CalPERS Holds Back More Votes

April 19, 2004 ( - The nation's largest public pension plan continued its corporate governance motivated "assault" last week, announcing its intention to withhold votes from directors at nine more companies.

The California Public Employees’ Retirement System, in positions disclosed on its  Web site , reported Friday that it opposed directors who had approved non-audit contracts for the companies that performed audits.   In six of the votes, CalPERS also voted against ratifying the selected auditor if that accounting company performed non-audit work.   The move follows announcements earlier in the week (see  CalPERS Targets a Dozen Proxy Targets CalPERS Withholds Vote on Apple Computer ), and the latest signs of public pension funds exercising their ownership “clout” to wrest behavioral changes from companies in which they invest (see  Angelides Posits Purse Power ).

In the latest round, the $167 billion CalPERS said it would withhold votes for two nominees for director at Merrill Lynch , five at utility Dominion Resources , two at energy giant Exelon Corp. , and two at truck maker Paccar Inc. – all over the issue of audit independence (they also opposed auditors selection at the firms).  

Moreover, CalPERS targeted Honeywell International’s entire board, saying it failed to implement shareholder-approved proposals on super-majority votes and a staggered board.   Three Honeywell directors were also singled out over the audit issue.

CalPERS also said it would withhold its vote for Wyeth’s entire board – because the drugmaker’s board didn’t heed a shareholder-approved proposal to submit a poison pill to a vote.

It also will withhold its votes for two directors at Cincinnati Financial ; one, in part, because he attended fewer than 75% of the meetings held by the board and committees on which he served, and another because the company and its subsidiaries paid his Cincinnati Bengals football team about $148,000 for tickets and a luxury stadium box.

Additionally, according to CBSMarketWatch, CalPERS is withholding votes for:

  • Two directors at Praxair for their audit committee decision to keep the auditor ratification off the shareholder ballot;
  • Four directors at Synovus Financial , with three objections, including details of contracts their companies had with Synovus. The fourth was on the audit committee and backed non-audit work for the auditor.

While its opposition moves appear to be drawing most of the headlines, CalPERS also on Friday announced its support of Pfizer’s board slate, as well as ratification of the company’s auditor.