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Top
retirement funds plan to jointly push reforms
NEW YORK - Several of
the world's largest retirement funds are in talks to unite as a way to
advance their common agenda of pushing poorly run companies to adopt new
corporate governance reforms. While the roster of
funds that will participate is not yet final and discussions are
preliminary, the potentially heavyweight group is expected to include the
New York State Common Retirement Fund. "This is a
network that has been in very close contact this proxy season over a variety
of initiatives, and that group is going to continue to talk," said Bill
Paterson, director of the AFL-CIO office of investment. "It is not like a
set organization, it is much more operational," he explained.
"It's a set of institutions that see the value in dialogue and teaming
up and speaking with a single voice in situations that are consequential to
investor value." One source familiar
with the situation said that CalPERS -- California Public Employees
Retirement System -- may also sign on. Together, the New York and California
funds manage more than $230 billion in assets. If the funds join
forces, they could exert maximum pressure on companies they think have
spotty corporate governance rules and could decide against investing their
clients' money in their stocks. Brad Pacheco, a
spokesmen for CalPERS, said he was unaware of the specific effort, but
pointed out that it would not be unusual for leading retirement funds to
join forces. John Chartier,
spokesman for N.Y. State Comptroller Alan Hevesi, who oversees the common
fund, said: "It is no secret that together pension funds from multiple
states carry greater influence, so it certainly makes sense to work together
and share information when we are able to, in order to protect shareholder
interests." The demand for greater
corporate governance has grown in the years following the collapse of former
market bellwethers Enron Corp. ENRNQ.PK, Adelphia Communications Inc.
ADELQ.PK and WorldCom Inc. WCOEQ.PK. Indeed, the source
said the idea had grown out of a letter from a group of investors --
spearheaded by the AFL-CIO -- that was sent to the chairman of Unocal Corp.
UCL.N regarding the energy company's business practices in Burma. GOING TO THE POLLS The group is expected
to play a significant role in the 2004 proxy season, and represents a deeper
movement toward a culture of shareholder activism. One example of this is
the approval by Hewlett-Packard Co. HPQ.N to limit executive severance
packages. Other U.S.
institutions said to be considering taking part include the Connecticut
retirement fund and the labor-affiliated Amalgamated Bank. From Britain, the
Universities Superannuation Scheme Ltd. (USS) and ISIS Asset Management have
been invited to join in organizational talks. All groups together
manage, or have input on the direction of, more than $750 billion in assets,
and their collective influence in corporate boardrooms and executive suites
is expected to be widely watched. "It is certainly
true that we have been asked, and in principle we are always open to the
idea of working with others," said Karina Litvack, head of governance
and socially responsible investing for the London-based ISIS. "But there is no
blank check that we are going to join a coalition. It really depends on what
the coalition does on each case," she said. Copyright ©
2002 Global Action on Aging
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