CalPERS names and shames on corporate governance
US – CalPERS, the US’s largest pension fund, has named and shamed those companies on which it will be focusing its corporate governance activism in the coming proxy season.
Out of 1,800 US corporations in which CalPERS invests, six have been highlighted for their poor corporate governance.
Document company Xerox tops CalPERS list as having the most ineffective board. The company was fined by the Securities and Exchange Commission and forced to restate its earnings form 1997 to 2000. The Xerox board has also been publicly accused of financial manipulation by its own former employees.
“We were shocked to learn that Xerox has a policy that its board members are ‘strongly recommended’ not to communicate directly with institutional investors,” said Rob Feckner, chair of CalPERS’ investment committee.
CalPERS has asked Xerox to take steps to expand the board by three independent directors and split the position of chairman and chief executive officer.
Other companies named are Gemstar-TV Guide International, JDS Uniphase Corp., Manugistics Group, Midway Games and Parametric Technology. CalPERS primary gripe is the lack of independent directors on company boards. In the case of Parametric, however, CalPERS is concerned that there is no nominating committee, and that the company has ignored its requests to meet and discuss performance and governance concerns.
Seven additional companies have been put on a monitoring list.
US retirement funds have been banging the drum for corporate governance since losing hundreds of millions of dollars in the WorldCom scandal. Last August a core group of pension funds, led by those from California, New York and North Carolina, agreed to clamp down on companies that do not abide by good company practice.