TIAA-CREF Tightens Governance Policies
Leading investment group closely considering governance in future votes.
By James Hyatt
TIAA-CREF, the $400 billion-plus retirement fund organization for academic, medical, research and cultural institutions, has stiffened its policies determining how it votes on a variety of corporate governance issues.
Among the highlights:
- Support for corporate bylaws requiring majority voting in director elections
- Support for shareholder resolutions seeking an advisory vote on companies’ compensation disclosures
- Revisions in policies linking environmental and social issues to strategic and governance responsibilities of corporate directors and executive management
- An expanded program of examining corporate governance practices of international companies in which it invests
- A new policy statement concerning decisions to withhold or vote against portfolio company directors
The organization says it would consider withholding votes or voting against directors when it concludes that their actions “are unlawful, unethical, negligent, or do not meet fiduciary standards of care and loyalty, or are otherwise not in the best interest of shareholders. Such actions would include: issuance of backdated or spring loaded options, excessively dilutive equity grants, egregious compensation practices, unequal treatment of shareholders, adoption of inappropriate anti-takeover devices, (and) unjustified dismissal of auditors.”
Despite the changes, TIAA-CREF said its “long-standing focus on board accountability and its preference for constructive engagement rather than confrontational activism remain unchanged.”