Investments

2022 Proxy Season

Spring is here! For some people, this means a calendar filled with outdoor activities. At CalPERS, our corporate governance team’s calendars are filled with Annual General Meetings because it’s officially proxy season.

What happens during proxy season?

All publicly owned companies have Annual General Meetings, commonly referred to as AGMs. These meetings are generally held between April and June. They provide an opportunity for companies to update shareowners on recent activities and plans for the future. Shareowners also have an opportunity to provide input on how a company is managed by voting their proxy on specific proposals.

Proposals can be put on the ballot by the company, such as the election of board members. They can also be put forward by shareowners, such as a measure that would direct the company to report out climate change impacts. As a shareowner of more than 10,000 public companies, CalPERS has the right to cast a large number of votes.

What are our priorities during proxy season?

As a long-term investor, we vote our proxies to ensure the company’s health and viability for decades. The better the company does, the better returns we see. We are mindful that short-term gains at the detriment of long-term corporate feasibility is bad for our portfolio. We consider all of these factors when we put forward proposals and vote our proxies.

This year, CalPERS will be focusing on three priorities:

  • Executive Compensation: The salary packages designed by companies to compensate their executives. We believe that well-designed compensation packages can help align management and employees with the interests of long-term shareowners to generate sustainable investment returns.
  • Corporate Board Diversity: The amount of diversity represented on a company’s board of directors (for example, experience, skills, background, education, ethnicity, gender, etc.). Empirical evidence shows that diverse teams tend to make better decisions and have better financial outcomes than nondiverse teams.
  • Climate Change: Enhanced reporting from companies about how they plan to manage the risks and take advantage of the opportunities brought about by climate change.

Does it make a difference?

At CalPERS we believe in engagement over divestment, and our active proxy season and yearlong corporate governance efforts help us create meaningful change at the companies in which we invest.

One example of this was last year’s proxy effort to elect four climate competent individuals to the Exxon board. Thanks to large investors like CalPERS, three of the four candidates up for election secured seats. These new members are pushing Exxon to increase environmental impact disclosures and ramp up their clean energy efforts. As many have noted, if other large investors had not divested, all four individuals could have been elected to the board.

During the 2022 season, we will continue our efforts and make strides on our priorities. Throughout this season, you can see how CalPERS votes at specific companies by visiting our Notable Proxy Votes webpage. You can also learn more about guidelines, principles, and disclosures on our Proxy Voting webpage.