the early and new now after the figures were just updated a couple weeks ago. so we are in the process right now of updating our outreach materials based on the newly adopted figures and we will be issuing letters to pred.d.a. households in early april and we will have an informational table set up at the april on island board meeting, and tentatively planning to have a drop in session later in april where people can come in and ask questions as well on a saturday, and then the option would be available to households beginning may 1st and ending february of next year. if we've made an election at the end of february based on continued interest to extend the

window further, we went update the outreach materials and reissue them to residents, so that is our timing update, but i will take any questions that you have. >> commissioner dunlop? >> thank you, very much, madam chair. i wasn't here last weekend, so my apologies. was there a discussion last week regarding the meeting that was on the island a week before? because this kind of feeds right into that and some of the concerns of the people on the island. >> yeah, there was some discussion and supervisor haney attended last week chop chop meeting and wait in with his thoughts.

i will be meeting with him to brief him further on the transitional housing programs that are parts of the d.d.a. for both what one treasure island households and households of the villages. we'll be going over that this week. >> and moneywise, we haven't, it was promised, it's available -- >> if people choose to take the in lieu payment, then those funds are available in our budget, and their replacement housing as part of the projects that we are working on with mercy and catholic charities, in particular will be our first opportunity for replacement housing. also, at the april board meeting , naturally mentioned earlier that we will have updates on both the shares and

catholic charities buildings, but also a presentation on the first market right mac building that will be constructed. which will be the first -- which will include inclusionary affordable units that will be for sale so there will also be future information on the pre marketing opportunities and when that window will be for pre d.d.a. households for people to purchase either a market right or affordable units within the development. >> and the affordable, that is 5% of the units on why b.i.a.? >> yes. it is 5% of the figure overall. in this particular building, we'll include all of the affordable units, so this building will be more than 10% affordable.

>> i see. there was a lot of concern from people who do fit into the market right mac currently bubble fit into market right down the road just because prices have gone so high. has that been discussed, will that be discussed, there's a lot of people who are very concerned on the island. >> for the pred.d.a. households that are offered replacement housing, their rent will be tied to their current rent, so they will not see a big change in their rent for their households. >> and purchasing a certain amount of people might have been able to afford it five years ago

, we really have no idea right now is that kind of true. >> and we don't have control over the market cycle. >> we just don't have any figures from t.i. c.d. on the purchase pricing. >> maybe we can talk later about last week's meeting. i'm so sorry i missed it. >> i have some questions. from the last meeting, and i know commissioner dunlop, yes, you were absent, staff provided the outreach and it was quite impressive. we had indicated all along that it is very important and you are doing a great job out there and you need to demonstrate that because sometimes, especially when we have a new supervisor and nailed this matter now, is nearing conclusion, which started this outreach years ago

and listed a consultant to help us, and every meeting we have had a tighter regular meeting and also in the infrastructure transportation, we will be asking for updates on this. that was very informative, and i'm sure that the supervisor has one. in fact, i would think that knowledge should also be available to tenants. sometimes you can have 200 households, all it takes is one or three people. they will show up and say no, they didn't hear anything. we know it is unfair, but at least you can produce and say, this is what we have. we have all these opportunities, and we are still engaging with them. so that's going to be very important. secondly, a lot of misconception that's why when we engage the public, give the history for

treasure islands. no one on treasure island has been evicted. in fact, the truth and mercy generosity of san francisco, they set aside some of the tenants, they called them pre-d.d.a., about 200 of them, and given them generously with the benefits that we are talking about here. nobody should be entitled for anything but the city of san francisco is very important. when we go out there and we talk and we talk about a supervisor and we keep keep them up-to-date because they do not know, because the residents are doing this, and we do not explain it, even to the press and everyone. what happened is we keep passing misinformation down the line, that is not what is happening here. other things that i need to do here is that -- we need to define what we mean by caregivers, and we see all the

documents and we know it is very important when we communicate that people know the composition and the household. san francisco has a policy that is set aside and we are bound by as a sitting agency for public housing tenants. there is a lot of policy in there. we need to define that because we are still bound by that. although, these issues that i have, are we making available to the pre-d.d.a. households about housing opportunities in san francisco? they're also san francisco residents. as you see now, they have their names and everything should be in there. why? to develop. again, we have all the restrictions. if i'm looking for it, and san francisco is developing everywhere, they should also be

