CalPERS Takes Aim at 11 Firms Over Governance
California’s largest public pension fund said Monday that it would withhold proxy votes involving 11 more companies, continuing its campaign largely directed against boards that let auditors perform outside services such as consulting.
The $166-billion California Public Employees’ Retirement System said it would withhold votes for directors at Alcoa Inc., Adobe Systems Inc., Broadcom Corp., Coca-Cola Enterprises Inc. and Clear Channel Communications Inc.
CalPERS also said it would withhold votes for board nominees at Capital One Financial Corp., Kimberly Clark Corp., Kohl’s Corp., Merck & Co., Popular Inc. and Verizon Communications Inc.
Not all is negative, however. CalPERS said it would vote to elect directors of Aetna Inc., Corning Inc., Occidental Petroleum Corp. and SBC Communications Inc.
CalPERS has been an aggressive watchdog on corporate governance issues and has vowed to oppose decisions by companies to permit auditors to perform consulting services and approve executive compensation not linked to performance.
At the same time, the fund may stop investing with Kohlberg Kravis Roberts & Co. unless the buyout firm severs its ties to Safeway Inc., a CalPERS official said Monday.
CalPERS, which has $225 million invested in two KKR funds, wants New York-based KKR to focus on its buyout funds instead of spending time on Safeway, where KKR co-founder George Roberts and three other executives tied to KKR sit on the nine-member board.
“Unless they start moving in the right direction and taking positions shareholders are asking for, I don’t see why we would invest with them,” said Rob Feckner, chairman of CalPERS’ investment committee.
CalPERS and other state pension funds are using their leverage with KKR to try to make changes at Safeway after the No. 3 U.S. supermarket chain posted $1 billion of losses since 2001 and its shares dropped almost 50% in two years. CalPERS holds about 2.7 million shares of Pleasanton, Calif.-based Safeway.
Of the latest batch of targeted companies, CalPERS took aim at the boards at consumer products maker Kimberly Clark and retailer Kohl’s in part over what the pension fund said was each firm’s failure to implement shareholder-approved proposals on options accounting.
The pension fund also said it planned to oppose the entire Verizon board over the audit issue and because the largest U.S. phone company’s board failed to put in place a shareholder-approved proposal on golden parachutes, or lucrative severance payments to executives.
Verizon challenged the fund. “CalPERS is saying we did not implement a shareholder-approved resolution for golden parachutes. That is incorrect.... We did last year,” spokeswoman Sharon Cohen-Hagar said.
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Reuters and Bloomberg News were used in compiling this report.
