Ex-CalPERS Chief: Schwarzenegger, Eisner, Burd behind Ouster

January 3, 2005 (PLANSPONSOR.com) - Sean Harrigan, ousted earlier this month as president of the California Public Employees Retirement System (CalPERS), says his removal was politcally motivated.

In a telephone interview with the Associated Press, Sean Harrigan still points the finger of blame at California Governor Arnold Schwarzenegger, The Walt Disney Co., and Safeway Inc., as having played significant parts in the ouster movement (See  Harrigan Moved Aside at CalPERS  ).

“I was totally convinced in early December and late November, and I’m totally convinced today, the Chamber of Commerce and (Safeway CEO) Steve Burd and (Disney CEO) Michael Eisner and the Schwarzenegger administration played a key role in making sure I wasn’t re-elected,” Harrigan told the AP. “It was the only place they could take me out.”

Of Harrigan’s comments, Schwarzenegger spokeswoman Margita Thompson told the AP, “It’s too bad the holiday season hasn’t done away with Mr. Harrigan’s paranoia.”

Board Talk

CalPERS, the nation’s largest public pension system, led unsuccessful efforts in 2004 to strip the board seats of Eisner and Burd. Though Eisner eventually lost his post as Disney chairman (See   Eisner Protest Vote Reaches 43% ), the action against Burd (See  Activist Funds Set Governance Sights on Safeway ) proved especially controversial, coming after the United Food and Commercial Workers ended a strike against Safeway. Harrigan, 58, also works as an executive with the union.

Harrigan joined the CalPERS board in December 1999 as a representative of the California State Personnel Board, which oversees labor-management issues for state employees. Labeling his position as CalPERS president “the greatest bully pulpit in the world,”   he led a drive among institutional investors for rule changes at the US Securities and Exchange Commission to let shareholders nominate their own company directors (See  Pension Funds Propose Enhancing Shareholder Power at Disney ), as well as a wide variety of other corporate governance reform efforts – moves that ultimately proved extremely controversial (See   Running the Fund: Clear Conscience? ).

Harrigan told the AP that he’s pleased with reforms taken by the New York Stock Exchange and called new standards separating investment and research departments at investment banks among CalPERS’ biggest accomplishments on his watch. But he said it’s “50-50” whether public pension funds and other institutional investors will win the “crown jewel of corporate governance reform,” the ability to nominate their own directors. “There’s tremendous pressure from the Business Roundtable, the Chamber of Commerce, individual companies and the Bush administration not to support this rule,” he said.

Recent Developments

Fight over the issue continued late last week as the pension funds appealed to the US Securities and Exchange Commission (SEC) (See  Funds Appeal SEC Staff Disney Proxy Access Decision ) following word that SEC staff members had reversed their earlier decision and were now siding with the Disney’s efforts to keep a shareholder director nomination proposal from being considered at its annual meeting, (See  SEC Staff Does About Face on Disney Proxy Issue  ). Even though SEC staff had originally told Disney on December 8 it could not exclude the funds’ director nomination plan from its annual proxy materials, an SEC official doubled back on that judgment last week by telling the entertainment company that staff members had now decided there was “some basis” for its efforts to block the funds’ proposal.

The $182.8 billion CalPERS controls the retirement funds of 1.4 million state employees.