aware of that because there maybe a percentage that are not going to be waiting for many years more before we complete the funding and get things done. i want to make sure it is great to be treasure island and housing is in there so we let them build. there's all this opportunity in san francisco, don't put your eggs in one basket. i think we can own that. at the end of the day, they have all of these options and to utilize, to stay on the island or move out of the island based on their needs. again, i wanted to put that out there. so basically that is what we are doing here. so make available the outreach so that everybody has access to that. i think it will be very helpful

for all of us here. the staff did a great job in updating that log, and we need to continue to update that. i noticed that the outreach was to june, it precludes all of these other discussions somewhere. today we talked about that, we talked about that last week for the city. there should be another log attached to that so people can see the breadth and scope of how much time we have devoted to this particular issue than any other issue. believe me, it will happen at some points. down the line and a few months, you will read about it, and even the media are inquiring about this particular process. we better be getting all of the information to them so they understand before any misinformation is published. we will say it right here. no other comment from the

commissioners, let me ask the public. do you have any other further comments on this matter? next item on the agenda, please. >> item number 8 is discussion of future agenda items by directors. >> okay. , a couple of things. commissioners, please jump in this laundry list. we need to have a presentation on the m.t.c., an update on the bicycle bridge that is westbound that it talked about. it would be great to bring them back to the questions. i think it maybe time for an update. t.i. m.m.a., i think they need to come back. and we have a new supervisor now , and we need to re-energize the discussion all along because

2021 is the first housing on the island and we still have no results. timma issues a lot of information out there, and it maybe possible if we educate the supervisor that they should be going to the legislature. t.i. d.a. is only do compliance here, this matter was mandated by the state, again, based on the reality for treasure island, not being accessible from the bridge, and that we are going to have to buy a fairy. and the city and county of san francisco would not buy that unless there was a toll, and unless they wanted to revert back to cancel the toll and purchase a fairy. i think let's talk about that right now and we need to jump on this discussion. and issues regarding water transportation in general, i think for 2019, tida would like

to be involved in the overall discussion so we might be ringing this back for further discussions. anything as you would like to put on the agenda for consideration? okay. >> two quick things. to matt and the pole -- timma and the pole got a lot of things excited. perhaps that can be a citywide cause because it is a citywide benefits. just looking towards the future, secondly, the issue about the testing, and so if we could have some information as soon as it's available, we don't know about

treasure island, but certainly there has been some conversation about the company over hunters point. we do have some information, and certainly not before. >> thank you so much. thank you for joining us for your time. thank you to all of our guests and the staff today. this concludes the, is that correct, meeting. see you next time. thank you. [♪]

>> we start with the pledge of allegiance. will everyone please rise and join us in the pledge of allegiance. [pledge of allegiance] >> president stansbury: roll call, please. [roll call]

>> president stansbury: great. thank you. in a moment, we're going to go into closed session. before we do so, we will call for public comment. being that there are no members of the public present, we will close public comment and go into closed >> president stansbury: we're just coming out of closed session. rememb we are returning to open session. is there a motion not to disclose? >> yeah, i move that. >> president stansbury: there's a motion by commissioner bridges, second by commissioner driscoll. is there any public comment on this? seeing no public comment, can we take this item without objection? great. item passes. [gavel]. >> president stansbury: we are going to go to item number four, general public comment. seeing none, we will close

general public comment. next item, please. [inaudibl [inaudible] >> president stansbury: is there a motion on the table? [inaudible] >> president stansbury: is there a second? >> second. >> president stansbury: motion by commissioner bridges, second by commissioner paskin-jordan. is there any public comment? seeing that there's no public comment -- oh, commissioner bridges? >> board member bridges: yeah. on the discussion of hiring boia, and there's a section in attributing to what i said, which is fine. i apologize for what was a waste of you all's time but none of that was captured. i was speaking about the r.f.p.

