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CalPERS Wants To Crack Down On Conflicts Of Interest

Compliance Week | November 9, 2004

The nation’s largest public pension fund, the California Public Employees’ Retirement System, recently fired off a letter to the Fortune 100 CEOs, asking them to disclose any “interested-party transactions.” Specifically, the fund wants the CEOs to provide information on directors and executives who hold a financial interest in companies with which the CEOs do business. CalPERS is also wants to know which directors and officers hold an interest in companies acquired by the CEOs.


The letter’s author, CalPERS Chief Investment Officer Mark Anson, writes that the pension fund is very concerned about recent news reports of these conflicts of interests, and that they “undermine the very essence of a director’s or senior management’s fiduciary duty to shareowners.”

In the letter, which is dated Nov. 1, Anson wrote that CalPERS is requesting disclosure on the following items:

  • The name of any entity that has done any business with the company in which any director or member of senior management has an economic interest;
  • The nature of the business relationship between the entity and the company;
  • Any policies or procedures that in place governing these interested-party transactions.

CalPERS’ Corporate Governance Program Portfolio Manager William Sherwood-McGrew will be collecting responses. The pension fund has said it will withhold votes for any directors who have conflicts, and that it would use the information in compiling its annual Focus List.

The letter can be downloaded from the box above, right.