The California Public Employees’ Retirement System’s investment chief urged President Barack Obama to oppose a proposal to curb the ability of shareholders to list board candidates on corporate proxy statements.
U.S. Senate negotiators on Thursday proposed limiting investors’ rights to nominate directors for shareholder votes to those who own at least 5% of a firm for two years or longer. The plan would be part of merged House and Senate measures to overhaul the financial industry, including authorizing the Securities and Exchange Commission to let shareholders list their board candidates on corporate proxy statements.
“The institutional-investor community was shocked to hear that the Senate supports adding a 5% share-ownership threshold to the provision that clarifies the SEC’s authority to promulgate a rule,” Joe Dear, chief investment officer of the $201.9 billion Sacramento-based fund, said in a letter to White House adviser Valerie Jarrett. “This will gut the proxy-access provision and is completely unacceptable to responsible long-term investors such as CalPERS.”
Activist investors including Carl Icahn have fought to get their nominees elected to the boards of companies they say are underperforming. Mr. Dear said there isn’t a single shareholder of Bank of America Corp., IBM Corp., or Exxon Mobil Corp. that owns 5% and that the largest 10 pension funds by assets don’t own more than 3% of any of those companies.
Democrats have pushed to include a provision to let the SEC make ballot-access easier for candidates promoted by shareholder groups, hedge funds and institutional investors. Republicans have opposed the measure.
Business groups including the U.S. Chamber of Commerce oppose making it easier for investors to oust directors. The Washington-based advocacy group, which represents more than 3 million companies, has said that labor unions will hijack board elections to push political or social agendas detrimental to other investors.