fund also said its governance unit will urge other shareholders to withhold their votes from directors who either exclude 3 percent/three year shareholder proposals or who “deliberately preempt” such resolutions with management proposals with higher thresholds.

SEC Rule 

“CalSTRS has steadfastly supported the 2011 rule, proposed by the Securities and Exchange Commission, that allows shareholder groups access to board director nominations with what we call a three-and-three ownership structure,” said CalSTRS Director of Corporate Governance Anne Sheehan. “We firmly believe this is the most appropriate threshold for proxy access.”

In a letter in January, the Council of Institutional Investors said the 3 percent/three year threshold is the “prevailing U.S. shareholder view[] for a viable ownership threshold”.

Other institutional investors—including BlackRock and the New York City Pension Funds—similarly said they will vote against directors who act in bad faith over shareholder proposals with the 3 percent/three year threshold .

A bid by many companies to exclude from their proxy materials shareholder proposals with the 3 percent/three eligibility recommendation in lieu of management resolutions with higher thresholds led the SEC to suspend no-action relief under an exclusion that allows companies to omit shareholder proposals that directly conflict with ones by management. The SEC staff is reviewing 1934 Securities Exchange Act Rule 14a-8(i)(9). 

The U.S. Court of Appeals for the District of Columbia invalidated the SEC's proxy access rule in 2011.

To contact the reporter on this story: Yin Wilczek in Washington at

To contact the editor responsible for this story: Ryan Tuck at

The CalSTRS release is available at


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