The Financial Accounting Standards Board's adoption of a rule to require expensing of employee stock options prompted a reduction in proposals on that topic. The rule is set to become effective this summer. But the possible intervention of Congress or the SEC to delay the rule has led the carpenters and other pension funds to continue introducing some stock-option expense proposals to ensure adoption of the new accounting treatment, Mr. Durkin said.
Walt Disney Co.'s directors, at the annual meeting this year, received endorsement from pension funds that waged a vigorous campaign last year to withhold votes; the confrontation eased because of continuing discussions between board members and pension fund officials. In March, the board announced that Michael D. Eisner will be replaced as CEO in September, one of the major goals of the pension fund campaign.
Institutional investors have also been talking with board members at Safeway Co., where a number of major pension funds, including the Illinois State Board of Investment, Chicago, staged a campaign to withhold votes from directors last year, said William Atwood, executive director of the $10.7 billion Illinois fund.
Mr. Atwood said the Safeway board has taken a number of steps, including having more independent directors. He said the fund has no plans for another withhold effort this year.
Meetings where there could be what Mr. McGurn called mega-withhold votes include Sempra Energy, which faces proposals calling for annual election of its directors, employee stock option expensing, performance-based pay, and shareholder approval of its poison pill anti-takeover device.
According to Mr. McGurn, other major proposals on the table this year include:
• board leadership, calling for separation of the roles of chairman and CEO, or for a lead director;
• board accountability, calling for annual election of directors;
• shareholder vote to ratify appointment of auditor;
• pay for performance on stock options and other equity-based compensation;
• corporate social responsibility, including environmental risk and employment issues; and
• opposing directors for ignoring successive majority votes on shareholder proposals.
The $186.9 billion California Public Employees' Retirement System, Sacramento, adopted a policy on withholding votes from audit committee directors in egregious cases of auditor conflicts of interest. That's a moderation of its massive approach last year, when it withheld votes for at least one director at some 80% of companies where it voted.
As to whether CalPERS will withhold its vote from Warren Buffett for re-election as a director of Coca-Cola Co. — as the pension fund did last year, along with some other major pension funds, causing widespread criticism — Mark Anson, CalPERS chief investment officer, was quoted in P&I Daily as saying, "We have not seen egregious conduct" from him.
Officials of the State of Wisconsin Investment Board, Madison, which also withheld its votes for Mr. Buffett last year, wouldn't comment about how they will vote this year, said Vicki Hearing, public information officer for the $70 billion fund.
Mr. McGurn said Institutional Shareholder Services, which recommended its clients withhold their votes for Mr. Buffett last year, "will examine Coca-Cola when its proxy statement comes out."