Harrigan told reporters that the driving force behind the effort was CalPERS’ recent moves to use the $177-billion fund’s muscle to pressure a wide array of companies into adopting a menu of corporate reforms including more closely tying executive compensation to financial performance, the Los Angeles Times reported. As the nation’s largest public pension system controlling the pensions of 1.4 million state employees and retirees, CalPERS is closely watched in the retirement services community.
During Harrigan’s tenure, CalPERS:
- has sought tough investment standards for financial institutions (See State Treasurers Roll Out Mutual Fund Disclosure )
- led efforts to sue to recover losses from bonds issued by Enron Corp.
- pushed for the resignation of New York Stock Exchange Chairman Richard Grasso (See Pension Execs Join Grasso Resignation Call ).
Harrigan, head of CalPERS since early 2003 (See CalPERS Board Backs Labor Official Harrigan for President ), is a union official who serves on the pension fund’s board to represent the state Personnel Board. He told the Times that a majority of his fellow Personnel Board members would vote Wednesday to replace him at the close of his CalPERS term early next year.
The CalPERS official said his reappointment to the CalPERS panel was opposed by three members of the five-member Personnel Board, which oversees the state’s civil service system. Anne Sheehan, an official in Schwarzenegger’s Finance Department and Democrat Maeley Tom are expected instead to support fellow Personnel Board member Ronald Alvarado, an appointee of former Republican Governor Pete Wilson, according to the Times report.
‘Taking Out’ An Advocate?
In his media interview, Harrigan pointed an accusing finger at corporate and political interests – including Walt Disney Co. and supermarket giant Safeway Inc.- which he said were “trying to take out one of the most outspoken advocates on behalf of corporate governance in the country.” Disney Vice President John Spelich called Harrigan’s charges “utterly ridiculous.”.
In March, Harrigan and the CalPERS board were at the
forefront of a shareholder effort to remove Disney Chief
Executive Michael Eisner, who subsequently lost his post as
chairman and announced he would retire in 2006 (See
Eisner Protest Vote
). In May, the pension fund headed a less-successful effort
to oust Safeway CEO Steven Burd (See
Activist Funds Set
Governance Sights on Safeway
). Business groups such as the California Chamber of
Commerce and the California Business Roundtable accused
Harrigan and the CalPERS board of allying themselves with
supermarket unions during a 4 1/2 -month work stoppage at
Safeway and other major grocers in Southern California.
The issue became a political one Monday, when the presidents of several unions and the heads of consumer and retiree groups sent a letter to Personnel Board members, urging that Harrigan be retained. “It would be unconscionable if the (California Governor Arnold) Schwarzenegger administration and a few narrow corporate interests – such as the Chamber of Commerce, who have opposed corporate reform efforts – were to use the [Personnel Board] as a pawn in their fight against shareholders and fundamental fairness in our national’s financial markets,” the letter said, according to the Times.
CalPERS Investment Committee Chairman Rob Feckner, a longtime Harrigan ally, confirmed that Harrigan was expected to be replaced, but vowed that CalPERS corporate activism would continue.
Harrigan, a regional executive for the United Food and Commercial Workers Union, has been a focal point of criticism of CalPERS’ aggressive lobbying efforts (See Clear Conscience? ). Harrigan’s critics accuse him and the CalPERS board of spending more time going after corporations than fulfilling their responsibility to get the best rate of return for retirees. “They were trying inappropriately to influence negotiations, good-faith bargaining between unions and their employers,” said Allan Zaremberg, the California chamber’s president, told the Times.