Apple Inc. shareowners have supported a proposal by the nation's largest public pension fund that advises the company to adopt a majority vote standard for board candidates in uncontested elections.
(February 24, 2011) -- Apple shareholders have backed a director-vote proposal by the $226.5 billion California Public Employees' Retirement System (CalPERS).
The action reflects the effort among shareholders to encourage changes in the way US company directors are elected and their continued fight for broader shareholder rights.
The public pension fund, which owns 2.6 million Apple shares, aimed to replace the standard that Apple now uses of electing directors by a plurality of votes. Initially, the technology company had fought the proposal, asserting that it would be difficult operating a majority system under Californian law.
“As a company that thrives on innovation, Apple should have the best governance practices possible,” said Anne Simpson, the Senior Portfolio Manager who heads the CalPERS corporate governance program, in a statement. “Good boards have nothing to fear in acknowledging a fundamental right of shareowner democracy to elect directors by a majority vote.”
In a campaign by the three largest US pension funds, CalPERS has asked 58 large US companies to adopt majority voting (as opposed to a plurality voting system for uncontested elections, where directors can be voted in with a single ‘yes’ vote), and so far, 28 companies contacted by CalPERS have adopted the measure or are committed to doing so.
The CalPERS shareowner letter is posted here.
The efforts by CalPERS jibes with a survey late last year by the law firm of Schulte Roth & Zabel and research firm mergermarket.com that showed that hedge funds and pension plans are expected to drive an increase in shareholder activism over the next 12 months. The findings in the Shareholder Activism Insight survey showed a rising level of confidence in shareholder activism since 2008, when the interviews were conducted previously.
“Activists should have a good sense of the various investor groups likely to increase their activist activity, and if they’re right then corporate executives are in for a surprise as to the source of increased investor activism — investor groups that formerly were reluctant to utilize activists tools are losing that reluctance," Marc Weingarten, partner at Schulte Roth & Zabel, said in the report.