Archive | CalPERS

CalPERS Muzzles Critics: Michael Flaherman Runs

CalPERS Muzzles Critics

CalPERS Muzzles Critics

CalPERS muzzles critics. The following editorial appeared in the Sacramento Bee on May 25, 1999. The editorial references a “technical violation of board rules” by then Chairman William Crist. Actually, it was a clear violation of the rules, which prohibited changes to candidate statement after submission. No candidate in the history of CalPERS had ever been allowed to change anything in their statement, not even correct small grammatical errors. With the permission of staff, Mr. Crist was allowed to change his statement to address ethical concerns about him that I had raised in my statement. The election was not overturned because CalPERS rules required proof the results of an illegally conducted election would have been different had the rules not been violated. Proof might be obtained in a case of ballot stuffing but not candidate statement rewriting. How can you prove results would have been different in a fair election?

Addendum to CalPERS muzzles critics. Two of those later named in a bribery scandal also voted to muzzle candidates. (As bribery case continues, CalPERS reaps profits from tainted investments, Sacramento Bee, July 24, 2014.) The growing corruption I alluded to in my campaign was real. 

Now I am delighted to learn Michael Flaherman, the only CalPERS director elected by members who stood against the effort by the CalPERS Board to muzzle critics, is running in the upcoming election. See Critic of Wall Street Fees to Leave Calpers Board and my comments in the May 19, 2017 WSJ. If elected, Flaherman will be independent and effective. He has my endorsement, without reservation. Continue Reading →

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California Diversity Forum 2017: Part 2

CalPERS and CalSTRS sponsored the California Diversity Forum in Sacramento (“America’s Most Diverse City”) on Wednesday, May 12, 2017, bringing together investment and corporate executives to discuss how to better capitalize on the abilities of the diverse modern workforce. Diversity is both morally right and profitable. Narrowing the global gender gap would add $12 trillion in annual gross domestic product to global growth (McKinsey Global Institute).

What follows are my cryptic notes from the Diversity Forum. Sometimes they are just phrases I captured that may not mean so much out of context. Maybe it will be just enough to mark your calendar for next year’s Forum. More coverage at Part 1 and on Twitter at #CADiversityForum. I loved the fact that for once, I didn’t have to travel thousands of mile. Nice to have such an event in my own hometown.

Diversity Forum: The Corporate Perspective

Yee, Parcella, Chiames, Hymes

Betty Yee, Babriela Parcella, Paul Chiames, and Victor Hymes

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Human Right to Water Affirmed

Human Right to Water

Human Right to Water

After engagement with shareholders, two California-based water utilities, California Water Service Group (NYSE: CWT) and American States Water (NYSE: AWR), have adopted policies confirming a commitment to support the human right to water. Sparked by shareholder proposals filed last fall by Boston-based socially responsible investment firm NorthStar Asset Management, Inc., these two human right to water policies are the first at California water utilities.

Explained Julie Goodridge, CEO of NorthStar Asset Management:

NorthStar pioneered industry adoption of human right to water principles in 2007 when we filed the first shareholder proposal on the human right to water at a Connecticut-based water utility. In the ensuing decade, successful implementation at multiple companies other than water utilities has resulted in meaningful and tangible changes in company actions. Adding two more water utilities to our list of companies committed to the human right to water is a necessary step toward industry-wide recognition of the human right to water.

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A Response to Yves Smith on CalPERS

Yves SmithYes, The Twelve Days of CalPERS by Yves Smith at naked capitalism is very witty, but it plays into the hands of those who would like to see public pensions dismantled.

I like some of the work Yves Smith has  have been reporting on CalPERS, which obviously needs not only watching but needs to be constantly reminded of its duties, fiduciary and otherwise. Yes, failing to disclose private equity fees is problematic (I’m also glad JJ Jelincic is on the board Pension Pulse: CalPERS’ Partial Disclosure of PE Fees?)… but not long ago former board members were collecting enormous fees from CalPERS and it wasn’t just Villalobos. Continue Reading →

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CalPERS Candidate Forum: September 16, 2014

CalPERS Candidate Forum to be held in the auditorium

CalPERS Auditorium Looking Toward Board Seats

Please attend the upcoming CalPERS Candidate Forum. Sorry, I haven’t been keeping this site up but have concentrated on Corporate Governance. However, another election cycle is coming up at CalPERS. State and local government employees will each elect a candidate. Retirees can’t vote for any of the candidates running in the current election cycle. However, once elected, they will make decisions that impact all of us.

