In 2016, Oregon will leverage its clout as a successful global investor and continue to press for greater corporate responsibility, improved transparency, and better board and executive-level diversity, said State Treasurer Ted Wheeler.
The Treasurer is the custodian of public funds in Oregon and also a member of the Oregon Investment Council (OIC), which oversees one of the largest public investment portfolios in the country, totaling $89.6 billion as of January 31.
Oregon trust funds are invested in thousands of public companies whose shareholders have the ability to vote at annual meetings. Depending on the company, shareholder ballots can determine corporate board membership, enhancements to shareholder rights, better disclosure of climate-related risks, and referendums on executive pay packages.
“As a responsible shareholder, we take action to ensure that companies in which Oregon invests are operating in sustainable ways that improve long-term value,” said Treasurer Wheeler. “We know that companies are more profitable and sustainable when they embrace diversity and when compensation for executives is properly aligned with performance.”
Proxy voting is one component of Oregon’s corporate governance program. To protect Oregon beneficiaries’ interests, the Treasurer also engages with companies directly, presses for regulations in pursuit of better business practices, and authorizes securities lawsuits when company action or inaction damages shareholder value.
The OIC’s investment beliefs recognize that corporate policies and company leadership can affect the State’s investment performance, and that proxy votes are key in advocating for practices that enhance long-term shareholder value. As fiduciaries, OIC members have a duty to seek sustainable returns on behalf of Oregon’s trust fund beneficiaries which include schoolchildren and public sector retirees.
To cast votes at thousands of annual corporate meetings, the OIC has retained Glass, Lewis & Co., a San Francisco-based proxy agent. That firm’s 2016 strategic plan highlights several topics of interest on shareholder ballots this year.
Voting priorities include the following:
• Promoting broader board and corporate leadership diversity;
• Improving carbon risk and climate change policies, and disclosure of climate risk;
• Providing full disclosure of corporate political donation activities; and
• Advocating for compensation plans that better link executive pay with corporate performance.
Practices that the Treasurer will oppose include a compensation perk known as a “golden coffin” in which lucrative death benefits such as accelerated stock option vesting accrue to heirs of board members or company executives.
Also in its proxy votes, Oregon will seek to improve shareholders’ ability to nominate board members, reduce conflicts-of-interest for chief executives, and raise companies’ awareness of and attention to environmental, social and governance (ESG) factors.
Oregon’s shareholder program has grown rapidly in recent years: through its proxy agent, the OIC participated in 7,563 annual company meetings in 2015, a level of activity that represents a more than 200% increase from the 2,323 meetings it participated in during 2008.
Among the 2015 votes taken on Oregon’s behalf, the OIC’s proxy agent supported enhanced political donation disclosure at Exxon Mobil Corp., increased board diversity at LinkedIn Corp., and creation of an independent board chair at Wal-Mart Stores, Inc.
The Oregon State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. State investment policies are overseen by the Oregon Investment Council. The State Treasury also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices. You can track Treasury-related news on Twitter at @OregonTreasury.
