CalPERS is asking Eli Lilly and Co. shareholders to oppose re-election of three directors and support its proposal to allow shareholders to amend company bylaws by majority vote.
In a statement released today, the $237.5 billion California Public Employees Retirement System, Sacramento, urged shareholders to withhold votes on the re-election of Alfred G. Gilman, Karen N. Horn and John C. Lechleiter. It was on their watch that Eli Lilly experienced severe stock underperformance, poor corporate governance practices, and was unresponsive to shareowners, said CIO Russell Read in the statement.
The statement also said Eli Lilly shareowners now do not have the right to institute bylaw amendments by any vote, which is allowed by about 95% of companies in the S&P 500 and Russell 1000. CalPERS owns 4.7 million Eli Lilly shares.
Philip C. Belt, Eli Lilly director-corporate communications, said in a statement: The board believes that allowing the bylaws to be amended by a simple majority would expose the shareholders to the risk that a few large shareholders, who have no duties to other shareholders, could use the bylaws to advance their own short term special interests.
Lilly also disagrees with CalPERS' assessment of Lilly board members, Mr. Belts statement said. As for stock performance, CalPERS chose to look at time periods for which the comparisons suited their perspective.
The Indianapolis-based companys annual meeting is April 21.