Angelides Takes Aim at Exec Comp

November 9, 2004 ( - California State Treasurer Phil Angelides has called on the state's two giant public pension plans to prod four companies to reform their executive compensation practices.

The California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), could also try to enlist other large institutional investors to join the movement, Angelides said in the statement.

Angelides unveiled his “Spotlight Four List” of “poorly performing: companies whose top executives hauled down the lion’s share of stock options and grants given by the companies, according to a Web site  statement , Angelides said the four firms spotlighted bad practices, and that companies in general need to:

  • curb excessive executive compensation
  • broaden the distribution of their equity compensation plans to more employees
  • more clearly link compensation to performance.

The companies on the Angelides target list include:

  • UnitedGlobalCom Inc., Denver (communications)
  • UNUMProvident Corp., Chattanooga, Tennessee (Insurance)
  • AES Corp., Arlington, Virginia (utilities/energy)
  • Omnicare Inc., Covington, Kentucky (pharmaceuticals).

Angelides said that the companies in 2003 – the latest figures available – granted a range of 89% to 59% of all equity compensation to the top five executives of the companies, despite “dismal” records of five-year stock performance, ending December 31, 2003. The four companies highlighted are among the “most egregious” violators of new executive compensation policies adopted last year by CalPERS and CalSTRS for the 1,000 largest companies in which the funds invest their money, Angelides said.

Shareholders must be willing to reward sustained performance and the creation of value, Angelides said in the Web statement said. “At the same time,” he added, “we as large, pension fund investors must flex our ‘power of the purse’ to oppose compensation plans that benefit only executives, at the expense of shareholders.”