Everyone attending will  have an opportunity to ask candidates tough questions, which they will answer to a live audience and a much larger audience expected to view videos once posted on the Internet. Continue Reading →

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Americans Support Pensions for All

Americans Strongly Support Idea for New Privately Run, Universal, Portable Pension System

A new nationwide public opinion research report finds overwhelming support for Congressional action to provide all Americans with access to a new type of privately run pension plan. The research also finds that Americans remain highly anxious about their retirement prospects (85 percent), and see pensions a way to improve their retirement readiness. Even though their retirement is in the distant future, virtually all Millennials – those born after 1976 for the purposes of this study – agree that the nation’s retirement system is under stress and needs repair (95 percent).

These findings are contained in a new research report, Pensions and Retirement Security 2013: A Roadmap for Policy Makers, issued today by the National Institute on Retirement Security (NIRS) at the organization’s fourth annual retirement policy conference in Washington, D.C.   Conference speakers include Kathleen Kennedy Townsend and other retirement leaders and experts. The full program is available here. Continue Reading →

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$4.5 Million in Bonuses at CalPERS

“Top administrators and investment managers at the California Public Employees’ Retirement System were awarded $4.5 million in bonuses, averaging 41% of their base salaries for the year that ended June 30,” according to a report in the Los Angeles Times. (CalPERS awards $4.5 million in bonuses to managers, 10/8/2011)

The bonuses ranged from a high of 73% of the $240,000 salary of the senior portfolio manager for fixed income to a low of 14% of the $358,280 salary for the senior investment officer in charge of risk management.

While it has been some time since I have reviewed the bonus structure at CalPERS, I suspect much of the criticism I levied in March 2009 would still be applicable. Highlights include:

CalPERS’ bonus structure suffers, to some degree, from characteristics frequently criticized in the corporate sector. Like options grants to corporate executives, CalPERS bonuses are structured with no downside risk, only upside gain. Additionally, adjustments or “clawback” provisions are needed to recoup unearned bonuses.

Points are only awarded, not subtracted. So, managers who do poorly in factors that cost tens of millions can still get a bonus based on factors that yield only tens of thousands.

CalPERS annual bonuses are weighted (1 year performance counts 10%, 3 year 40%, and 5 year 50%) Adjustments to fund valuation aren’t applied retroactively. If there is no mark-to- market accounting, staff might be getting performance bonuses based on a bubble.

CalPERS should award negative points for under-performance and should subtract these from positive basis points. Payments should also be delayed to ensure performance reflects market, rather than book, value. This is especially important for real estate, alternative investment and other managers where value isn’t measured minute by minute, as it is with most equities.

According to the LATimes, “The bonuses are based on rolling averages of returns for the last three years.” That would be a step backwards from the five year look back used previously. See my CalPERS Testimony from March 16, 2009.

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Brown Didn’t Take Easy Path on CalPERS Bills

California’s Governor Jerry Brown signed signed Assembly Bill 873, which prohibits former CalSTRS and CalPERS board members and high-level executives from lobbying their former employers for ten years.  The bill is the most stringent measure yet to get at the “placement agent” scandals that in wrote about back in 1997.

In his signing message, Brown noted “what’s good for the goose, should be good for the gander,” meaning members of the Legislature should send him a similar bill prohibiting former members from lobbying current members for ten years, instead of the current one year limitation.

That seems highly unlikely. In 1997 I testified before a Senate hearing about gift giving at CalPERS. I remember one of the Senators leaning forward and looking at me over his glasses: “…and I suppose you think we shouldn’t be able to take gifts either?” I’m sure many in both chambers would not want to give up a lucrative career in lobbying.

Signing AB 873 was easy. However, Brown vetoed another measure, Senate Bill 439, that no member of either house opposed on the floor. It would have lowered the annual limit on gifts that CalPERS / CalSTRS board members and executives could accept from the current $420, that applies state-wide, to $50 from anyone doing business with CalPERS or CalSTRS.

Brown’s veto message says that the measure would “create a special set of rules that will apply exclusively to CalPERS and CalSTRS” and further complicate an already complex state reporting system without advancing government transparency very much.

Brown did a good job on these bills. While I’m generally against CalPERS / CalSTRS board members and execs accepting gifts, it was unreasonable to single out these two agencies.

