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April 15, 2016

Dear Fellow Cabot Oil & Gas Corporation Shareowner:

Support Shareowner Proposal #5 Requesting Proxy Access

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The California Public Employees’ Retirement System (CalPERS) and the New York City Pension Funds request shareowners vote “FOR” proposal #5 – a binding proposal to give shareowners effective access to the director nomination process – at the Cabot Oil & Gas Corporation annual meeting on May 4, 2016. Together, our funds have $433 billion in assets and are substantial long-term shareowners of Cabot Oil & Gas Corporation, with approximately 2,583,000 shares. Proposal #5 would revise a bylaw the Board adopted in 2015 that in our view imposes unduly restrictive requirements that are not in shareowners’ best interest.

Proxy Access a Fundamental Shareowner Right and Accountability in the Boardroom

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We believe providing access to a company’s proxy to give shareowners the ability to nominate directors to the board is one of the most important rights for owners of a company.  Without effective proxy access, the director election process simply offers a ratification of management’s slate of nominees.  Therefore, we believe long-term shareowners should have meaningful access to this process on the terms specified in the proposal #5.  The proposed thresholds include:

●	Beneficial ownership of at least 3 percent of the outstanding stock, consistent with market practice and SEC rulemaking, in place of the company’s current 5 percent threshold;

●	Ability for a group of qualifying shareowners to aggregate their shares, in line with SEC rulemaking, in place of the company’s overly restrictive limit of 10 investors participating; and

●	Ability to nominate up to 25 percent of the board, in line with SEC rulemaking, in place of the company’s effort to restrict nominations to 20 percent of the board

Proposed Terms Based on SEC Proxy Access Rulemaking in 2010

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Before adopting its now vacated proxy access rule in 2010, the SEC undertook a detailed analysis, both internally and through the public comment process.  The SEC determined that a 3 percent ownership threshold was appropriate, stating, “The ownership threshold we are establishing should not expose issuers to excessively frequent and costly election contests conducted through use of Rule 14a-11, but it is also not so high as to make use of the rule unduly inaccessible as a practical matter.”  The proposed holding slate size limitation in proposal #5 is also consistent with the SEC rule.

Trends Show U.S. Companies and Shareowners Are Embracing Proxy Access

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Prior to November 2014 only 6 U.S. companies had a 3 percent proxy access bylaw in place – that number has risen to more than 210 companies as of April 1, 2016. The growing number of companies spans across various industries and size ranges – examples include Apple, Microsoft, Johnson & Johnson, General Electric, Amazon, Wells Fargo, AT&T, Coca-Cola, Pfizer, and Chevron. These companies are adopting the governance best practice, thereby rejecting the common corporate assertion that proxy access is costly, distracting, and favored mainly by special interest groups.  Few companies have imposed a 5% threshold; fewer have constrained investor aggregation to 10 investors.

 

Given the widespread investor backing and the accelerating adoption of proxy access bylaws, the Council of Institutional Investors has developed a “Proxy Access: Best Practices”¹ document providing a framework for investors and companies that highlights how to adopt a shareowner-supportable proxy access bylaw provision, including key provisions consistent with Proposal #5.

Support Viable Proxy Access and Director Accountability – Vote “FOR” Shareowner Proposal #5

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Proxy access is fundamental to a sustainable system of governance that fosters director accountability and long-term value creation – but will only work if bylaws have reasonable terms.  We believe the SEC provided reasonable and balanced terms, as reflected in Proposal #5, that offer shareowners effective access to the director nomination process.  Please vote “FOR” proxy access proposal #5.

Thank you for your support.

Sincerely,

Anne Simpson

Investment Director, CalPERS

Scott M. Stringer

New York City Comptroller

 

 

 

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