CalSTRS criticizes SEC's director election rules

NEW YORK, Oct 2 (Reuters) - California State Teachers' Retirement System, the second-largest U.S. public pension fund, on Tuesday said proposed Securities and Exchange Commissionrules to increase the ability of shareholders to nominate and elect directors are "counterproductive" and should be rejected by the SEC.

The proposed rules were designed to give more power to shareholders to nominate directors using company proxy materials.

Yet the rules "reveal an agency that has thrown overboard its mission to serve investors and has adopted instead a policy of promoting the interests of corporate management at the expense of shareholders," Jack Ehnes, CalSTRS Chief Executive, said in a letter to the SEC.

One rule permits proxy access proposals under limited circumstances, Ehnes said, including a high ownership threshold and tough disclosure requirements. Another proposed rule forbids shareholders from making a proposal that advocates the adoption of 'proxy access' procedures, he said.

By contrast, he said CalSTRS favors communication between boards, executives and shareholders with few restrictions. CalSTRS, which manages $169 billion of investements, asks the SEC to reject the proposed rules. (Reporting by Joseph A. Giannone)