I used to be an ethics officer for a department within CalEPA and would frequently get questions from officials wanting to accept small gifts from those doing business with our department. The laws in this area can be quite complex and frequently the cost of my time to answer their questions far exceeded the value of the gift in question.

A $4 sandwich, for example, could end up being valued at a true cost of $100 after factoring in all the expenses of the sponsor. You need to factor in the cost of invitations, speakers, room rental, catering etc. and if it were a poorly attended function that would drive up the cost of that $4 sandwich. This is an area that cries out for reform and simplification but is something that should apply to all public agencies, not just the two largest pension funds.

For more, see Jerry Brown signs one CalPERS bill, vetoes another, Sacramento Bee, 10/7/2011.

What do you think? Did he get it right?

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Retirement Security for All

Hank Kim, Executive Director and Counsel for the National Conference on Public Employee Retirement Systems (NCPERS), has unveiled a proposal for a new type of retirement plan. To those who think CalPERS and pensions for public employees should be abandoned, the proposal offers an alternative. See Retirement Security for All.

The proposed Secure Choice Pension (SCP) is aimed at enhancing retirement security in the private sector by providing workers who are not in a pension plan with a guaranteed, lifetime retirement income that would be immune to stock market fluctuations and economic downturns. The plan would provide the flexibility and portability that a mobile private work force needs, while spreading investment risks and costs over large pools of plan participants and employers, according to a press release.

“Less than half of private sector employees have access to an employer-sponsored retirement plan — and many of those who do simply are not financially prepared for retirement,” said Hank Kim, Esq., Executive Director and Counsel for the National Conference on Public Employee Retirement Systems (NCPERS). “Recent studies have put the gap between what private sector workers are saving and what Continue Reading →

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Bilbrey Wins CalPERS Board Seat

Michael Bilbrey is the apparent winner of a special runoff election to fill a vacancy on the 13-member CalPERS Board of Administration.

According to the unofficial vote count, Bilbrey received 117,034 votes, while Richard Ross received 78,718 votes.  The result is not official until certified by the California Secretary of State’s Office.

Bilbrey and Ross were among a field of eight candidates vying for a member-at-large board seat following the resignation of Kurato Shimada, who left under something of a cloud last August.  A runoff election was held after no candidate received the majority of votes in the first round of the election that took place earlier this spring.  CalPERS regulations, adopted with the support of PERSWatch.net, require the winning candidate to receive a majority of the votes cast.

Bilbrey, a Vice President with the California School Employees Association, will seve out the remainder of the term vacated by Shimada, which ends on January 15, 2014. Learn more about Bilbrey at his campaign web site, bilbrey4calpers.com.

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Videos of CalPERS Candidate Forum Available

Videos are now available from the “CalPERS Candidates’ Forum,” moderated by the League of Women Voters of Sacramento County, on Wednesday, July 6, 2011 in the CalPERS Auditorium. Although less than 50 people showed up for the forum, I expect many more will watch them online. We will need to consider other options for the next forum to ensure a better turnout. Your ideas are welcome. Please e-mail them to [email protected].

In the first round of the current election only 14% of members voted. Let’s hope more vote in the run-off.

CalPERS members as of June 1, 2011 are eligible to vote in the runoff election. Ballot packages were mailed beginning June 30, 2011 and must be postmarked or received by CalPERS on or before July 28, 2011 in order to count. Unofficial election results will be available online in mid-August 2011.  Below are links to documents previously posted by CalPERS and you can click on candidate names to go to Continue Reading →

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CalPERS Candidate Forum July 6th

CalPERS Auditorium Looking Toward Board Seats

PERSWatch.net will sponsor a “CalPERS Candidates’ Forum,” moderated by the League of Women Voters of Sacramento County, on Wednesday, July 6, 2011 from 6:00 p.m. to 8:00 p.m. The forum will take place in the CalPERS Auditorium, Lincoln Plaza North, 400 P St., Sacramento, California. Free parking will be available under the building. Enter on the Q Street side between 3rd and 5th Streets.

As discussed below, no new information is forthcoming from CalPERS regarding the candidates. Candidate statements and videos remain unchanged for the runoff. Although you may find some new information on candidate websites, you know these are essentially ads, created to put candidates in the best light possible. At our forum you can put candidates on the spot with tough questions and compare them side by side.

