Some major pension funds are refining their corporate governance guidelines because they are either too aggressive or not aggressive enough.
The $70.6 billion State of Wisconsin Investment Board, Madison, plans to revise some its guidelines, including reconsideration of how it votes on directors, said Keith L. Johnson, chief legal officer. Earlier this year, it withheld votes for the re-election of Warren Buffett at Coca-Cola Co., following its guidelines. But he noted guidelines might be too rigid to provide for flexibility on voting for individual situations.
The Illinois State Board of Investment, Chicago, refined its guidelines recently. The board retains voting of the proxies on its stocks, although external managers run its $10.3 billion in assets. Following its guidelines, it voted earlier this year in favor of the re-election of all the directors of Walt Disney Co., including Michael Eisner, chief executive officer and then chairman, and George Mitchell.
"We had to follow our guidelines," which essentially call for supporting management, unless the election is contested, said William Atwood, executive director of the Illinois fund. But, the board sympathized with other pension fund shareholders that voted against Mr. Eisner and other Disney directors, he said.
A few months later in voting on Safeway Inc., the Illinois board voted to temporarily suspend its guidelines to withhold votes for the re-election of three directors whose terms were expiring. Because of Safeway's continuing underperformance, the Illinois fund helped lead a campaign to oust the directors, although it was unsuccessful.