U.S. Markets

Exclusive: TIAA-CREF joins 'proxy access' push with letter to top holdings

NEW YORK/BOSTON (Reuters) - TIAA-CREF, one of the largest U.S. assets managers, is asking the top 100 companies in which it invests to make it easier for shareholders to nominate board candidates, according to sources close to the matter.

TIAA-CREF joins Vanguard Group and BlackRock Inc in backing a reform that is gaining traction ahead of the spring proxy season as investors seek greater influence. At issue is shareholders’ ability to get their candidates listed on company ballots, alongside management’s candidates.

In a letter dated Feb. 10 and seen by Reuters, the New York-based asset manager urged companies to adopt bylaw changes known as “proxy access,” which TIAA-CREF says will make boards more accountable and companies more valuable.

“The benefits of proxy access are multi-faceted, ranging from improved relations with shareholders to increased US market capitalization,” says the letter, signed by William Riegel, TIAA-CREF Asset Management’s chief investment officer, and by Bess Joffe, managing director for corporate governance.

Some companies have already embraced proxy access, including General Electric, Citigroup Inc and, just this week, Prudential Financial. Others including energy companies have resisted the change.

A person close to the matter said Prudential had been in talks with investors for several months and had received TIAA-CREF’s letter. On March 10, Prudential said it had adopted a proxy access bylaw. A spokesman for Prudential declined to comment.

TIAA-CREF, which has $851 billion under management, has supported proxy access in the past. The issue gained wider attention last fall, when New York City’s comptroller, Scott Stringer, who oversees the city’s public pension funds, asked 75 companies to allow groups of investors representing up to 3 percent of a company’s shares for three years to be able to list their own candidates on the company ballot.

The terms Stringer asked for resemble a rule the U.S. Securities and Exchange Commission had passed in 2010. But business groups successfully challenged the rule in court, worried the change would give activist investors too much influence.

In its letter, TIAA-CREF backed the 3 percent level.

In a new policy this year, fund manager Vanguard Group Inc said it will generally support changes to allow investor groups with 5 percent of shares to nominate directors.

BlackRock, the world’s largest money manager, states on its website that it supports proxy access but will review proposals “on a case-by-case basis.”

Reporting by Nadia Damouni and Ross Kerber; Editing by Leslie Adler