process. i'm not sure what direction is given to the person drafting the minutes. [inaudible] >> many, many minutes that we just sort of wanted to try to get the gist of what their comments were. but certainly, if you want us to go back and beef up your areas of discussion, we can certainly do that. but the issue was it was a long discussion. >> unequivocal sections, trying to capture what was said is what i want you to do. don't go backwards to that meeting. >> okay. i hear you. >> as for the termination of fidelity issues, i think there are other issues we want to capture other than just

performance. and i'll talk about that again when we get to the c.i.o.s report. it's just a comment on the minutes. i'm not voting against them or anything like that. >> okay. >> president stansbury: there's a motion. we have a second. we'll call for general public comment -- we'll call for public comment on this item. is there any public comment? seeing no public comment on this item, we'll close public comment. can we take this item without objection? great. item passes. item number six. >> clerk: item number six, action item, consent calendar. >> president stansbury: we'll call for any public comment. are there any members of the public that would like to address the commission on the consent calendar? seeing none, we'll close public comment. is there a motion? is there a second. okay. can we take this item without objection?

item passes. okay. why don't we go ahead and we will move onto item 15. is that where you'd like to start? you want to start on 14? did i miss one? item number 14 it is. >> thank you. good afternoon, commissioners. this recommended approval for a 2% july 1, 2019 basic cola impacts over 27,000 retirees bay area consumer price index increased almost 2.5% for 2018, so there is a nominal cola bank shown on exhibit b, and in years when the inpolice station is less than 2%, this cola bank would ensure benefits do increase up to that maximum 2% for most employees. >> what is the current bank at? >> i'm sorry? >> well, it varies on when you retired, so if you've been retired for a long time, it's almost certain that you're

going to always get that maximum 2% increase. yeah, it's on the last page. [inaudible] >> -- for folks who retire after 19893. that's a basic guaranteed of 2 22% of cola if even inflation is zero. >> your benefit would never decrease below your original -- i mean, from when you had first retired. >> okay. great. is there a motion? [inaudible] >> there's a motion by commissioner casciato, a second by commissioner bridges. we'll open it up to public comment. is there any public comment on this item? seeing none, we'll close public comment. can we take this item without

objection? item number 14 passes. item number 15. [agenda item read]. >> the rates have been quite a bit smaller than the 4% minimum insured in the carter, so we would like -- charter, so we would like the board to approve a credited 4% interest rate starting july 1, 2019. >> okay. do we have a motion? by commissioner casciato. seconded by commissioner chu. we'll open it up for public comment for this item. seeing no members of the public that would like to comment on this item, we'll close public comment. can we take this item without objection? item number 15 passes. item number 16. >> clerk: item number 16, action item.

review and adoption of july 1, 2018 actuarial evaluation report, presentation of employer contribution rate stress test projection. >> we have bill hallmark and ann harbor to present you the key results. >> good afternoon. we're going to run through the highlights of the results, talk about what the key changes were in the last year, and then, take a look going forward. on side 2, the chart shows last year's contribution rates compared to this year's contribution rates, and you can see that the average member rates stays about the same, and the employer rate goes up from

23.3% to 25.2%. the black line represents the normal cost. that's the expected costa tributed to the current year of service, and so -- cost attributed up to the current year of service. the teal line we're calling tread water line. that's the amount of contribution that needs to be made to keep the u.a.l., unfunded liability at the same dollar amount if all of our assumptions are met, you have to contribute to that level inform tread water, and a lot -- to tread water, and a lot of departments aren't contributing that amount. this shows the role this system has taken in contributing significantly above that level, and all of the contributions above that level are going directly to reduce the principle of the unfunded liability. those rates are before any of

the cost sharing adjustments, so they're in our appendix. we have the complex table array of all the cost sharing adjustments for all the different classifications and so forth. but after the cost sharing adjustments, the employer rate would be 27.8%, approximately, and there would be no change in the average member rate, but it would be 11%. the actuarial liability increased this year to about $27 billion. the chart shows the liability in bar form from the prior year and the current year. the blue portion of the bar is the liability for people who are currently receiving benefits. that little gold sliver is for people who no longer work in covered employment but are

entitled to a future benefit. and then, the red portion of the bar is the liability for current active employees. the lines show the market value of assets in green and the actuarial or smooth value of assets in the -- the teal. on the actuarial value whibasi we've increased to 87% funded level, and on the increase, we're up to about 97% funded. those are very good funding levels compared to other systems around the country. on a market value basis, the unfunded liability decreased from about 3.3 billion down to 2.8 billion. >> what is calpers currently at? >> much lower. something like that. >> in terms of our funding

