Update from CalPERS

March 2021 CalPERS update, starting with commitments for this year:

  • Proxy Voting & Corporate Engagements
    • ✓  Vote all public company proxies in a manner consistent with CalPERS’ Governance & Sustainability Principles and CalPERS’ Investment Beliefs
    • ✓  Actively engage 2,000+ unique companies annually on executive and employee compensation, corporate board diversity, climate change, investor rights, human capital management, and other sustainability considerations to promote long-term value creation
  • Executive and Employee Compensation: continue to engage companies on, and to hold compensation committees accountable for, misaligned pay and performance
  • Corporate Board Diversity: continue to engage companies to improve corporate board diversity and use proxy voting and shareowner campaigns, including filing shareowner proposals and running director vote no campaigns, to bring about change where engagements are not productive
  • Climate Change: continue to engage companies on climate change risks and opportunities as part of the Climate Action 100+ initiative and use proxy voting and shareholder campaigns, including filing proposals and running proxy solicitations, to effect change
  • Investor Rights: continue to engage companies to adopt proxy access and majority voting for director elections to facilitate shareowners’ ability to hold boards accountable for oversight failures

2020 Achievements:

• Enhanced Executive Compensation Accountability

  • ✓  Voted “against” 51% of executive compensation proposals for poor pay-for-performance alignment (1,349 of 2,650 companies)
  • ✓  Voted “against” 3,402 compensation committee members at 1,267 companies to hold them accountable for poor pay-for-performance alignment. This was the first year of implementation of voting against compensation committee members at the same time we vote against executive compensation proposals
  • ✓  Wrote letters to Chairs of Compensation Committees and/or Boards at 1,267 companies requesting engagement meetings to discuss our “against” votes on their executive compensation proposals. The response rate as of the end of December 2020 was 35%

65% of companies engaged since July 2017 have since added at least one diverse director to their boards (518 of 800 companies, excluding delisted, acquired, and bankrupt companies, 71% of companies engaged have added a diverse director to their boards (494 of 697 companies)

✓ Voted “against” 205 directors at companies where diversity engagements did not result in constructive outcomes. By comparison, we voted against 314 directors in 2019 and 468 directors in 2018. A decrease in the number of against votes over time is a sign of progress

  • Climate Change Accountability: Case-in-Point: ExxonMobil
    • ✓  May 2020: CalPERS voted “against” multiple board members for failing to disclose scope 3 emissions. ExxonMobil was the only U.S. oil & gas major that did notdisclose its scope 3 emissions
    • ✓  August 2020: CalPERS filed a shareowner proposal requesting that the company disclose its scope 3 emissions. The proposal was meant to be voted at the company’s 2021 Annual General Meeting (AGM)
    • ✓  January 2021: ExxonMobil disclosed its scope 3 emissions for the first time ever. CalPERS withdrew its proposal as a result of the company implementing what the proposal requested
  • Enhanced Investor Rights
    • ✓  Proxy Access: 23 of 25 companies engaged either adopted or committed to adopt proxy access per our request. 2 of 25 companies were acquired
    • ✓  Majority Vote on Director Elections: 20 corporate board diversity companies adopted majority voting per our request. We ran an additional 19 majority vote proposals at other non-responding corporate board diversity companies, and 4 passed with >50% support
    • ✓  Staff will be engaging 50 companies in 2021 requesting that they adopt proxy access

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