Democracy is a two way street. It works best when an educated electorate fully participates and evaluates the candidates – their experience, qualifications, platform, dedication – whatever you place as high priorities. Hopefully, engagement with members continues after the election to ensure directors are truly representing our interests.

In the first round of the current election only 14% of members voted. Perhaps low turnout is attributable to a low interest or knowledge, a declining sense that voting as a civic duty, the difficulty of voting, or limited contact with the candidates. Whatever the reason, I personally can’t remember a time when the stakes were higher.

Both candidates running in the Special Runoff Election, to fill the Member-At-Large Position B vacancy, have confirmed their attendance. The forum is open to all CalPERS members, media and the general public and is free of charge. Attendees will have the opportunity to submit questions to the candidates via question cards, available upon arrival. League volunteers will group and consolidate questions submitted in order to avoid repetition and cover a broad range of material.

No food or drinks will be allowed in the Auditorium. Seating is limited. Please minimize the use of perfume and cologne out of respect for those with asthma or chemical sensitivities. In addition, please arrive several minutes in advance so the program can start on time without distraction.

Since there was no majority vote winner in the balloting held earlier this year, a runoff election will be held between the two candidates who received the highest number of votes, Michael Bilbrey and Richard H. Ross. As a result of a random drawing, Bilbrey’s name will appear first on the ballot.

CalPERS members as of June 1, 2011 are eligible to vote in the runoff election. Ballot packages will be mailed beginning June 30, 2011 and must be postmarked or received by CalPERS on or before July 28, 2011 in order to count. Unofficial election results will be available online in mid-August 2011.  Below are links to documents previously posted by CalPERS and you can click on candidate names to go to their campaign sites.

Richard H. Ross

Michael Bilbrey

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CalPERS Runoff: Bilbrey & Ross — CalPERS Forum July 6

Michael Bilbrey got 46,032 preliminary count votes. Richard Ross placed second with 26,522 votes to qualify for a runoff. Donna Snodgrass and David Miller were close behind with 24,101 and 23,627 respectively. Ballots go out June 30 and are due back July 28. PERSWatch.net will hold another CalPERS Candidate Forum on July 6, from 6-8 pm, in the CalPERS auditorium at 400 P Street, Sacramento. The League of Women Voters of Sacramento County will again facilitate the forum.

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CalPERS Candidates’ Forum

PERSWatch sponsored the “CalPERS Candidates’ Forum,” moderated by the League of Women Voters of Sacramento County, on Tuesday, April 26, 2011. The forum took place in the CalPERS Auditorium, Lincoln Plaza North, 400 P Street, Sacramento, California.

Seven candidates running in the Special Election, to fill the Member-At-Large Position B vacancy, participated in the event. This forum was open to all CalPERS members, media and the general public. Attendees had the opportunity to submit questions to the candidates via question cards.

Over 120 people were able to attend in person, twice the number that attended our last CalPERS Candidates’ Forum and four times the number that attended our first forum. We hope these forums will improve the dialogue between candidates, CalPERS members, and the general public, as well as helping members make more informed voting choices.

Special thanks to the League of Women Voters of Sacramento County for facilitating the Forum and to CalPERS for the use of their auditorium and for creating the following videos so that those of you who could not attend in person can still benefit from this effort.

  1. Video: Introduction and Opening Statements, Part 1Read the transcript (PDF, 33 KB)
  2. Video: Question and Answer Session, Part 2Read the transcript (PDF, 45 KB)
  3. Video: Question and Answer Session, Part 3Read the transcript (PDF, 56 KB)
  4. Video: Closing Statements and Conclusion, Part 4Read the transcript (PDF, 28 KB)

Please remember to vote by May 20, 2011. Thanks to the election reform efforts of PERSWatch, if no candidate receives a majority vote in the initial election, a runoff election will be conducted between the two candidates who received the highest number of votes.

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CalPERS Ambassador Program

If you are a retiree, hopefully, you saw the brief article on the Ambassador Program in the California State Retiree or on the CSEA Retirees Inc. website. If you aren’t a retiree, contact CalPERS at the e-mail below and ask them if you can attend as well. You may need to take some time off from work, but it could be a good investment of your time. Now, as Paul Harvey used to say, “the rest of the story.”

