Compliance April 11, 2006

Corp Governance Legislation Gets CalSTRS Support

April 11, 2006 (PLANSPONSOR.com) - A California senate bill that strengthens shareholders' voting rights in publicly-traded corporations based in California and a congressional bill that would require company disclosure of executive compensation plans in its annual reports and proxy statements have gained the support of the California State Teachers' Retirement System (CalSTRS).
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Under the current default system, corporate directors are generally nominated by a company’s board of directors and elected by shareholders by a plurality of votes, according to a CalSTRS press release. This plurality voting standard allows corporate directors to be elected by the vote of a single share, unless, in rare cases, they are opposed by a dissident candidate who receives more votes.

State Senate Bill 1207 sets as a default policy that uncontested nominees to the board of directors of a California-registered public company must receive a majority of votes from the shareholders represented and voting in order to be elected. Shareholders would have the ability to vote against a nominee and nominees would be elected to the corporate board only if they receive a majority of the votes. The legislation aims to put the ultimate power over the election in the hands of the shareholders, the release said.

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Congressional bill H.R. 4291 would require full disclosure of a company’s compensation plan for principal executive officers in their annual report and proxy statements. The bill would also require separate shareholder approval for any compensation plan, including “golden parachute” packages.

In addition, H.R. 4291 includes a provision that would require companies to adopt policies in which all principal executives return compensation to corporations. The policy would also apply to compensation for performance that does not meet stated measures, compensation as a result of fraud and unearned performance-based compensation as a result of restatement.

“We have been working for decades to improve transparency at the board level and have fought tirelessly to make our voice as shareholders heard,” said Jack Ehnes, CalSTRS chief executive officer, in the release. “While we have made great strides in engaging companies directly on these issues, these bills lend a strong and consistent legal framework.”

Benefits April 10, 2006

Execs See Link between Wellness Measures and Workforce Health

April 10, 2006 (PLANSPONSOR.com) - A majority of executives participating in a recent survey who report that the health status of their workforce has improved over the last 24 months also say their company has offered employee health incentives and health quality information.
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A new survey by PricewaterhouseCoopers’ Management Barometer and the firm’s Health Research Institute found that executives see a link between a company health benefit plan, employee health, and workforce productivity. Two thirds (65%) of senior executives believed that the design of their company’s health care benefit plan has a connection to the overall health status of their employees – including 22% who see a great connection, and 43% a partial one. One in 10 does not see a connection.

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Moreover, according to a news release, more than three quarters (76%) see a link between their employees’ health status and their productivity – including 42% seeing “a great deal” of linkage, and 34% “some” linkage. Only 4% see no connection. The majority (59%) say that the health status of their workforce has stayed about the same over the past two years. However, 18% believe it has improved, while 9% feel it has declined. The remaining 14% is uncertain.

“Because these executives see a connection between their company health benefit plan, employee health, and workforce productivity, they have a vested interest in maintaining and improving employee health,” said Michael Thompson, Global Human Resource Solutions partner with PricewaterhouseCoopers, in the news release. “There also may be a connection between providing health care information and improved workforce health.”

Eighty-two percent of surveyed companies offer their employees choices in their health care plan, with some offering newer benefits like wellness programs and health care quality data. Of these, 98% provide cost and coverage options; 64% health savings accounts, and 54% a selection of insurance companies. Twenty-two percent expect to give more choices over the next 12 months.

Some 64 % of surveyed companies currently offer their employees programs and incentives for improving their health and well being. But only 19% of these describe these programs as strong or above-average. Some 39% provide health care data to employees, but among these only 36% measure employee satisfaction with the data.

Cost remains the top priority in designing the corporate employee health care plan, but one in four executives also gives high priority to data about quality of care. Eighty-six percent of surveyed executives say that cost is a top priority in designing their company’s health care plan – including 53% who say cost is their highest priority.

PricewaterhouseCoopers’ Management Barometer is a quarterly survey of top executives in a cross-section of large, multinational businesses. The survey is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc. Additional information is available from Pete Collins, survey director and publisher, at 646-471-4496, or pete.collins@us.pwc.com .

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