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CalPERS seeks shareholder changes at Apple

December 23, 2010 | 11:49 am

The California Public Employees' Retirement System, a fund with a long history of corporate-governance activism, is claiming significant success with a nearly year-old initiative to pressure companies in which it invests to elect directors only with majority votes of shareholders.

The $221-billion pension fund, the largest in the nation, now is setting its sights on Cupertino-based Apple Inc., manufacturer of the iPhone, the iPad and Macintosh computers.

CalPERS says it plans for shareholder majority-vote resolutions at Apple and three other companies next year and will hold talks with an additional 34 in hopes of persuading them to make the switch in how directors are selected. Apple's annual shareholders meeting is scheduled for February.

Apple did not respond to a request for comment on the CalPERS initiative, which began in March.

Since then, CalPERS officials said they have persuaded 20 of 58 targeted companies to voluntarily switch from a plurality vote to a majority-vote requirement. The plurality system theoretically could allow board members to be elected with a single "yes" vote, even when dissenting shareholders officially "withhold" their approvals.

"Too often board elections are more like a coronation than an election," said CalPERS Chief Investment Officer Joseph Dear. "The majority vote is an effective tool for holding directors accountable for creating shareowner value and encouraging better shareowner-director communication."

Some of the companies in CalPERS' portfolio that switched to a majority vote of directors are Computer Sciences Corp., Corning Inc., Costco Wholesale Corp. and Edison International, the parent of Southern California Edison Co.

Those firms are among those that make up 80% of the S&P 500 and 60% of the Russell 1000 benchmarks that have adopted majority-vote rules for directors, CalPERS said.

-- Marc Lifsher