Calpers is one of the largest and most active US pension funds in the corporate governance. It is a founding leader in the field of activism .The famous programmes of Calpers in US targeted cooperation's like IBM, American Express, Kmart and Sears(1) . It is the third largest pension fund in the world and serves more than one million members and beneficiaries including state, local and government members.(2)
In 1984-87, corporate governance at Calpers started reacting to the anti-take over action of corporate mangers leading to a dissonant chord. During the period of 1980's and 1990's Calpers learned a great deal about the rules and methods to influence corporate managers.(3) Calpers includes participatory effective involvement of shareholders. The issues raised by Calpers includes eliminating staggered boards, working towards the independence of directors and confidentiality of voting during elections.(4)
Calper is the precursor of institutional activism. Since Calpers is considered as the leader of the world and proponent of shareholder activism by institutional investors, it is necessary to highlights the standards and global requirements of Calpers on corporate governance.(5)
Corporate governance at Calpers refers to the relationships among various members participating in the performance and direction of corporation. Primarily on the corporate governance, Calpers as a institution actively published an annual "focus list" in 1992 and since then the annual report is being published every year.(6).The focus list caters the ability to produce excess returns to Calpers assets. The programme refers to an annual process which identifies companies dealing with domestic internal equity portfolio focusing towards poor economic performance and poor corporate governance.(facts at a glance: corporate governance,2010,pg 3)
It acts as a cautious element in incorporating social values into corporate governance on the grounds of compromising a fiduciary responsibility of its trustees.(7) and focuses on changing the companies governance practices by emphasizing on accountability, transparency independence and discipline in order to improve shareowner wealth.(facts at a glance: corporate governance,2010 pg2)
Calpers work as an investor and provider of a long term of capital and play a major role in the improvement and integrity of financial reporting. Financial reporting plays an important role in investors and financial market participants in order to allocate resources and decisions.
The initiatives facilitated by Calpers provide leadership among the share owners. The initiatives include engaging audit committee directors through National Association of corporation directors and regulate to assist with auditor, market reform and accurate financial reporting. It also seeks opportunities which caters the engagement of stock exchanges, equity market regulators, authorities of government and institutional investors to promote reforms which improves executive compensation disclosure .(facts at a glance: corporate governance,2010 pg2).
1. An international comparison of Corporate Governance models, Gregary Francesco Maassen, Third edition 2002,pg 86
2. Pension power unions, pension funds and social investment in Canada, Isla Carmichael,2005pg
3. Global principles of accountable corporate governance,march2009,pg-7
4. .Pension power unions, pension funds and social investment in Canada, Isla carmichael,2005pg
5.The influence of institutional investors on corporate management and corporate governance in Germany, Bysebastican Sturm, a multipurpose analysis /diploma thesis ,2008,pg 26
6. The oxford handbook of corporate social responsibility, Andrew crane , Abagial MC.William, Dirk Matlen, Jeremy moon, Donalds siegel,2008
7. Pension power unions, pension funds and social investment in Canada, Isla carmichael,2005pg
8. The frank J.Fabozzi series handbook of alternative assets, second edition, Wiley finance mark J.P anson,2006, pg 692
CALPERS Global Corporate Governance Principles
1. Optimizing share owner return: corporate governance practices should focus the board attention on optimizing the company's operating performances, profitability and return to shareowners.
2. Accountability: Directors should be accountable to shareowners and management accountable to directors.
3. Transparency: Operating financial and governance information about companies must be readily transparent to permit accurate market comparisons. The disclosure and transparency of objective globally accepted minimum accounting standards such as international financial reporting standards
4. One share/one vote: All shares must be treated equitably and upon the principles of one share/one vote
5. Proxy materials: Proxy material should be written in a manner designed to provide shareowners with the information necessary to make informed voting decisions. It should be distributed in a manner designed to encourage share owner participation. All ownership whether caste in person or by proxy should be formally counted with vote outcome formally announced.
6. Code of best practices: Each market where shares are distributed should adopt its own code of best practices to promote transparency of information, investor protection and corporate social responsibility. Where such a code is adopted, companies should disclose to their share owners whether they are in compliance.
7. Long term vision: Corporate directors and management should have a long term vision that emphasis sustained owner ship value. Despite different investment strategies and tactics, share owner should encourage corporate management to resist short term behaviour by supporting and rewarding long term superior returns.
8. Access to director nominations: Shareowners should have effective access to the directors nomination process.
Source: Global principles of accountable corporate governance, march2009, pg 9
Calpers has established global principles of governance with minimum requirements of corporate governance in markets throughout the World. International Corporate Programme adopted (1996) aims at establishing governance principles which recognizes differences in markets in UK, France, Germany and Japan.
