Four major pension funds voted in opposition of more directors and other issues than shareholders in aggregate during the most recent proxy season.
The California State Teachers' Retirement System, West Sacramento, voted to oppose 36% of the 17,764 nominees for director to corporate boards in the fiscal year ended June 30, more than other major pension funds sampled and other institutional investors on average, according to the latest proxy-voting reports of four major pension funds and other reports.
The State of Wisconsin Investment Board, Madison, voted against 24.6% of the 7,583 nominees in the same period; the Florida State Board of Administration, Tallahassee, voted to oppose 16.8% of the 15,968 nominees for the year ended Dec. 31, 2012; and the Ohio Public Employees Retirement System, Columbus, voted to oppose the election of 21.7% of nominees for the year ended Dec. 31, 2011.
“I think what is evident is institutional investors are paying more attention to directors than they ever have before,” said Patrick McGurn, special counsel, Institutional Shareholder Services Inc., Rockville, Md., a corporate governance and proxy-voting advisory firm.
A decade or so ago, “the numbers in opposition would have been a small fraction of what they are today,” he said.
By contrast, all institutional investors, including pension funds, voted on average to oppose only 4% of nominees for directors for the year ended June 30, 2011, according to the most recent report of Broadridge Financial Solutions Inc., Lake Success, N.Y., whose services include proxy-voting processing.
All shareholders, including individual investors, also voted on average against 4% of nominees, the Broadridge data show.
“I think they have substantial influence” in proxy voting, said Kent S. Hughes, managing director, Egan-Jones Ratings Co.'s proxy advisory services, speaking of public pension funds.
The Broadridge figures are based on 83.4% of all shares that were voted, including institutional and individual shares held by custodians and brokerage firms.
But “it is difficult to generalize about” the proxy voting practices of public pension plans, Mr. Hughes said.