The California Public Employees' Retirement System urged shareholders to exercise their right to vote to improve Sybase's corporate governance practices by having annual rather than staggered elections for board members and by increasing those individuals' personal vested interest in the company's financial performance.
Sybase shot back today in a filing with the Securities and Exchange Commission, saying it already had raised those issues during its February board meeting.
In the SEC filing, Sybase maintained its position that declassification of its board is not in the best interests of stockholders, and recommended that stockholders vote against CalPERS' proposal.
"CalPERS and Sybase are after the same objective--to increase stockholder and shareholder value," said Mary Shank Rockman, Sybase's director of public relations.
"We are looking at the long term perspective," she added. "With the staggered approach [of electing board members on...three-year terms], we believe this gives us the opportunity to have people with Sybase that are committed to the future of the company. A turnaround takes a long time, and the stability of the board is very important in that sense."
Sybase also said that a plan was under development by its lead independent director and legal counsel to encourage greater stock ownership by board members.
The company is working on implementing a plan by which board members would obtain more Sybase stock, Shank Rockman said, noting that the plan has been in works for some time.
All of Sybase's board members currently own stock in the company, though three members did not purchase the shares with their own money, she said, adding, "But we are working to encourage them to buy stock."
In February, Sybase topped CalPERS's list of underperformers-- a dubious distinction it has held for the past two years.
Indeed, Sybase's financial performance has lagged that of its peers in the database industry, and its stock is trading near its five-year low. Those weak stats led CalPERS to call on Sybase stockholders to push the company to improve its corporate governance practices, which CalPERS says have a direct impact on a company's financials.
CalPERS--which has become increasingly vocal about poor management and performance at the public companies in which it invests--urged Sybase shareholders to vote in favor of the proposal recommending that the company amend its bylaws so that all members of its board of directors are subject to annual elections.
Stockholders in Sybase now change over about one-third of the board of directors every three years.
A CalPERS spokesman said that annual reelection ensures accountability for board members because shareholders can vote on the entire board at the same time.
But Sybase said in its filing that it believes "corporate accountability depends on responsible and experienced individuals diligently fulfilling their obligations to the stockholders," not on the length of the term being served.
CalPERS owns more than 423,000 shares of Sybase stock, valued at about $3.7 million.
Sybase's annual meeting will be held on May 27.