CalPERS Launches Financial And Retirement Reform Initiative

The California Public Employees' Retirement System's (CalPERS) Board of Administration today urged Congress and the Securities and Exchange Commission to enact retirement and financial reforms. CalPERS is the nation's largest public pension fund.

"Our pensioners and pensioners everywhere depend heavily on ethical, transparent, and accountable financial markets for their retirement future," said Dr. William D. Crist, President of CalPERS Board of Administration. "For more than 10 years, CalPERS has made constructive attempts to improve corporate governance in the United States and abroad," Crist said. "Enron teaches us that in spite of these efforts, shareholder value can be destroyed by faulty corporate governance. It clearly is time for us to tighten the screws."

"Federal agencies, the investor community and corporations themselves can expect to hear from CalPERS over the coming months as we press for change," said Michael Flaherman, Chair of CalPERS Investment Committee. "We want reforms to be put into place soon so that all investors may be ensured of the integrity of our financial markets," he said. "We will continue to be aggressive on behalf of our 1.2 million members."

Other proactive efforts announced by CalPERS today include:

• actively opposing the election of any director who, while sitting on the company's Audit Committee, approved retaining an external audit firm when that firm also provides consulting or internal audit services to a company;
• publicly opposing shareholder approval of any auditor that has been retained by a company for more than five years or also performs consulting or internal audit services to the company;
• joining forces with other significant users of financial statements to provide concrete and responsible accounting standards reform proposals;
• forming a commission to examine ways in which conflicts of interests by investment banks, equity analysts, rating agencies, lending institutions, outside lawyers and other consultants can be identified, disclosed and managed;
• preparing, promoting and pursuing proposals within Congress and the Securities and Exchange Commission that truly strengthen and clarify the meaning and importance of "independent" directors;
• supporting congressional efforts to provide greater retirement security to participants in 401k plans, particularly supporting SB1838 (Boxer/Corzine).

The CalPERS Financial Market Reform Initiative and Action Plan can be found on the System's corporate governance web site - the CalPERS Shareowner Forum - at www.calpers-governance.org.

Rick Meigs, Publisher, 401khelpcenter.com