Pension Funds Seek Voice on Texaco Board
Two big institutional shareholders in Texaco Inc. want a voice in nominating directors to Texaco’s board, and some analysts said Wednesday that the move could run into stiff resistance from Texaco management.
Officials of the California Public Employee Retirement System and the New York State Employees Retirement Fund will ask for a formal, long-term role in choosing Texaco directors. They plan to make the request at a meeting on Aug. 24 with Texaco President James W. Kinnear, said Richard Koppes, general counsel of the California fund.
The New York pension fund holds 3 million Texaco shares and the California fund has 783,000 of the company’s 244.3 million shares outstanding. The California system is the largest public employee pension fund in the country, with more than $46 billion in assets, while the New York fund controls $39 billion.
Two seats on the Texaco board are expected to open within the next year. The two pension funds want institutional shareholders in Texaco to be permanently represented on the board’s nominating committee by “independent” delegates who are neither executives nor shareholders.
Could Be Tempted
The two funds are not seeking to place direct representatives on the board’s nominating committee, Koppes said, since they would get access to confidential information about Texaco that could conflict with their fiduciary responsibilities as money managers.
The pension officials could be tempted to buy or sell Texaco stock on the basis of that information--and probably would have to give up the right to trade the stock before joining the board.
“This could very well be an important development for all of corporate America,” said Rosario Ilacqua, vice president of equity research at the investment firm Nikko Securities Co. International.
Texaco declined comment on the issue. Anita Larsen, a spokeswoman at the company’s headquarters in White Plains, N.Y., would only reiterate Kinnear’s recent public promise to meet with representatives of the institutional investors.