According to Scott Yates, newly hired to run the Office of Stakeholder Relations, the CalPERS Ambassador Program has been built in line with the successful Ambassador Program run by the Public Employee’s System of Nevada (NVPERS). Mr. Yates and his staff studied how NVPERS’ Ambassador program educates and empowers their volunteer corps of Ambassadors to communicate the facts about public pensions in Nevada. They are trained to communicate facts with their friends and neighbors, engage community and business leaders, and to work with the editorial boards of community newspapers. Volunteers are not Continue Reading →

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Organizing for Retirement Security

Disclaimer: These are my notes from the second day of a conference of mostly California pension funds. I try, but don’t guarantee accuracy. These notes are very abbreviated and do not cover several speakers.

The LA Trustees Roundup keeps getting better every year. If you’re a trustee or even just a member of a public pension fund, you should plan on attending next year. Coverage of day one: AM sessions, PM sessions.

Pension Plan Attacks: State and National Efforts to Eliminate Quality Retirements in the Public and Private Sector

Hank Kim, National Conference of Public Employee Retirement Systems

We used to suffer from benign neglect. Public sector employees and unions were an after-thought when it came Continue Reading →

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Cost of “Air Time” May Rise Soon

The CalPERS Board will consider lowering its investment return expectations from the current 7.75 percent to 7.5 percent.  If you are a CaPERS member and are thinking about buying “air time.” If the discount rate is changed, it will apply to all applications postmarked on or after March 17, 2011.

Lowering the discount rate to 7.5% will result in an increase in cost for members to purchase service. Costs are expected to increase between 2% and 5%. (The State Worker: How CalPERS’ rate change would affect ‘air time’ purchases, 3/10/2011)

“Air Time” or Additional Retirement Service Credit (ARSC) gives active CalPERS members with five years of earned service credit the opportunity to purchase from one to five years of additional service credit to increase their unmodified retirement allowance. Note that purchased Airtime does not change eligibility for additional benefits (e.g., retirement, disability, death, or any other benefit).

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Protect Your Pension

The Los Angeles Trustee Network invites a frank discussion of issues:

  • On February 28, Corporate Governance. What initiatives will help preserve our pension funds’ long-term value?  Have the risks to pension funds been clearly identified? Have the risks been mitigated?  If not, what are our priorities for this year and going forward?
  • On March 1, Tactics for Improving Pension Plans Sustainability. Attacks on the very Continue Reading →

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Don’t Toss That Proxy! Learn From CalPERS

Resolution MB 8/09, approved at CSEA’s last General Council, sought to expand on the leadership CalPERS has shown in the area of corporate governance by exploring how CalPERS could better influence the proxy voting of its own members and in helping us to evaluate which mutual funds vote in alignment with our own values and those of CalPERS.

In response to our request, CalPERS will be dramatically increasing the number of proxy votes they announce in advance in order to influence how we vote in corporate elections. This increased communication will be a two-way street. As members become more aware of how CalPERS votes, we may also have recommendations as to how they should vote. I would be happy to hear from CSEA members and other organizations that represent CalPERS members in that regard. Continue Reading →

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CalPERS Election and Candidate Forum April 26


400 P StreetCandidate Forum

As we have during the last two CalPERS elections, PERSWatch will sponsor a candidate forum so that members and the general public can meet and ask questions of the candidates. The forum for the Member-At-Large candidates will be held on April 26, 2010 from 6:00 p.m. – 8:00 p.m. in the CalPERS auditorium at 400 P Street, Sacramento. The “CalPERS Candidates’ Forum” will be moderated by the League of Women Voters of Sacramento County.

Notice of the Forum will be highlighted in the Spring edition of the CalPERS PERSpective. CalPERS will also include notice in the ballot package. A video of the Forum will be archived on the CalPERS and PERSWatch websites. We are delighted to be sponsoring this event and are thrilled that all eight candidates have agreed to participate.

Please, no food, drinks or campaign materials will be allowed in the auditorium. Continue Reading →

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Diehr Elected: Another Candidate Forum Planned

George Diehr has been officially re-elected to the board of administration of CalPERS, as the state elected member. Diehr received 77.5% of the votes; Inderjit Kallirai received 22.4%. Only 28,373 votes were cast by state and Cal State University employees out of about 340,000 eligible voters. We tried to boost interest and voting by holding a candidate forum, also sparsely attended. (see Candidate Forum coverage)

Diehr, who was first elected to the CalPERS’ board in 2002 is vice president of the board and chairs the powerful investment committee. Rob Feckner, current president of the CalPERS board and the school representative, and Priya Mathur, public agency representative, both ran unopposed and were already declared winners.

