Risk & Compliance

Calpers Mulls Fewer No-Confidence Votes

Most of the directors who have been targeted serve at companies that permitted their auditor to provide consulting or other non-audit services.
Stephen TaubMay 19, 2004

The California Public Employees’ Retirement System (Calpers) is rethinking a policy that has led the nation’s largest pension fund to withhold votes from director nominees at 90 percent of its portfolio companies.

Sean Harrigan, the president of the board of the $166 billion fund, said Monday that Calpers may change this strategy when it is reviewed in July, according to Reuters.

Most of the directors who received no-confidence votes from Calpers serve at companies that permitted their auditor to provide consulting or other non-audit services. Very often, however, the targeted directors have received majority support from those shareholders who do cast their votes. Indeed, Calpers recently received some ridicule for withholding votes from billionaire Coca-Cola Co. director Warren Buffett, himself a shareholder activist.

Harrigan, though, considers criticism of the Calpers policy a “badge of honor,” according to the wire service. “It’s so important in terms of the integrity of our markets,” Harrigan reportedly said.

To be sure, Calpers is not the only pension fund that has become more activist. Others that have been aggressively pushing for change at companies during the current proxy season include the California State Teachers’ Retirement System (Calstrs), the Connecticut state controller, the New York state controller, and the American Federation of State, County and Municipal Employees (AFSCME).