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The California Public Employees’ Retirement System today announced that three proxy advisors are recommending support for a CalPERS proposal to have Standard Pacific directors stand for annual election.
Proposal 3 is on the proxy card as a nonbinding resolution on the homebuilding company’s May 14, 2008, annual meeting. It is supported by Glass Lewis, RiskMetrics (formerly ISS) and Egan-Jones Proxy Services.
The resolution seeks to replace the company’s current practice of having directors serve in “classes” with staggered three-year terms on the Standard Pacific Board.
“Shareholders have expressed an increasing aversion toward staggered boards year over year,” Glass Lewis said in a proxy report. “While a majority of companies elect to maintain a classified board structure, shareholder proposals seeking to repeal classified boards have garnered increasing support.”
As of March 31, 2008 Standard Pacific’s stock had severe underperformance relative to the Russell 3000 Index and the Russell Homebuilding Industry peer index over the one-, three-, and five-year periods. The Irvine, California, company trailed peers by 83 percent over the past five years.
CalPERS also plans to cast withhold votes against D. Jacobs and L. McNabb. Both served as members of the board when the company experienced stock price underperformance and poor governance practices.
”Managements argue that staggered boards provide continuity and stability, but empirical evidence has suggested that such a structure is not in shareholders’ best interests from a financial perspective,” RiskMetrics said.
CalPERS named Standard Pacific to its 2008 Focus List of underperforming companies, citing Standard Pacific’s underperformance, 80 percent supermajority voting requirements for amendments to company articles and bylaws, the absence of a majority vote standard for directors in uncontested elections, and its classified board structure.
“Under the current structure, shareowners can only vote on a portion of the Board at any given time,” Egan-Jones said. “We believe that the election of directors is an important means for shareholders to influence corporate governance policies and for the board to reiterate its commitment to good corporate governance and accountability to shareholders.”
CalPERS owns 386,296 Standard Pacific shares and is the nation’s largest public pension fund with assets totaling more than $247 billion. The System provides retirement and health benefits to some 1.5 million State and local public employees and their families. For more information about CalPERS, visit www.calpers.ca.gov.
