CalPERS Targets 7 Ford Directors on Corporate Governance Issues

CalPERS said Wednesday that it would withhold votes for seven of Ford Motor Co.’s 16 directors, including former Treasury Secretary Robert E. Rubin, as part of an effort to combat conflicts of interest among corporate directors and auditors.

The California Public Employees’ Retirement System said Rubin and Ford board members John R.H. Bond and John Thornton had potential conflicts of interest.

Rubin, 65, is chairman of the executive committee of Citigroup Inc., which provides investment banking services to Ford. Thornton, 50, is former co-president of Goldman Sachs Group Inc., which provides investment banking services to the automaker, and has failed to attend 75% of board and committee meetings, CalPERS said. Bond, 62, is chairman of HSBC Holdings, which also provides investment banking services to Ford, the fund said.

“This is not about the personality of these directors,” CalPERS spokesman Brad Pacheco said.

The other four directors opposed by CalPERS are Stephen Butler, Irvine Hockaday, Ellen Marram and Jorma Ollila. As members of the board’s audit committee, they authorized Ford’s auditors to perform non-audit services, CalPERS said. The fund has a policy against allowing a company’s auditors to perform non-audit work for the company.

“We’re trying to send a message we don’t like the practice,” Pacheco said.

Ford disagrees with CalPERS about both sets of board members targeted by CalPERS, company spokesman Oscar Suris said in an e-mail. “Our independent directors meet all the necessary criteria to qualify as independent,” he said, adding that the non-audit work done by the outside auditor was “fully in compliance” with Securities and Exchange Commission rules.

Bond, Rubin and Thornton couldn’t be reached for comment.

CalPERS, which has $167 billion in assets, is holding back proxy votes to prod companies to improve corporate governance. The fund has taken similar action this year against directors at several companies including General Electric Co., Merck & Co., Verizon Communications Inc. and Sears, Roebuck & Co.

The automaker, which will hold its annual meeting next Thursday in Louisville, Ky., has drawn scrutiny on corporate-governance issues in part because the Ford family controls 40% of shareholder votes through its ownership of class B stock.

CalPERS said it would support a shareholder proposal for an independent board committee to evaluate any conflicts of interest between the family as holders of class B stock and the owners of the common shares.

Ford has fewer independent directors than other publicly traded companies, Moody’s Investors Service said in a Jan. 20 report. The family has three members on the board: Bill Ford, 47; his father, William Clay Ford Sr., 79; and Edsel Ford II, 55, a cousin of the chief executive. Company President Nicholas Scheele is a director, as is Carl Reichardt, a former Ford vice chairman.

Ford’s shares fell 29 cents to $15.12 on the New York Stock Exchange.