Labor Leader Is Elected Board President of CalPERS
The California Public Employees’ Retirement System, the nation’s largest pension fund, Thursday elected labor leader Sean Harrigan as president of its board over rival candidate Willie Brown, San Francisco’s mayor.
Harrigan’s post carries little independent power, but he will be a key voice in CalPERS’ direction, analysts said.
The fund is known for its shareholder activism and for demanding better governance practices from companies in its portfolio, though CalPERS’ main problem these days is reversing its own financial decline of the last two years.
The CalPERS board voted 8 to 4 for Harrigan, a regional director of the United Food and Commercial Workers union. He’s also a member of the State Personnel Board and has been its representative on CalPERS’ board since 1999.
Brown also is on the CalPERS board and had the support of Gov. Gray Davis for the top post.
Harrigan succeeds William Crist, who retired.
CalPERS has 1.3 million state and local government members and $133 billion in assets. Its assets have dwindled by 23% since the fund’s peak of 1999, when they stood at $172 billion.
Like many investors, CalPERS has been hurt by the stock market’s decline. More than half its assets are in stocks. Yet the fund is struggling to simply perform as well as its peers.
In 2002, CalPERS’ investment portfolio declined 9.5%. That contrasts with an 8.98% median decline for all public funds with a total market value greater than $1 billion, according to Wilshire Associates’ Trust Universe Comparison Service, which tracks the industry.
CalPERS, which has pressured corporate America for greater financial disclosure, has taken some knocks for its own disclosure policies. It agreed to report performance data for its investments in private-equity funds only after being prodded by a lawsuit. CalPERS had kept the information secret at the request of many of the funds.
CalPERS’ sheer size gives it considerable clout with companies and on Wall Street, and Harrigan “will be the external voice of CalPERS,” said Allan Emkin, managing director of Pension Consulting Alliance in Encino, which has done consulting for CalPERS.
“But he doesn’t make policy, doesn’t implement policy and can’t act in a way that’s inconsistent with the wishes of the majority of the board,” Emkin said.
The president sets meeting agendas and would have significant input on personnel and investment decisions, but the post appears to afford influence in financial and government circles as much as anything. It’s not a full-time job, and CalPERS’ president, like all board members, is paid only $100 per meeting. An exception is Brown, who isn’t paid in order to avoid a conflict of interest with his job as mayor, a CalPERS spokesman said.
Harrigan wasn’t immediately available for comment, but he said in a statement that his priorities are “restraining health-care costs and improving our investment performance.”
P.J. Johnston, a spokesman for Brown, said “it’s disappointing that Mayor Brown was not elected president,” but added that he “will certainly remain an active and enthusiastic member of the board.”
Times staff writer Dan Morain in Sacramento contributed to this report.