status compared to other california pension systems, do you have any sort of sense of where we are? >> i would say you're probably in the top three or four. i would say three or four others -- contra costa are over 97%. >> the fresno systems are over 100, and then, there are a few around 90%. i think contra costa, a couple of l.a. systems are in place, but there are a lot of other systems that are much more poorly funded. >> thank you. >> but this chart identifies the sources of the change in the employer contribution rate from last valuation to this valuation, and i wanted to note that when we were here november and were showing you the projections, and you adopted

the 7.4% discount rate, this 24.2% contribution rate is actually 20 basis points lower than the projections we were showing back in november. and the main reason for that slight decrease is really the assets, the preliminary assets that we were using were lower than the draft -- or the final assets. the final assets were about $175 million higher than those preliminary assets. really, what i'm saying, nothing has changed much when we were back here in november in terms of the contribution rate. the main sources for the increase of the contribution rate are that july 1, 2018 supplemental cola, the discount rate change from 7.5 to 7.4%, and then, the fourth year of that five-year phase in for the

2015 assumption changes, those three things increase the contribution rate by 3%. and then, your favorable asset experience along with fully paying your charter -- a couple of charter amendments decreased the contribute rate by about -- contribution rate by about 1.4%. this graph is showing the changes in the unfunded liability in the past ten years. the bars represent the annual changes in the accrued liability and the components, and the line represents the net change in the unfunded accrued liability. and you'll notice the good news, in the last two years, you've seen decreased in your unfunded liability in 2017 and '18. so the u.a.l., though, has increased, and i apologize for the typo. it's by 4.1 billion, not 4.9 billion, over the last ten

years. the majority of that or nearly more than half of that is due to assumption and method changes, which are represented by the purple bars. in 2011-12, '14, and '18, those changes were all changes in the discount rate and they assumed rate of return. in 2007 and 2018, those were based on the demographic changes, the studies we do every five years. in 2018, there was a very large increase in the unfunded, and the majority of that is due to mortallity assumption changes that some of the national tables had, and at that point,

we needed to include mortallity changes, as well. the net last five years, you'v actually see actuarial investments gain from 2014 to 2019. but back in 2009 to 2013, you're seeing those gold bars, those are the actuarial losses on assets mainly due to the 2008 financial market crash. >> okay. while i see -- i see the dot on the line graph, but for 2018, what was the dollar value decrease in the u.a.l.? it's like 25, 50 million-ish, something like that? >> i think it's 45 to 50.

>> okay. >> it's in the report. >> okay. thank you. >> the supplemental cola represent 1.1 billion of that u.a.l. increase, and those are represented by the green bars. we had supplemental colas in 2010, '11, '17, and '18. and in 2016, there was no supplemental cola granted for that year, but those are those retroactive supplement cal col for 2013 and '14 that allow certain people those supplemental colas, even if they're not funded. the liability experience was about a decrease of .7 billion and that was mainly due to lower than expected salary increases and lower than expected colas for the old

safety cola group, but you can see they're very, very small compared to some of the other sources. and then, lastly is the fact that your contributions are in excess of the normal cost expenses and interest on the u.a.l. or in other words, your contributions are -- over the last ten years, you've been able to pay down your unfunded liability. specifically in the last five years, you can see the red bars from 2014 to '18, have contributed to decreasing that u.a.l., and that's when the new amortization kicked in.

>> can i ask a question on that. >> yes, absolutely. >> looking at the chart where it shows contributions as decreasing the u.a.l., can you explain the -- >> sure. >> -- why each year, it's so different. i mean, i would think that the contributions are consistent kind of across the board, right? >> so what we're measuring here is comparing the actual contribution to the normal cost plus the u.a.l. of normal market assets, and that fluctuates each year with the market value of assets. for contributions, we smooth things out, and so some of that volatility you're seeing here in the size of that bar is really just reflecting us smoothing the contributions while still trying to pay down the u.a.l. while the market

value fluctuates. >> is that from a method change? >> that's -- in part, that's -- well, that aspect has been there throughout because we smooth the assets over a five-year period. >> okay. i'll circle back offline. that went right over my head. >> it's just -- we try and keep the contributions as smooth as we can while trying to account for environmental changes, but they don't smooth as rapidly as the measure of interest on the u.a.l. >> okay. thank you. moving forward to slide eight, is the historical and projected contribution rates. and to note, the blue line is

