The CalPERS head, an advocate of corporate reform, has alienated big
business. Unions, retirees and consumer groups want him to stay.
By Marc
Lifsher Times Staff Writer
November 30, 2004
SACRAMENTO — The
head of the California Public Employees' Retirement System said Monday that he
was being ousted from the board of the nation's largest public pension fund,
where his efforts to use its $177-billion investment portfolio to push an array
of corporate reforms have roused the ire of business interests.
Sean
Harrigan, president of CalPERS since early 2003, is a union official who serves
on the pension fund's panel as the representative of the state Personnel Board.
He said he had been told that a majority of his fellow Personnel Board members
would vote Wednesday to replace him when his CalPERS term expires early next
year.
CalPERS controls the retirement funds of 1.4 million state
employees and retirees. Investing its huge pool of money gives the fund clout as
it uses its big ownership stakes in companies to influence their behavior and
advance causes such as reining in executive pay.
Harrigan accused
members of Gov. Arnold Schwarzenegger's administration of lobbying to have him
removed, but he didn't offer solid evidence. He said corporate and political
interests — including Walt Disney Co. and supermarket giant Safeway Inc. — were
"trying to take out one of the most outspoken advocates on behalf of corporate
governance in the country."
A spokesman for the Republican governor
dismissed Harrigan's assertion as a "conspiracy theory." Disney Vice President
John Spelich called Harrigan's charges "utterly ridiculous." Safeway did not
return calls seeking comment.
The issue became a political one Monday,
when the presidents of several unions and the heads of consumer and retiree
groups sent a letter to Personnel Board members, urging that Harrigan be
retained.
"It would be unconscionable if the Schwarzenegger
administration and a few narrow corporate interests — such as the Chamber of
Commerce, who have opposed corporate reform efforts — were to use the [Personnel
Board] as a pawn in their fight against shareholders and fundamental fairness in
our national's financial markets," the letter said.
CalPERS Investment
Committee Chairman Rob Feckner, a longtime Harrigan ally, confirmed that
Harrigan was expected to be replaced, but said that his colleague's departure
would not diminish CalPERS' corporate activism. But state Treasurer Phil
Angelides, a likely Democratic candidate for governor in 2006, said replacing
Harrigan would send a signal to public pension funds to back away from
pressuring large companies to change the way they operate.
Harrigan, a
regional executive for the United Food and Commercial Workers Union, has been a
focal point of criticism of CalPERS' aggressive lobbying efforts. In March,
Harrigan and the CalPERS board were at the forefront of a shareholder effort to
remove Disney Chief Executive Michael Eisner, who subsequently lost his post as
chairman and announced he would retire in 2006. In May, the pension fund headed
a less-successful effort to force the resignation of Safeway CEO Steven Burd.
Business groups such as the California Chamber of Commerce and the
California Business Roundtable accused Harrigan and the CalPERS board of allying
themselves with supermarket unions during a 4 1/2 -month work stoppage at
Safeway and other major grocers in Southern California.
"They were
trying inappropriately to influence negotiations, good-faith bargaining between
unions and their employers," said Allan Zaremberg, the California chamber's
president.
Zaremberg and Bill Hauck, president of California Business
Roundtable, denied asking the Schwarzenegger administration to work for
Harrigan's removal from the CalPERS board.
Harrigan said his
reappointment to the CalPERS panel was opposed by three members of the
five-member Personnel Board, which oversees the state's civil service system.
Anne Sheehan, an official in Schwarzenegger's Finance Department, and Democrat
Maeley Tom are expected instead to support fellow Personnel Board member Ronald
Alvarado, an appointee of former Republican Gov. Pete Wilson.
Tom told
Harrigan this fall that someone else should have "an opportunity to serve" on
the CalPERS board, Harrigan said. Tom and Alvarado declined to discuss
Harrigan's status or the upcoming vote, said a Personnel Board
spokeswoman.
Harrigan has sought tough investment standards for financial
institutions, led efforts to sue to recover losses from bonds issued by Enron
Corp. and pushed for the resignation of New York Stock Exchange Chairman Richard
Grasso. In recent weeks, the CalPERS board adopted a policy endorsed by him of
voting against corporate directors who allow excessive executive
pay.
Harrigan's critics accuse him and the CalPERS board of spending more
time going after corporations than fulfilling their responsibility to get the
best rate of return for retirees.
Under his leadership, the fund earned
a 23.3% return in 2003 and gained 4.6% in the first nine months of this year,
when the stock market struggled.
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