CalPERS Targets a Dozen Proxy Targets

April 12, 2004 ( - California Public Employees Retirement System (CalPERS) continues to show its willingness to throw its considerable weight around as the 2004 annual meeting season progresses.

When the $167-billion organization – the largest U.S. public pension fund – holds back on its proxy votes to protest what it says are corporate misdeeds, corporate executives typically find CalPERS’ activist officials hard to ignore.

So it wasn’t surprising that the fund  announced twelve new proxy targets from which it will withhold votes of its often substantial share blocks, Reuters reported. The targets include:

Citigroup Inc.

CalPERS has vowed to withhold votes for Citigroup Inc. Chairman Sanford Weill and Chief Executive Charles Prince to serve as directors of the world’s largest financial services company.

CalPERS, which said it can vote 26,712,930 shares at Citigroup’s April 20 annual meeting, said Prince has business relationships with the company that the fund believes could impair his objectivity.

It also said Weill, who was Citigroup’s chief executive from 1998 to 2003, “had a significant role” in several scandals affecting the company and “should be held accountable for the substantial costs incurred by settling civil investigations of the company’s improper practices and conflicts of interest between the investment research department and the investment banking unit.”

Burlington Resources Inc.

The fund also vowed to withhold proxy votes for six directors on the board of oil and gas producer Burlington Resources Inc., citing perceived conflicts of interest.

CalPERS targets are directors Reuben Anderson, Laird Grant, Robert Harding, and Donald Roberts because they are members of Burlington Resources’ audit committee, which has approved the company’s auditor to provide non-audit services.

Additionally, the fund said it would withhold votes from directors Kenneth Orce and Walter Scott because they have business relationships the fund believes could impair their objectivity. CalPERS holds 1.1 million shares in Burlington Resources.

Charter One Financial Inc

The fund plans to withhold its vote from four directors at financial holding company Charter One Financial Inc. and vote against ratifying Deloitte & Touche LLP as the company’s auditor.

CalPERS said it would vote against approving amendments to a 1997 stock option and incentive plan because the plan “does not contain significant performance-based components.”

CalPERS said it would vote against ratifying Deloitte & Touche as independent auditor for 2004 because Deloitte has also performed non-audit services for the company.

CalPERS said it plans to withhold its vote for reelection of Patrick Agnew, 61, as director because Agnew is an affiliated outsider on the company’s nominating committee. Agnew has been a director since 1989, and was president and chief operating officer of St. Paul Bancorp before it merged with Charter One in 1999.

CalPERS said it plans to withhold its vote for Jerome Schostak, 70, because he is an insider who is on the compensation committee. It also plans to withhold votes for Ronald Poe, 65, and Mark Schaevsky, 68, because they authorized the company’s auditor to perform non-audit services.