CalPERS and the New York City Retirement Systems are calling for Charles Schwab Corp. shareholders to vote in favor a proxy-access proposal at the company's May 16 shareholder meeting.
“We believe providing access to a company's proxy by giving shareowners the ability to nominate directors to the board is one of the most important rights for owners of a company. Without effective proxy access, the director election process simply offers little more than a ratification of management's slate of nominees,” the two pension funds said in a letter to Charles Schwab shareholders Thursday.
The terms for proxy access proposed by the $313.2 billion California Public Employees' Retirement System, Sacramento, and the $170.6 billion New York system for are ownership of at least 3% of the company's outstanding stock, three years of continuous ownership and the ability to nominate up to 25% of the company's board.
CalPERS and the New York City pension funds hold about 5,343,000 shares of Charles Schwab stock combined, valued at about $220 million. The pension funds sent a similar letter to Humana Inc. shareholders on Monday urging votes in favor of proxy access at the health insurance company.
On Friday, a day after the pension funds' shareholder letter, Charles Schwab urged investors to vote against the pension funds' proposal, arguing that it “risks disruption in unforeseen ways.”
“With these proposed thresholds, contested director elections could occur every year, leading to high turnover, inexperienced directors with insufficient knowledge and understanding of our current and past business, and directors who could promote the influence of special interests over the interests of all stockholders,” Charles Schwab said in proxy statement released Friday. “Unlike other public companies where there are few concentrated stock positions, and it is difficult to amass 3% of outstanding shares among investors, there are five institutions that each hold over 3% of the company's stock. The top twenty institutional holders of common stock of the Charles Schwab Corp. hold over 45% of the outstanding common stock.”