Posts Tagged 'Calpers'

CalPERS to Consider Changes to Name and Shame Methodology

by  Allen Matkins Leck Gamble Mallory & Natsis LLP for JDSupra, November 16th, 2010.

In 1987, the California Public Employees Retirement System (CalPERS) initiated its “Focus List” program. Under this program, CalPERS identifies companies to a preliminary list. CalPERS then contacts these companies for the purpose of “encouraging” corporate governance changes. If CalPERS is satisfied with a company’s response, then it is not named to the public Focus List. In 2009, for example, CalPERS identified 13 companies to its preliminary list and four companies were ultimately named in the Focus List.

In the preceding decade (1999-2008), CalPERS engaged a total of 155 companies, 59 of which became Focus List companies and 96 which did not. Interestingly, no companies were publicly named in 2010.In the last few months, the CalPERS staff has reevaluated its Focus List methodology. Today, the Investment Committee will consider these proposed changes to the Focus List methodology.

What seems to be completely missing from the CalPERS staff’s proposal is any consideration of the requirements of the California Administrative Procedure Act (APA). The screening process is clearly a rule of general application and thus a regulation as defined in the APA. Cal. Govt. Code § 11342.600. This is significant because the APA requires that regulations be adopted after notice and public comment. Cal. Govt. Code §§ 11346-11348. CalPERS should comply with the APA in adopting its new Focus List methodology so as to ensure transparency and accountability. (continue reading… )

Why Corporate Governance Matters to Everyone

by Marty Robins for The Huffington Post – August 17, 2010

So many of the problems we face today result from poor decision-making by private corporations. Prominent examples include the Gulf oil spill and the seriously weakened financial sector, which is imperiling the rest of our economy. However, so many who describe themselves as liberals or progressives seek to address such problems with more government regulation and programs instead of by preventing the bad decisions at the source, which is likely to be more efficient from a resource utilization perspective.

That is, having government do or prohibit something is inherently more costly than having the private sector get to the same result on its own as a result of the cost of the government. It is also arguably less effective because the government is not the direct stakeholder and does not have the same access to information or incentives as do properly informed, incentivized private actors. Of course, as we currently see, using government programs to rectify problems created in the private sector is the most expensive of all the alternatives. How does one get better decisions in the private sector?

While there is no foolproof way to prevent such bad decisions, many analysts believe that the field of “corporate governance” is a very good place to start. This field involves efforts to get the right people and the right information into the decision-making process so as to enhance the likelihood of a “good” — or at least non-disastrous — decision. It’s hardly a secret that for too long, many business decisions have resulted from inadequate deliberation by an “old boys’ club” which did not reflect multiple viewpoints or sufficient consideration of risks and benefits. The field may at first glance seem like a dusty academic area, but it is actually fundamental to the well being of all Americans.

In recent years, corporate governance scholars such as Lucian Bebchuck of Harvard Law School, Nell Minow of The Corporate Library and James McRitchie of CorpGov, activist investors such as CalPers, CalSTERS, Carl Icahn, Andrew Shapiro and Bill Ackman and, to some extent, the Delaware courts, have sought to change this situation by facilitating better process and more inclusive boards of directors. A major step forward is the inclusion in the new financial regulation bill of expanded proxy access for minority shareholders in public company board of director elections, in order to get more viewpoints into the boardroom. Arguably in the same vein, is the inclusion in the bill of a non-binding ‘say-on-pay’ vote for shareholders (continue reading…)

Pension funds search for climate change risks and opportunities

by Ian Fraser, for QFinance, March 16, 2010.

Pension funds are increasingly being asked by politicians, non-governmental organizations, campaigners, and pressure groups to mobilize their financial clout more actively and to take their responsibilities as corporate owners more seriously. The chances are it could change from being “asked” to being “required.”

At the vanguard of the movement is UK  Treasury minister Lord Myners who recently berated pension funds for their appalling voting records and accused them of behaving like old-style “absentee landlords.” Their short-termism, passivity, and habit of voting with managements even on self-destructive deals such as RBS’s purchase of ABN AMRO, is seen as having exacerbated, and perhaps even triggered, the banking and financial crisis.

Myners wants to pressure pension funds and other institutional investors to raise their game and emulate the behavior of the $460bn Norwegian Government Pension Fund and California’s public sector scheme Calpers by engaging more actively with management teams to ensure they behave responsibly, ethically, and sustainably.

Earlier this week Mercer Consulting, the Carbon Trust, and the IFC, a subsidiary of the World Bank, launched a project that is expected to make it easier for pension funds to oblige—especially where climate change is concerned.

The research project should ensure investors are not flying blind where climate change is concerned. It aims to identify the investment opportunities, as well as the investment risks, that global warming can be expected to pose. The study will examine a range of global warming scenarios and map out the risks and opportunities each will have on a range of asset classes and geographies until 2050…(continue reading)

Report draws spotlight on corporate governance

by NDTV Profit, January 19, 2010.

One year after the founder of Satyam Computer Services made an astonishing confession to the largest fraud in Indian corporate history, many say that what really sets R. Ramalinga Raju apart is not his malfeasance, but the fact that he got caught.

“To think there aren’t other companies that dabble in less than forthright practices, to believe that other companies are not doing this kind of thing is naive,” said Sharmila Gopinath, research manager at Hong Kong’s Asian Corporate Governance Association.

The group released a 55-page white paper on Indian corporate governance Tuesday, which suggests that many of the conditions that helped facilitate Raju’s $2.5 billion fraud still exist, despite efforts to reform.

The Satyam scandal stunned India and raised questions abroad about the risks of investing in a country where improvements in regulations and corporate governance haven’t kept pace with its rapid rise in economic and financial clout. With creaking infrastructure and a fast-growing population, India more than ever needs reputable markets to attract and channel private investment capital.

The report draws on the views of more than a dozen foreign institutional investors, like the California Public Employees’ Retirement System, auditors, like KPMG, and law firms, like White & Case…(continue reading)

Women still face a steep climb to the top table

by Ruth Sunderland for the Guardian, August 23, 2009.

Women still face a steep climb to the top table.

Research commissioned by the Observer has revealed that UK boardrooms are still overwhelmingly male-dominated, despite the fact that more than nine out of 10 companies claim to have an equal opportunities policy in place.

Women occupy only 242 out of 2,742 seats on the boards of FTSE 350 companies, according to a study by The Co-operative Asset Management as part of our Good Companies Guide series of reports into ethical and socially responsible practice in corporate Britain.

More than 130 companies out of those surveyed had an all-male board and the vast majority of female directorships are non-executive. Women hold only 34 executive board seats out of a possible 970.

As a result of this work, Co-operative intends in future to consider gender and diversity when it is assessing companies from an ethical, social and governance perspective.

John Reizenstein, managing director of Co-operative Asset Management, said: “It’s a commonplace that women and minorities ought to be better represented in boards and other top positions. But does it make good business sense? Our report shows that leading UK plcs believe an inclusive, progressive approach brings real benefits, but also shows that too many companies still appear to pay the issue lip service. We think organisations which foster diversity at the top have an advantage over those which don’t.”…(continue reading)

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