With the recent resignation of Kurato Shimada, there will be another election at CalPERS next spring. With no incumbent running and since the seat is elected by all members of the system, I expect much higher interest and intend to sponsor another candidate forum.

I may ask candidates a number of questions in advance of the forum so that potential voters and the public have a better understanding of their positions on the issues even before a forum is held. I did this before the 2009 Forum. (see CalPERSCandateResponses2009, a pdf file file with Q&A from 2009). Please send your suggestions for candidate questions, as well as ideas about Candidate Forum sponsors and format via email or by posting comments here (You must register before posting comments. No spam will be posted. To register, see bottom right column under Administration.)

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CalPERS Bonuses

The AP’s Cathy Bussewitz has done a very good job on a topic that I warned needed more attention. (AP Investigation: Calif. pension bonuses examined, 10/21/2010)

CalPERS’ plunging value came as stock values tumbled around the world, the state’s economy suffered its worst decline in decades and basic state services faced severe budget cuts.

Virtually all of CalPERS’ investment managers were awarded bonuses of more than $10,000 each, with several earning bonuses of more than $100,000 during the 2008-09 fiscal year. The cash awards were distributed as the fund lost $59 billion.

This makes CalPERS seem very bad. However, as the article goes on to point out, CalPERS was following normal practices at public pension plans. They’ve improved since then but could probably still use some additional reform. Maybe the AP article will result in a further reexamination of bonuses as CalPERS, other pension funds, and corporations.

In my March 2009 testimony to the CalPERS Performance and Compensation Committee, I warned:

CalPERS’ bonus structure suffers, to some degree, from characteristics frequently criticized in the corporate sector. Like options grants to corporate executives, CalPERS bonuses are structured with no downside risk, only upside gain. Additionally, adjustments or “clawback” provisions are needed to recoup unearned bonuses…

Additionally, it is my understanding that CalPERS annual bonuses are weighted (1 year performance counts 10%, 3 year 40%, and 5 year 50%) and that adjustments to fund valuation aren’t applied retroactively. If there is no mark-to- market accounting, staff might be getting performance bonuses based on a bubble. While the 1, 3, and 5-year bases give greater weight to long-term performance, since negative points aren’t considered, there is really no penalty for artificially spiking performance.

CalPERS should award negative points for under-performance and should subtract these from positive basis points. Payments should also be delayed to ensure performance reflects market, rather than book, value. This is especially important for real estate, alternative investment and other managers where value isn’t measured minute by minute, as it is with most equities.

Think about paying on a one or two year delay. Spread payout even more or scale it back if CalPERS is in a down cycle or the employee quits. In fact, if they quit, perhaps they should forgo their final year of performance pay. These reforms would not only better align pay with performance, they would decrease staff turnover and guard against a possible public relations nightmare.

CalPERS responds:

CalPERS Board has made some changes to the compensation program to increase accountability. The new features include: the Board can defer, cut or eliminate performance awards if the fund’s fiscal year absolute return is less than zero percent, or for any other reason.

  • Awards only given to staff employed by CalPERS at the time the award is to be paid, except in the case of involuntary separation without cause.
  • Eligible employees must be in compliance with all regulatory requirements and ethics and conflict-of-interest policies.
  • CalPERS can also require repayment of a performance award, with interest, if within three years of the payment it is discovered the employee was not entitled to the award because of a policy violation.

While these are improvements, in my opinion they still should:

  • Award negative points for under-performance and subtract those from positive basis points.
  • Delay payments by two years.
  • Claw back based on accounting adjustments, not just policy violations.
  • Substantially reduce bonuses in the case of employees who are terminated or quit.
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Candidate Forum

Through PERSWatch.net, I had the distinct pleasure of sponsoring a second CalPERS Candidate Forum (the first was last year), thanks to co-sponsorship by the Sacramento Central Labor Council, facilitation by the League of Women Voters of Sacramento County, use of the CalSTRS Boardroom, video by CalPERS and cooperation from 2010 State Board Election candidate Inderjit Kallirai and incumbent George Diehr, as well as unopposed School incumbent Rob Feckner and unopposed and Public Agency incumbent Priya Mathur. As I indicate in the opening video, my hope is not only that such forums will become routine at CalPERS but that CalPERS will push similar forums at corporations facing director election contests either through proxy access or the normal route.