the 2017 valuation projections, and you can see those projections from last year to this year have not changed much at all. there was investment gains this year that have overall reduced the projected contribution rates going forward, but they're slightly offset in the short-term because of the supplemental cola that was also granted, and that was paid over the next five years, you see the supplemental rate increase over the next five years, and also due to the 2015 assumption change. the last year for that will be fiscal year ending 2021. historically, from 2010 to 2015, you see that sharp increase in the contribution rates, and again, that's the investment losses from 2018 -- or i'm sorry, 2008, plus some of the assumption changes. and then, in 2016 and '17,

there's slight decreases in the contribution rate due to actuarial gains in the investments, and then, that graduate increase from 2017 to 2021 due to the gradual phase-in of those assumptions. >> so we wanted to point out, we've added a new section in the valuation report in advance of a new standard of practice that requires some assessment and disclosure of risk. so we're not going to go through -- well, a bunch of the stuff that is in that section is the projections that we have traditionally provided you, and so we will be going through that, but i just wanted to explain what this new section is and how it's laid out. the standard requires us to

identify the risks and assess the risk at some level. the assessment does not have to be very detailed at all. but we are required to recommend another assessment if we believe it would be significantly beneficial. in the draft, they didn't have the word "significant" in there, and my question was when would it not be beneficial? so we got some clarification, and you'll see some language in your report that says, you know, we're providing sufficient risk assessments at this time and we're not officially recommending a more detailed assessment. it also requires us to disclose some maturity measures that are relevant to understanding the

risks, so there's some assessments showing the maturity of your plans compared to other plans across the country. most of this information, it has been from the past reports and has moved into that section, but there's some new information and some new language explaining it and setting up the risks. these are some of the sample charts looking at some of the measures compared to other systems. the bars are the distribution of other systems, and the diamond is where esfers stands. the higher you are on these charts, the more sensitive you are to risks. we can go into that in more detail, and we did talk some about it in the july or august

board meeting, but we just kind of wants to summarize what we put in there. we identified three specific items to assess. investment returns are the obviously one, the risk that your actual future investment returns will be other than 7.4, and those assessments are the traditional projections we've done for the different scenarios and we'll touch on those in a minute. interest rate and assumption risk. one of the things that has caused the -- how much assumption changes have increased the unfunded liability, part of that was the moretality, and part of -- mortality, and par of it was changes in -- part of it was changes in the markets.

so we just put in, what if we had to reduce the expected rate of return by another 100 basis points, so you can get a sense of that sensitivity. then, the last thing was the supplemental colas. with the audit, they raised the question whether we were capturing the supplement cal colas and whether there was a risk there, so we thought we would show that risk and our assessment. the assessment and the report basically shows that our current methods do take care of the supplemental colas, even though we don't testify a liability for them in advance, we only recognize them in our contributions once they're granted. but then, we amortize it over a period of five years, and our stress tests show that methodology works. >> can i -- for the sake of time, a lot of this is stuff that we have -- things are

putting together the summary stuff. i know some of this is new. if you maybe can just hit on another one or two sort of high points, and we'll -- >> yeah, so our plan is this works for you, i'm just going to setup the scenarios, and we're going to go to the last page. we're not going to look at the different pieces here. so the scenarios we've done are based on the hypothetical scenarios that are not intended to give an actual projection of what would happen, but to give you an idea of the actual stresses in the system. those are based on five-year capital market assumptions, and we showed the distribution of those assumptions over one-year and five-year periods. we've created one-year shock

systems that are based on the 95 percentile turnover one years, and then one-year and five-year significants that are based on the 75th percentile and 95 percentile over five years. so what happens to funded status, what happens to contributions in each of those scenarios, and i'll let ann summarize them. >> so this is a summary of the scenarios that bill was just explaining, and you can see -- okay, the yellow are the one-year shock, so there's a one-year very negative or very positive shock. one-year moderate and one-year significant. what's interesting to point out in the short-term, the next one or two years, there's not a large difference in the

