Independence-Minded Xerox Nominates Ann Reese to Board

April 18, 2003 ( - Xerox Corp. has nominated an outsider to its board of directors less than three weeks after the California Public Employees' Retirement System (CalPERS) labeled the company public enemy number one for corporate governance issues.

Ann Reese, the former chief financial officer for ITT Corp. and current executive director of the Center for Adoption Policy Institute, was Xerox’s choice to bring an independent director on board.   With the selection of Reese, Xerox says 78% of its proposed board has been deemed to be independent of the company, with only Anne Mulcahy, the company’s chairman, and Yotaro Kobayashi, chairman of Xerox affiliate Fuji Xerox Co., not classifed as independent. Shareholders will vote on the selection in May, according to a Reuters report.

The move comes less than three weeks after CalPERS, the nation’s largest public pension fund, put the Stamford, Connecticut based company at the top of its 2003 list of America’s poorest corporate performers.    Among the complaints the fund had about Xerox was its small, stagnant board of directors and the lack of separation between the positions of chairman and CEO (See  CalPERS Releases Corporate Governance Focus For 2003 ).

However, Xerox was not alone on this year’s list.  Selecting from a $131 billion pool of investments in more than 1,800 US companies, CalPERS based its decisions on stock performance, corporate governance practices and an analysis of a company’s economic value-added (EVA) evaluation, net operating profit after tax, minus its cost of capital.     When it was all said and done, CalPERS drew the cross-hairs on six companies it will target:

  • Gemstar-TV Guide International Inc
  • JDS Uniphase Corp
  • Manugistics Group, Inc
  • Midway Games Inc
  • Parametric Technology
CalPERS spokesman Brad Pacheco told that “we are pleased they added an independent director to the board.”    However, referencing a letter dated March 26, 2003 sent from CalPERS’s Director of Corporate Governance Ted White, to Mulchay, Pacheco added the action comes up short saying, “we would like them to move further beyond this and add a couple other independent directors to the board.”   No comment was offered on the selection of Reese.