April 13, 2009
Office of Public Affairs
Pat Macht, Assistant Executive Officer
Contact: Clark McKinley, Information Officer
CalPERS Seeks Majority Vote Standard for Harleysville National Corporation
SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) is seeking shareowner support for a proposal to have unopposed candidates of Harleysville National Corporation elected by majority vote.
“We are writing to urge you to vote for Proposal #5 at Harleysville National Corporation’s April 28, 2009 shareowner meeting,” Eric Baggesen, Senior Investment Officer, CalPERS Global Equity, said in a solicitation letter. “Shareowners lack the ability to hold board members truly accountable for poor performance because of the ease of director re-elections under the current outdated plurality voting structure.”
Shareowners who oppose a candidate can withhold votes under the plurality vote rule but have no voice in the outcome since directors can be elected by only a single ‘for’ vote. CalPERS seeks a majority vote threshold in uncontested elections.
“Approximately 66 percent of the S&P 500 has adopted some form of majority voting – an indication of the current direction of good corporate governance – and this trend does not apply to large companies alone,” Baggesen said. “Currently, there are a growing number of mid-sized and small companies that are adopting a majority vote standard.”
The nonbinding CalPERS resolution asks that directors of the financial company submit a letter of resignation if they fail to receive a favorable majority vote. They wouldn’t be elected or re-elected unless the board declined the resignation and publicly disclosed its reasons for doing so.
The proposal would not affect the plurality vote rule for contested elections where there are more director nominees up for election than seats on the Harleysville National board.
CalPERS owns approximately 101,000 common stock shares of the Pennsylvania company, which underperformed peers in the Russell 1000 Index by 31 percentage points over the past five years. A copy of the CalPERS letter to shareowners can be found in the pension fund’s Press Room at www.calpers.ca.gov.
CalPERS has approximately $172 billion in assets and is the largest U.S. public pension fund. It administers retirement benefits for more than 1.6 million active and retired State, public school, and local public agency employees and their families on behalf of 2,600 California public employers, and health benefits for nearly 1.3 million members.