Overview - Corporate Governance
The Treasury's Corporate Governance Program is designed to protect and enhance the economic long-term value of investments made by the Connecticut Retirement Plans and Trust Funds (CRPTF), consistent with the Treasurer's fiduciary responsibility to prudently manage pension fund assets. The Treasurer's Office oversees the voting of proxies, promotes corporate governance best practices, and engages in other activities that are critical to the financial performance of the companies in which the CRPTF invests.
A key component of the Corporate Governance Program is the exercise of the Treasurer's fiduciary duty to vote on matters that may affect a company's financial performance through ballots presented to shareholders at companies' annual general meetings. The process of voting these ballots, also known as "proxy cards," is considered a pension fund asset with economic value.
Through the proxy voting process, investors may elect nominees to boards of directors, approve equity plans, ratify auditors and approve or reject other items submitted by management. In some cases, investors also may vote on items submitted by other shareholders in the form of shareholder resolutions. Shareholder resolutions asking for changes in executive compensation policies and practices, director election standards, shareholder voting rights, board structure, and a broad range of environmental and sustainability issues are common.
The Investment Policy Statement includes comprehensive guidelines for the voting of both domestic and international proxies.
The Treasury may engage directly with portfolio companies on corporate governance issues that impact the value of pension fund investments. The CRPTF has also utilized the shareholder resolution process as an engagement tool with portfolio companies, where focused negotiations have led to settlements and withdrawals of resolutions.
In some cases, the Treasury may take a more proactive approach to hold portfolio companies accountable for substandard corporate governance practices by withholding its votes for nominees for positions on boards of directors (similar to a vote "no"). For example, current proxy voting policies require the CRPTF to withhold on some or all director nominees under certain circumstances, including the combination of the roles of board chair and chief executive officer, a lack of board independence or excessive audit fees.