Updated from June 18
picked up another -- somewhat unexpected -- endorsement of its controversial stock options plan on Friday, as the nation's largest pension fund gave the company its stamp of approval.
The California Public Employees Retirement System on Friday voted its 3.5 million eBay shares in favor of a management initiative to significantly expand the options available to the company under two of its current stock plans. Calpers published the vote on its
Web site. Shortly after the vote was released, the Web site published a message that said the site would be unavailable from 5 to 7 p.m. PDT.
On Saturday, the pension fund's site was no longer displaying its eBay vote.
Calpers also decided to abstain from voting on a shareholder proposal that would urge the company to recognize the cost of stock options in its income statement.
The fund abstained from voting on the shareholder proposal because Calpers' board has not yet reached a decision on whether options should be expensed, said Calpers spokeswoman Pat Macht on Saturday. Macht did not know why the pension fund voted in favor of increasing eBay's options pool.
"I don't recall that
the eBay vote has come up in any board meeting," she said. "It was probably the staff doing the appropriate due diligence."
Ironically, Calpers was one of the most prominent
opponents of a
similar but grander options plan by eBay last year. And the pension fund has only raised its profile as a governance activist in the year since then.
eBay representatives did not return calls seeking comment.
The auction giant's
plan would expand its total options pool by some 24 million shares, or about 3.7% of that company's outstanding share count. The plan has drawn criticism from some investors and from proxy adviser Glass Lewis, which has called eBay's options practices "egregious."
Despite that censure, the company's plan seems to be gaining steam. Last week, Institutional Shareholder Services, the influential proxy adviser, gave eBay's plan its
backing, urging investors to vote in favor of it.
ISS' backing was not particularly surprising, considering the firm also
supported supported eBay's option pool increase last year. eBay was a
client of the firm both years, having paid to access the formula ISS uses to evaluate stock plans.
ISS has maintained that it has a "Chinese wall" between its corporate consulting services and its proxy research division, not allowing the former to influence the latter's decisions. But the proxy adviser is under fire from other governance activists for its potential conflicts of interest.
Similarly, Calpers' recent governance initiatives have also attracted criticism both from other investors and from members of its own board. California State Controller and Calpers board member Steve Westly, for instance, has questioned the pension fund's policy this year to oppose the re-election of corporate audit committee members when a company's auditing firm also does consulting work.
But Westly himself could draw scrutiny for Calpers' eBay decision.
Earlier this week, Westly, formerly an executive at eBay, issued a statement applauding a House of Representatives committee for
passing a measure that would restrict the expensing of options. The House measure has been strongly opposed by many corporate governance activists.
A representative for Westly, who was on the Calpers board when it opposed eBay's options plan last year, did not immediately return a call seeking comment.
Macht did not know whether Westly recused himself from Calpers' decision on eBay. But Calpers' board members are generally not involved in the pension fund's actual proxy votes, she said. Instead, the board issues guidelines each year that Calpers' staff uses to make the voting decisions, she said.
"People assume that board members vote on all these proxies, but they don't," Macht said. However, she acknowledged that board members do sometimes get involved in "high profile" proxy issues
Calpers' sister fund, the California State Teachers' Retirement System (Calstrs), has not yet cast its vote on eBay's proxy, a fund representative said. Like Calpers, Calstrs opposed eBay's options plan last year.