Stanford Group Issues Pension Governance Standards

June 4, 2007 ( - A committee of the Stanford Institutional Investors' Forum at Stanford Law School, in cooperation with the Arthur and Toni Rembe Rock Center for Corporate Governance, have announced new standards designed to improve fund governance and curb abuse of fund assets

The Clapman Report, a set of best practice principles for managing pension, endowment, and charitable funds, calls for institutional investors to adopt basic policies aimed at improving how they govern themselves, according to a press release.  

Among the Clapman Report recommendations are that funds should:

clearly define and make publicly available their governance rules;

mandate tough and transparent policies to address conflicts of interest;

take steps to ensure funds have trustees who are competent in financial and accounting matters; establish clear reporting authority between trustees and staff; and

define appropriate responsibilities and delegation of duties among fund trustees, staff, and outside consultants.  

The press release referenced several unrelated instances of high-profile scandals that it said “painfully illustrate the need for tougher governance standards”:

Governance issues have plagued charitable funds as well, according to the press release, including the Getty Foundation, whose president resigned amid accusations ranging from inappropriate funding of mortgage loans to using museum assets for personal benefit.

"As a committee we were bound by a central belief: fundamental fund governance standards ought to exist to safeguard beneficiaries' assets from questionable-and often illegal-practices, and to protect the taxpayers who end up footing the bill when institutional investors fail," said Peter Clapman, CEO of Governance for Owners USA, former chief investment counsel of TIAA-CREF, and chairman of the Stanford Institutional Investors' Forum's Committee on Fund Governance.

The committee has asked the Council of Institutional Investors (CII), a not-for-profit association of 130 public, labor, and corporate pension funds with assets exceeding $3 trillion, and Institutional Shareholder Services (ISS), a respected and influential provider of voter advisory and corporate governance solutions to the institutional marketplace, to encourage its members and clients to adopt the Clapman principles.

The report is available at