The influential California Public Employees? Retirement System (Calpers) has criticised Sybase for the second year running, calling on the database supplier?s shareholders to put pressure on it to improve the accountability of its board and so increase its stock price.
The world's largest private pension fund, which owns more than 423,000 shares in Sybase at a value of about $3.7 million, also sent stockholders an "urgent message" asking them to vote in favour of Item 5 of the company?s annual proxy statement, dated 15 April 1998.
The shareholder proposal recommends that Sybase amend its bylaws to make it mandatory for its board members to be elected annually. Stockholders can currently review corporate decision-making practices annually and generally vote out about one-third of the board every three years.
Calpers, however, is arguing that Item 5 would improve accountability, which, it claims, is directly linked to financial performance.
Brad Pacheco, Calpers? spokesman, explained that a board cannot be held accountable when there are staggered terms and shareholders could not vote on the performance of the entire board at the same time.
"Really that promotes improper decision making because you have boards that are making decisions, but we can?t register a vote against the entire board," he said.
He also criticised the board for what he believes is a lack of personal vested interest in the organisation. Four of its nine existing directors have invested no personal capital in Sybase stock, which, he claimed, indicated that their interests may not be aligned with those of the shareholders.
"If they don?t have a vested interest, do they really believe in what they?re doing? We are the patient capital and some of the board hasn?t invested a dime," he said, attesting that Calpers had been forced to turn to shareholder proposals because several discussions with the company had borne no fruit and Sybase had been reluctant to change its ways.
But, in its proxy statement, Sybase said that accountability depended on "responsible and experienced individuals diligently fulfilling their obligations to the stockholders, not on whether they serve terms of one year or three."
It also maintained that its existing system enabled change while "avoiding the potential for sudden and disruptive changes in the corporate business strategy and policies that could arise if an entirely new group of directors were elected in a single year."
As a result, the board has voted against Item 5, but even if the proposal were approved, it could only serve as a recommendation rather than a mandate.
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