CalPERS List Reveals Tentative Target Firms
The California Public Employees’ Retirement System is tentatively targeting Advanced Micro Devices Inc., J.C. Penney Co., First Union Corp., Rite Aid Corp. and 11 others in its annual drive to push companies in its portfolio to boost their lagging stock prices.
For each of the last 12 years, CalPERS, the nation’s largest public pension fund, has singled out about 10 U.S. companies of the 1,600 it owns in an effort to reform their board practices to increase shareholders’ returns.
The $155-billion pension fund’s board has yet to approve this year’s final list of targets. The list, which fund spokeswoman Patricia Macht said was released Tuesday by mistake, was a report prepared by the staff based on preliminary internal discussions.
“We are disappointed to be included in the list,” said John Greenagel, a spokesman for AMD, whose shares have dropped 4.7% this year after jumping 50% last year.
CalPERS has filed shareholder proposals seeking changes at some of the companies, including First Union. CalPERS wants the bank chairman to be an independent director. Edward Crutchfield, the chief executive, now doubles as chairman of the board. First Union’s shares have tumbled 43% this year. A bank spokesman was unavailable for comment.
CalPERS has also filed proposals at AMD, Charter One Financial Inc., Crown Cork & Seal Co. and PhyCor Inc. The proposals ask that boards have a majority of independent directors or that the chairman be independent.
Other laggards on the list include Bob Evans Farms Inc., Dura Pharmaceuticals Inc., A.G. Edwards Inc., Intergraph Corp., International Flavors & Fragrances Inc., Lone Star Steakhouse & Saloon Inc., and Winn-Dixie Stores Inc. Parametric Technology Corp. also made the rough list, even though its shares are up 87% this year.
CalPERS puts pressure on lagging companies to make changes to their boards, rather than just selling the shares, because the fund has found that activism can improve stock performance.
CalPERS has met with about half the companies on the list, including Bob Evans Farms. It asked the restaurant operator either to name an independent director to chair the board or to designate a lead outside director.
“We take their observations seriously and we are in the process of evaluating them,” said Mary Cusick, a spokeswoman for the Columbus, Ohio-based company. Its shares have declined 40% this year.
A.G. Edwards said it doesn’t think it belongs on the list. The other companies either declined to comment or could not be reached.
In the past, CalPERS has withdrawn proposals if the companies agreed to make changes before the annual meeting.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
CalPERS Targets?
The California Public Employees’ Retirement System is launching its annual campaign to push companies in its investment portfolio to boost their stock prices. These companies are on CalPERS’ preliminary list, which was released Tuesday but is subject to change. Many, though not all, of the stocks are down sharply this year.
*--*
Ticker Tues. 52-wk 52-wk Company symbol close high low Advanced Micro AMD $27.63 $33.00 $14.56 A.G. Edwards AGE 28.75 41.00 24.25 Bob Evans Farms BOBE 15.56 26.88 12.75 Charter One Financial CF 19.50 30.56 17.50 Crown Cork CCK 21.19 37.50 19.75 Dura Pharmaceuticals DURA 12.25 17.69 9.75 First Union FTU 34.94 65.75 33.88 Intergraph INGR 4.69 10.25 3.19 Intl. Flavors IFF 34.94 48.50 33.63 J.C. Penney JCP 18.75 56.13 18.63 Lone Star Steakhouse STAR 7.13 11.75 6.63 Parametric Technology PMTC 30.44 31.00 11.69 PhyCor PHYC 1.34 8.38 1.03 Rite Aid RAD 12.63 51.13 4.50 Winn-Dixie WIN 24.69 46.69 22.31
*--*
Sources: Bloomberg News, Times research