Q&A Part 1

Q&A Part 2

Closing Statements and Conclusion

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At CalPERS: One Pleads the 5th, One Quits

CalPERS announced that Kurato Shimada resigned yesterday to focus on “personal matters.”

“It’s with sadness that I accepted Kurato Shimada’s resignation from our Board today,” said Rob Feckner, CalPERS Board President. “We appreciate his desire to focus on personal matters and wish him well.” CalPERS will be scheduling a special election to fill his vacant seat. Press Release, August 31, 2010.

Shimada occupied one of two “at-large” seats on the CalPERS Board. Earlier in the day, the Sacramento Bee reported focused on former Board member Charles Valdes, who for many years, occupied the other at-large seat. From that Bee report:

In court papers, the state introduced written testimony from Buenrostro’s ex-wife Melissa Nevis, who said Villalobos once gave $500 in casino chips to Valdes and either of two other men: CalPERS board member Kurato Shimada and former board member Robert Carlson…

Questioned by a state lawyer, former board member Charles Valdes invoked his Fifth Amendment right against self-incrimination 126 times in closed-door testimony this month. Former CalPERS board member refuses to answer questions (SacBee, 8/31/10)

Today, the Bee provided further clarification, stating that “Shimada hasn’t been accused of any wrongdoing in the pension fund’s bribery scandal.” CalPERS board member with ties to Villalobos resigns, SacBee, 9/1/10.

Shimada served two separate stints on the board. The first ended in 1999, and a year later he went to work for Villalobos. The two pitched an investment deal to CalPERS in 2000 on behalf of Los Angeles real estate firm CIM Group. CalPERS eventually invested $400 million with CIM, which paid Villalobos’ firm a $9.6 million fee. Called to testify in July in Villalobos’ bankruptcy case, Shimada said he earned more than $40,000 on the deal. Shimada rejoined the CalPERS board in 2002. He served a total of 21 years.

And there’s this from the LATimes (Villalobos bankruptcy judge is skeptical that state’s suit won’t get in the way, 9/1/10)

On Tuesday, the state Legislature passed a bill to regulate placement agents and their fees for directing public pension money to investment firms. The investment industry at first strongly opposed the bill but later withdrew its objections.

That bill, AB 1743 (Hernandez), will require placement agents with respect to public retirement systems to register as lobbyists. This would have many disclosure and economic consequences for placement agents and their employers. One of these consequences will be a ban on contingent compensation. (Placement Agent Bill Passes, calcorporatelaw.com)

CalPERS earlier enacted regulations regarding placement agents but they weren’t adopted according to the legal requirements of the Administrative Procedure Act. Southern California attorney, Keith Bishop, filed for a determination with the Office of Administrative Law to invalidate the underground regulations.

I also filed in support of that petition. However, OAL took the position that CalPERS’ certification of non-enforcement of the May guidelines deprived them of any ability to take action, since they can only rule on underground regulations that an agency intends to enforce. See past determinations (bottom of page) made by OAL at my request. At least this time CalPERS appears to be following up their underground regulations with real regulations.

I’ve probably run for the Board at CalPERS more than anyone else who never got elected. Each time it was very frustrating trying to get the attention of the press. They always seem ready to jump on any scandal at CalPERS but none of them have ever vetted or endorsed candidates prior to the election. Here’s something I wrote for a guest commentary in the Sacramento News & Review (Don’t overlook CalPERS election, 9/14/06):

When I asked the Sacramento Bee to consider making an endorsement, it told me the fall elections would “demand our full attention during the political season.” The paper only had time to focus on elections of importance to its readers.

When I’ve given talks in Shanghai or London about corporate governance, no one questions the importance of CalPERS. Yet, neither our local nor our national press seem to think CalPERS elections are important enough to cover. Perhaps that’s one reason why the number of candidates for office has dwindled. Years ago, almost one hundred candidates filed in a single year. This year, three seats were up for election. Only one seat is contested. Apathy is rampant, even as the press seems to carry more and more stories of problems.

CalPERS members need to give much more thought to how they vote in their elections. The press should also step up to the plate. Instead of sniping at CalPERS at every turn, they should live up to their responsibilities by not only investigating and endorsing candidates before elections but doing a much better job of covering Board activities throughout the year.

