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CalPERS changes tactics on poor performers

November 15, 2010 |  4:40 pm

The nation's largest government pension fund on Monday ended its decade-long policy of publicly criticizing poor-performing companies whose stock it owns.

Instead of posting an annual "name-and-shame" Focus List, the California Public Employees' Retirement System now plans to privately contact corporations that it is unhappy with.

"The Focus List has served us well by calling public attention to some of the worst market players," said CalPERS Board President Rob Feckner, "but the time has come for a more effective approach."

The $220-billion CalPERS, Feckner said, opted for the new approach after research showed that many of the companies in its portfolio already have been moving toward improved corporate governance practices that are in line with pension fund's interests.

That's backed with new research from CalPERS consultant, Wilshire Consulting of Los Angeles. Wilshire reported that 159 companies contacted privately between 1999 and 2008 significantly outperformed 59 companies on the public Focus List over five-year periods, compared with market benchmarks.

As part of its new corporate governance strategy, CalPERS will use a screening process to evaluate 500 companies in its U.S. stock portfolio and come up with a list of corporations whose behavior could be influenced for the better through a series CalPERS-sponsored shareholder resolutions at annual meetings.

"This approach expands our playing fields with bigger companies than before," said George Diehr, chairman of CalPERS' investment committee.

-- Marc Lifsher