CalPERS Backs Activist for Seat on Sears Board : Corporate: The influential California investment fund hopes to spur other investors who are unhappy with the firm’s management.

Shareholder activist Robert A. G. Monks’ campaign for a seat on the board of struggling retailer Sears, Roebuck & Co. got a strong boost Wednesday when an influential California investment fund announced that it would support him.

The fund--the California Public Employees’ Retirement System, commonly known as CalPERS--is the first institutional investor to publicly back Monks. Although CalPERS owns less than 1% of Sears’ 343 million shares, analysts said the fund’s decision could spur other investors to vote for Monks to express their unhappiness with management.

“Monks has touched a nerve among shareholders,” said Edward A. Weller, an analyst with Montgomery Securities.

CalPERS has been a leader in recent years among pension funds pressing corporate managements to be more responsive to shareholders. But Weller called it “extraordinary” for a fund “to express a vote of no-confidence in management” instead of simply selling its shares.

Sears officials said they were surprised by the announcement. Although CalPERS pushed for a Sears shareholders advisory committee last year, the fund withdrew the proposal in January after company Chairman Edward A. Brennan agreed to meet with the fund’s officers twice this year.

In a news release, Chicago-based Sears said it is “disappointed in the position taken by CalPERS. However, we are encouraged by the support we have received in discussions with many other individual and institutional Sears shareholders.”

CalPERS, in a statement released from its headquarters in Sacramento, said Monks has “extensive experience in corporate and public affairs and is an ardent advocate of shareholders’ rights.” As a Sears director, the fund added, Monks would make “an important contribution to improved financial and corporate governance performance.”

Monks, president of the Washington-based advisory firm Institutional Shareholder Partners and the U.S. Labor Department’s chief pension regulator in 1984 and 1985, twice ran unsuccessfully for a U.S. Senate seat from Maine in the 1970s.

Monks said he was gratified that CalPERS recognized his “excellent business credentials.” He faulted Sears’ board for being too closely tied to Brennan and for failing to represent shareholders’ interests.

He also criticized the company for putting too much responsibility in Brennan’s hands. Along with being chairman, president and chief executive of the parent company, Brennan took over as head of the company’s retailing arm last year in an effort to improve its lagging performance.

Monks said he would join the Sears board with no prepared agenda for the company, but some analysts believe that he will push for a spinoff of its slumping retailing unit. Sears also has three financial services divisions: Dean Witter, Allstate Insurance and Coldwell Banker real estate.

In the proxy statement for its May 9 annual meeting, Sears said it expects to spend $5.55 million to reelect Brennan and two other directors. Sears acted recently to thwart Monks’ bid for a seat on the board by cutting the number of directors from 15 to 10.

Monks would need 25% of all the votes cast May 9 to be assured of winning a seat. Under the company’s cumulative voting rules, investors cast three votes for each share they own. That feature magnifies the clout of shareholders--such as CalPERS--that plan to place all of their votes behind a single candidate.