CalPERS' support of global corporate directors declined to 58% in the 2023 proxy season from 67% in the prior year, the $485.9 billion pension fund reported.
The California Public Employees' Retirement System, Sacramento, voted on 31,998 global director elections in the fiscal year, including 8,959 director elections in the U.S.
Among the reasons for the decrease in CalPERS support for directors are pension officials' desire to hold directors accountable for climate-related risks, mainly focusing on the highest greenhouse gas emitters in CalPERS' $198.1 billion equity portfolio. Pension officials also increased its corporate board independence threshold to majority from one-third in the fiscal year.
CalPERS also voted on 1,129 say-on-pay proposals and opposed 556 or 49%. The pension fund voted against these proposals for several key reasons including a pay and performance misalignment, short performance and/or vesting periods for long-term incentives and one-time awards without sufficient justification or performance periods.
"Voting against a say-on-pay proposal is not intended as a signal to pay the CEO nothing; rather it's a signal to the board and compensation committee that we have identified issues with some aspect of the pay design or relative quantum to peers through the performance lens," CalPERS said in its 2023 proxy season wrap up released on Feb. 15.