contributions in these scenarios. you're only seeing about a 6% range in that contribution rate where the return for that one year -- for the next year would be -15 for the negative scenario and a +15 for the positive scenario. so you have this cushion right here in your plan right now because you have about $700 million in the difference between your actuarial value of assets and your market value of assets. there is the scenario what your rates could be given market rate returns. >> so just in conclusion, the projections are similar to the

last valuation. next year is the last year we are increasing the 2015 assumption change cost, so there is an expectation of an increase next year, but that's -- after that, there's an expectation or a trend of much lower contribution rates, but that all hinges on investment returns, and there's a wide range based on what your actual returns are. >> what was our return last year? 13 -- >> 2008 was 11.5%. >> that's june 30. >> 11.5 was the -- >> it was 13.5 in 2017 -- june 30, 2017. >> i'm sorry. >> it was 13.5 for june 30, 2017. >> i lost the year. okay. thank you.

[inaudible] >> motion by commissioner casciato. can we have a second? >> second. >> there's a second by commissioner chu. we'll open it up to public comment. are there any members of the public that would like to address the commission regarding this item? seeing none, we'll close public comment. can we take this item without objection? okay. item passes. thank you so much. >> thank you. >> number 17, please. [inaudible] >> and this item is just the culmination of the presentation that you just heard. >> there's a motion by commissioner casciato. do we have a second? >> i'll second. >> there's a second by

commissioner bridges. we'll open it up to public comment. are there any members of the public present that would like to address the commission regarding this item? seeing none, we'll close public comment. can we take this item without objection? item number 17 passes. thank you very much. >> thank you very much. >> thank you. >> thank you. >> thank you. >> thank you so much. >> mr. huish. where wou where would you like to go? how long do we -- do we want to go to -- or do we want to go to nine first in terms of timeline? yeah, item number nine's an action item. do you want to go to nine

first? excuse me, kurt, did you want to do item nine before seven and eight? >> yeah. >> okay. [inaudible] >> thank you very much, board membe members. this is a recommendation to terminate a quantitational income strategy. >> as bill described, staff is recommending an napc of l.s.v. unless any p.c. would like to make any comments, i'll turn it back to the board for any

questions. >> board members? >> i support this recommendation. perhaps you could boil is down into one sentence why you want to do this. the spokesman is to your right and across the room. >> you want us to say that here? >> no, in case there's a phone call because they're not going to be able to read this to them over the phone. they've already written the article, and it's going to fly out tonight. in case there's a phone call or a real clear statement, we're making other changes to this. >> okay. we don't typically make comments to the press. we tell them what the recommendation does and whether it was approved. >> the recommendation made last month? >> yes, which we made in open

session. we're not going to make that comment again. >> i'm just trying to have you help the spokesperson who may speak to the media if they answer the phone. >> our advice is just to refer them to staff's memo. >> right. >> any questions from the board? >> so moved to support staff's recommendation regarding l.s.v. >> there's a motion by commissioner driscoll. do we have a second? second by commissioner casciato. we'll open it up to public comment. are there any members of the public that would like to address the commission regarding this item? seeing none, we will close public comment. any discussion amongst the board? can we take this item without objection? item passes. thank you very much. why don't we go back, and then, we'll start going back through -- in order. we'll go back to item number seven -- sorry.

[inaudible] >> so, you know, as stated, this was our proxy report. if kurt and andrew have any comments, and then, we'll answer any questions from the board. >> so each year, our proxy consultant provide a report on proxies voted in the prior calendar year, and also on an annual basis they review the approved proxy guidelines and makes recommendations for modifications. andrew? >> thanks, kurt. hello, commissioners. so the full report is there for your refer. i just wanted to draw your attention to a few items related to our voting activities for 2018, and then, we're joined by andrew lindberg from i.s.s.

