CalPERS Targets Offshore Companies

The investment committee of the huge California Public Employees’ Retirement System voted Monday to sponsor shareholder resolutions asking three major offshore companies to return to the United States.

CalPERS, the nation’s largest public pension fund, agreed to co-sponsor resolutions with the American Federation of State, County and Municipal Employees to seek to change the formal addresses of Tyco International Ltd., Ingersoll-Rand Co. and McDermott International Inc.

About 20 public companies are incorporated offshore in large part to avoid paying U.S. income taxes and also because shareholders in other countries have more limited rights.

Tyco International and Ingersoll-Rand are based in Bermuda. McDermott International is based in Panama.

The shareholder votes, which are scheduled to take place at the companies’ annual meetings early next year, would not be binding.

State Treasurer Phil Angelides, a member of the CalPERS investment committee, called offshore incorporation “a despicable practice.”

“It says, ‘We’re not going to fulfill our corporate responsibility to pay taxes and we’re going to make it hard for shareholders to enforce their rights,’ ” he said.

Angelides said it was especially important for public retirement funds to take a strong stand against the practice in light of a void in leadership at the Securities and Exchange Commission.

The employees’ federation also is recruiting public retirement funds in Connecticut and other states to join in the effort. Angelides said he also would bring the matter before the state teachers’ retirement fund.

State Controller Kathleen Connell abstained from the vote because she is a regular commentator on the CNBC financial program “Squawk Box,” which regularly discusses issues involving the three companies.

The vote by CalPERS’ investment committee was sufficient to take action and does not require a vote by the full CalPERS board.

CalPERS has assets of $136 billion and provides retirement and health benefits to 1.3 million municipal employees and their families.