In a prepared letter, Angelides laid out his “Power of the Purse” principals for investors to follow when deciding which companies to invest in.
“These principals are based on a simple premise: that investors can use their market force to restore integrity to our financial system if they are willing to mobilize and take action in the cause of corporate reform,” according to the letter, ” the Treasurer’s Office calls on investors from across the nation to take the actions embodied in the principles.”
Those principals are:
- Demand Ethical Conduct – use market strength to demand the highest levels of ethical conduct and transparency
- Act Like Owners – participate in shareholder votes to voice your opinion of corporate actions
- Reward Value, Not Greed – restore “rationality to the realm of executive pay” by rewarding executives for sustained performance
- Pursue New Investment Strategies – embrace a more active, rather than passive, form of investment portfolio management
- Send a Message: Company Conduct Counts – invest in companies that act diligently
- Reward the Creation of Long-Term Value – encourage people of good character to serve on corporate boards
Angelides, who sits on the board of both California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), said in the letter that California is already taking some of these steps. Recently, the California State Treasurer’s Office prohibited business deals with expatriate US companies and adopted a set of Investment Protection Principals requiring banks and money managers to meet new standards of disclosure.
A full text of the prepared letter and the “Power of the Purse” principles can be found at http://www.treasurer.ca.gov/publications/PowerofthePurse.pdf .