CalPERS is Say(ing No) on Pay in 2018

The California Public Employees’ Retirement System (CalPERS) is putting its foot down when assessing executive compensation packages in 2018. The US’ largest state pension fund voted against nearly half of executive compensation programs (43%) this past year—amounting to over 900 US companies. One of major catalysts in their increased opposition from last year’s—CalPERS opposed only 18% of executive compensation packages in 2017—is scrutiny on returning value to shareholders over a longer-term horizon. In an interview with Bloomberg, CalPERS’ Simiso Nzima pointed out, “Over one, two or three years, performance might look good, but over 10 years, the relationship sometimes just isn’t there.”

Besides the considerable opposition posed to Say on Pay, CalPERS is zeroing in on harassment/misconduct and board diversity. Just as we’ve seen the #MeToo movement affecting management teams in the mainstream news, CalPERS’ recently updated governance guidelines call for increased disclosure measures and oversight to prevent harassment and other misconduct. In addition, they voted against 438 directors at 141 companies where there were concerns about a lack of diversity in the boardroom.