As the principal fiduciary for the state pension fund, Connecticut’s Treasurer is required to act prudently and in the long-term economic interest of plan participants. In addition to prudence, Connecticut law directs the Treasurer to consider the social, economic and environmental implications of particular investments on foreign policies and the national interests of the United States.
When the state pension fund invests in a company, it becomes a shareholder of that company. Shareholders are obligated to vote each year on certain significant issues that may affect the future financial performance of the company. One of the shareholders’ most important responsibilities is to elect the members of the board of directors, the body of corporate governance ultimately accountable for corporate performance. Shareholder votes also may affect the economic interests of certain stakeholders of the company including the employees and the community in which the company resides. Shareholders are also asked to approve changes in compensation, mergers or acquisitions, and how the company raises capital.
Investors, such as the State of Connecticut, refer to written policies to guide decisions concerning companies in which the fund has an ownership interest. Customarily, pension fund managers do not attend the annual meetings where such corporate policies are voted on. Instead, fund managers send in their ballots known as proxies. The written policies that guide how decisions will be cast on the proxies are referred to as proxy voting policies.
The Treasurer views this proxy voting responsibility as one which is of the utmost importance to the Office. Proxy voting is a method that allows investors to hold companies in which they invest accountable for the business decisions they make. In the examination of every investment, the Connecticut law requires the Treasurer to scrutinize these corporate decisions to determine whether they have met the standards of good corporate citizenship as articulated in the law. The Treasurer is also responsible for the consideration of the long-term, best economic interests of the workers and retirees who rely on the fund for their pension benefit upon retirement. For this reason, the Treasurer’s proxy vote must be a rigorous economic analysis to ensure that it meets standards of prudence and loyalty related to the Treasurer’s fiduciary responsibilities.
For the first time since 1995, the Connecticut Office of the Treasurer has re-established itself as a responsible institutional investor. A comprehensive series of proxy voting policies, developed and proposed by Treasurer Nappier and endorsed by the state’s Investment Advisory Council, are now in place to ensure that these critical responsibilities are performed consistent with state law and the obligations of the State Treasurer.
These proxy voting policies are divided into two types of policies. The first policy applies to decisions made about companies that are headquartered in the United States. These are listed on this website as Proxy Voting Policies. The second sets of policies, Global Proxy Voting Policies, govern the votes of companies headquartered outside of the United States.