CalPERS believes that in an uncontested director election, a majority of proxies cast should be required to elect a director. In a contested election, a plurality of proxies cast should be required to elect a director.  Currently, a plurality vote system is used in most corporate elections, in which directors can be elected by the vote of a single share unless they are opposed by a dissident candidate.  CalPERS plans to support the initiative through the following courses of action:

• Implement majority vote policies at individual companies through company bylaw and charter amendments;
• Advocate for changes to state laws to implement majority vote where feasible; and
• Seek to advocate regulatory and stock exchange support for the majority vote standard.

March 14, 2005