A recent examination of the “CalPERS Effect” by Wilshire found that Non-Focus List companies outperformed Focus List companies. Only the “worst” offenders are “named and shamed” on the Focus List. More receptive companies may already have engaged reform and are likely to move more quickly to better governance standards, improving the performance of those stocks more and more rapidly. (October 15, 2010 letter)
At its next meeting, the CalPERS Board will consider changes to their Focus List Program. Some of the more significant changes are as follows:
- Limit review to larger companies with greater CalPERS holdings.
- More consideration of
- Board quality – skill-sets, diversity
- Environmental & social issues
- Risk management process
Let me know if you see anything problematic in the proposed revision of focus list methodology. Better summary of changes by Responsible Investor, CalPERS in radical rethink of company engagement, 11/10/2010. Update: CalPERS press release, 11/15/2010.