CalPERS sent letters to 1,600 major shareowners of Eli Lilly & Co., Indianapolis, seeking support for a non-binding resolution to allow shareowners to amend company bylaws by a majority vote. Approximately 96% of companies in the S&P 500 and the Russell 1000 allow shareowners to amend the bylaws, according to the proposal.
The companys board opposes the proposal, saying in a statement it believes that allowing the bylaws to be amended by a majority shareholder vote would expose the shareholders to the risk that a few large shareholders who wish to advance their own special interests and who have no duties to the other shareholders could adopt changes in these operating principles that could be detrimental to minority shareholders.
Separately, the Eli Lilly board introduced a proposal asking that shareholders amend bylaws to elect directors annually, instead of the current system of staggered three-year terms. Approval requires a vote of 80% of outstanding shares, the proposal states.
Earlier in March, the $232.6 billion California Public Employees' Retirement System, Sacramento, named Eli Lilly to its 2007 Focus List of underperforming companies. The fund owns 4.8 million Eli Lilly shares.
The companys annual meeting is April 16.