For the second year in a row, I’m co-sponsoring an opportunity for CalPERS members, concerned taxpayers and the press to meet and question Board candidates on the issues before they are voted into office. See 2010 Board Member Election & Candidate Forum.

I’m delighted to report that all candidates, including those with no opponents, have agreed to attend. I’m hoping it will stimulate more interest in and coverage of the election. I’m also hoping corporate directors will participate in similar forums when faced with proxy contests or proxy access director nominee challengers. Shouldn’t we be able to question potential directors before voting?

Given the continuing feeling of powerlessness, it seems to be harder for voters and investors to stand up and say “yes, we can!” However, if we don’t, our situation may only get worse.

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2010 Board Member Election & Candidate Forum

The CalPERS Board of Administration consists of 13 members – six elected by members, three are appointed, and four are “ex officio” representatives.

A State Board member election will be held this fall. The term of office will be January 16, 2011 – January 15, 2015. You are eligible to vote if you are an active CalPERS State member (employed at a CalPERS-covered agency) on July 1, 2010. A ballot package will be mailed to your home September 3, 2010 and you can vote for a candidate through October 1, 2010. (More Information.)

Elections for the Public Agency and School seats won’t be held, since the incumbents, Rob Feckner and Priya Mathur, are unopposed. Request for certification of their election will be submitted to the Secretary of State, along with the unofficial election results of the 2010 State Board Member Election, in October 2010.

2010 CalPERS Candidates’ Forum

CalSTRS HQs

On September 7, 2010, from 6:00 p.m. – 7:30 p.m., the Sacramento Central Labor Council and PERSWatch.net will host a “CalPERS Candidates’ Forum,” moderated by the League of Women Voters of Sacramento County. The forum will be held in the CalSTRS Boardroom at 100 Waterfront Place in West Sacramento, next to the pyramid. This is your opportunity to meet and question the candidates. Email James McRitchie for more information.

A video of the forum will be archived on the CalPERS website. We are delighted to be cosponsoring this event and are delighted that all candidates, even those who have no opposition, have agreed to participate. This is your opportunity to meet the candidates and to ask them all those tough questions. No reservations are required, just show up.

For those of you who attended last year’s forum, this year will be different. We expect to have many more in attendance, since all candidates have agreed to participate and since it will be held in the CalSTRS boardroom, a very convenient location for many. Please be sure to arrive a few minutes before 6 pm. Seating is limited to 95 people. Sorry, no food or drinks (other than bottled water) are allowed in the CalSTRS boardroom. Please bring a pen or pencil. All questions presented to the candidates must be in writing and will be screened and sorted by League volunteers.

One way to ensure you are kept up-to-date is to join the PERSWatch mailing list using the form at the top of the column to the right. We will not share your e-mail address with others and we won’t barrage your in-box with e-mail.

Parking Update (8/25/10): CalSTRS provides about 30 spaces in the uncovered lot in front every evening for the public and there is more than enough free street parking to handle the rest of those expected to attend. parking is also available in the covered garage at the rate of $1 per half hour. However, there will be no attendant on duty when the forum ends, so you will need to use your credit card to pay in order to exit the parking building.

If planning to park in the uncovered lot in front of the building, don’t arrive earlier than 5:00 pm or about 5:10 pm. That’s when the arm will be lifted. In addition to a few spaces on Waterfront Place, there is an entire block of free spaces on the other side of the building (E Street), more street parking on the circle leading into the back side of the Ziggurat building garage, and apparently a free row of spaces in the Zig garage (back side) – lots of choices.

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CalPERS muzzles critics

CalPERS-logo

CalPERS Ballot rules protect board, keep others in the dark

“Self-serving” is what one critic called the vote last week to sharply limit what candidates for the California Public Employees Retirement System board can include in their ballot statements. Certainly, “self-serving” is one word that characterizes that vote. “Anti-democratic,” “chilling” and “wrong” are among the others.

In a decision sweeping in its arrogance and disregard for First Amendment speech rights, the CalPERS board voted 9-4 to restrict ballot statements to “a recitation of the candidate’s personal background and qualifications” — and nothing more. Incredibly, board members even voted to delete a proposal by their staff that would have allowed ballot statements to include “candidates’ opinion or positions on issues of general concern to the system’s membership.” Continue Reading →

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