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CalPERS focuses on the following elements in order to identify poorly
governed companies.
Director Oversight & Accountability
- Director withhold votes
- Supermajority vote required to remove a director for cause or without
cause
- Classified board
- Combined Chairman & CEO or Chairman & CEO without a lead independent
director
- Inadequate director holding requirements
- Outside directors do not meet separately from inside management
- Relatives on board
- Business affiliations
- Insiders on board
- Directors on multiple boards
- Board size
Executive Compensation
- Poor pay-for-performance assessment
- Inadequate executive holding requirements
- Compensation Committee composition
- Equity dilution
Audit Practices
- Non-audit fees
- Section 404 adverse opinions
- Material restatement
Takeover Defenses
- Combination of takeover defenses such as poison pill, classified
board, golden parachutes, and supermajority voting stipulations on charter
and bylaw amendments and mergers
- Written consent limitations
- Special meeting limitations
- No cumulative voting
Shareowner Responsiveness
- Board failed to address majority winning shareowner proposal(s)
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