he's the head of custom research for the americas, and he'll give us an overview of sort of the general trends of proxy voting in 2018. >> sorry to interrupt. i probably should have called items seven and eight together. so maybe we can be brief on seven and then move onto eight when we're done, and then, we can speak about those trends. >> yeah. sure. so just very quickly, on seven, just wanted to remind the board that we continued to vote in line with our custom voting policy. that means that we generally support progressive corporate governance measures like proxy access, the ability to act by written consent, right to call special meetings, independent board chairs, board diversity, disclosure of climate risk, etc. we continue to oppose excessive executive compensation, poison pill measures, golden parachute

measures. in addition, we continued to support the shareholder resolutions filed by the members of the series investor network on climate risk and sustainability, so we voted in favor of 65 of these shareholder resolution, a very few received majority support, but there were a few at kinder morgan and a couple others. it's important to note that a couple were withdrawn because management was able to sit down with companies and enter into a constructive dialogue. so maybe i'll close there. we can then move to the next item, and then, andrew could offer a few comments. does that -- >> is that agreeable? okay. great. so why don't we open it up to public comment. seeing that there are no mem y

members of the public present that would like to address the commission, we'll close public comment. thank you for your report on item number seven, can we move onto item number eight, please. >> item number eight is our updates to our proxy voting guidelines for 2019. as kurt said, for each year, we review our proxy voting guidelines that we've consulted with over the years, work with our proxy consultant, i-s-s make sure that they reflect any changes to the corporate government's landscape and review what constitutes good corporate governance. we took the liberty to make some updates to the formats of our proxy voting guidelines. this was just to improve the readability, presentation of those guidelines, hopefully make them more accessible and useable for staff and removed

any superfluous information. really wanted to go into the more substantive changes we're recommending. we're recommending ten total changes. i think the three key ones that i would like to highlight is one, we're recommending an update to how we vote on management to say on pay proposals and remuneration policies to just take a closer scrutiny on pay magnitude, and pay and performance alignment, internal pay disparity, and then, performance based equity, so this means we may vote against management more this proxy season than on pay proposals. second, we're recommending an update to our u.s. director election policy where we will generally vote against the chair on nominating committees

and generally other directors at russell 3,000 or other s&p companies when there are no women on the companies board of directors. and then third, we're recommending an update to the u.s. director elect policy so expand the definition of what we call a material failure of the board to also include the failure to adequately guard or manage certain e.s.g. risks. so the other change i think are a little more routine. we wanted to highlight those three and certainly can answer any questions on that or on proxy season 2018. and maybe we'll just pass it to andrew for a few general comments. >> excuse me. thank you for having me in today. i would say there are a couple of key issues in the corporate governance or the e.s.g.

landscape that we've noticed in the last year. the first one of course being board diversity. diversity comes in a number of different -- comes in a number of different ways, but one of the key focus among investors are share olders this year in 2018 has been in terms of board gender diversity, so bringing females onto all male boards or increasing the level of gender diversity at u.s. companies, looking at the landscape today, about 24% of companies in the russell 3,000 do not have a female director on the board. this is -- you know, there's been some improvement in the last few years, but it's still trailing a number of other developed markets where this is dealt with in ways other than proxy voting. of course in the u.s. context, this has historically been dealt with through the property vote or through engagement. we are potentially seeing a change to that. some of you may be aware that

california's introduced legislation that would mandate california companies or companies whose principled executive officer right side in california to have a woman on the board by 2019, two or three women on the board by 2020, depending on the company size. this is a positive development on the regulatory side, and other states are beginning to follow. new jersey, back in november, essentially introduced the same language in their legislation that would require companies based out of new jersey so have the same levels of diversity at their public company boards. so whether this is -- whether this will withstand any sort of challenge in the legal system remains to be seen, but at least for right now, companies are being advised to comply with this legislation, so certainly a positive sign. looking back in 2012, about 17% of directors were female last year. that number's up to 25%, so we're seeing a positive growth,

but it looks like there needs to be a little more pressure. that's really what the goal is, as andrew mentioned, one of the recommended policy changes, is recognizing in 2019, there's really no excuse at a russell 3,000 company not do have a female on the board. that's a low hurdle, and i think that's one thing that many key investors or companies are willing to take. the other thing i'd like to highlight is in the context of shareholders resolutions, touching on environmental or social resolutions, 20 or 25 received majority support.

a real change in investors' philosophies, touching on things such as climate change, and sustainability reports, but even some social issues, which is a first in 2018. there were two proposals aimed at manufacturers or distributors of firearms. one is sturm ruger, the other one at american outdoor brands, and so those proposals received majority support, and eye third proposal addressing the opioid crisis at depo med received majority support. this is a first for me of seeing these types of proposals receiving majority report and an issue on the proxy. i don't foresee that going away in 2019, and as andrew mentioned earlier, about half of these proposals on environmental and social issues,