CalPERS Focuses on Mid-Size Stock Laggards in Its ’96 ‘Hit List’

CalPERS is thinking smaller.

The $95-billion-asset California Public Employees’ Retirement System announced its 1996 “hit list” Monday, naming 10 company laggards that the pension fund will publicly harangue to take steps toward boosting shareholder returns.

And in a departure from the last 11 years, CalPERS says it is targeting more mid-size firms than corporate giants--which partly reflects the already-heavy emphasis on stock returns at the nation’s largest companies, the fund says.

“We’re moving further down the corporate America food chain,” said CalPERS Chairman William D. Crist. “Smaller companies should take heed from corporate America’s giants who have turned their companies around through measures suggested by active investors.”

CalPERS’ activism generally involves pushing laggard companies to revamp their boards, improve board oversight of executive pay and make other such governance changes in the name of boosting corporate performance--and stock prices--over the long term.

As the largest public pension fund, CalPERS’ actions are highly visible and can influence other big investors to pressure poorly performing companies deemed unresponsive to shareholders.

In another departure, CalPERS said it may resort to “extensive proxy solicitations” to garner investor support for its proposals. In a proxy solicitation, an investor attempts to sway other shareholders to vote with it, and against management, at annual meetings.

In the past, CalPERS has sometimes contacted a limited number of investors to enlist their help in pressuring specific companies. Now “what we are looking at is being more aggressive than that,” said Kayla Gillan, deputy general counsel at the fund.

The companies on CalPERS’ 1996 list are Applied Bioscience, Bassett Furniture, Charming Shoppes, Edison Bros. Stores, Melville Corp., Oryx Energy, Rollins Environmental Services, Stride Rite Corp., U.S. Surgical and Venture Stores.

CalPERS says it has so far met with independent directors of Applied Bioscience, Melville, Oryx, Stride Rite and U.S. Surgical to air its concerns. Meetings with directors of the other companies are being scheduled, the fund says.

Companies on the list either could not be reached for comment Monday or had no immediate comment.