The Corporations Couldn’t Tolerate My Activist Voice

As president of the $177.8-billion California Public Employees Retirement System for the last two years, I have had a unique platform to voice the concerns of shareowners across America. I have spoken out -- amid a torrent of criticism from the U.S. Chamber of Commerce and the Business Roundtable -- about the integrity of America’s corporations.

At CalPERS, we have castigated company leaders over their failure to perform, for their poor compensation policies and practices, for accounting fraud, for misuse of company funds. We have formed alliances with others and taken on giants such as WorldCom, Adelphia, AOL/Time Warner and Wellpoint Anthem. We helped behind the scenes to develop the Sarbanes-Oxley legislation, we adopted investment protection principles for our managers to follow, and just three weeks ago we announced big plans to go after CEOs who give themselves huge pay packages without merit. We have named plenty of bad actors: Dick Grasso at the New York Stock Exchange, Michael Eisner at Disney and Steve Burd at Safeway. It has been my duty to speak out on behalf of CalPERS against despicable business practices and individual greed not for some political reason, but because of the financial harm caused to the retirement security of the 1.4 million public servants and retirees we represent.

CalPERS has stepped on many toes. The Wall Street Journal said in apparent glee that I was hoist with my own petard; that having played politics, I became a victim of CalPERS politics. I agree politics were played, but they were played by those interests that want corporate reformers to lie down and die. I consider criticism of me and CalPERS a badge of honor because we have been effective agents for change. CalPERS is the best friend an investor can have.

As I end my tenure as president of the board -- involuntarily -- I want to call out what I believe is the core problem that leads to all other problems in the boardrooms of America’s worst companies. The root of all evil is a director who fails to put the shareowners’ interest above all other interests in making decisions in the boardroom.

Too many individual company directors are doing the bidding of the CEOs and their cronies, not what is best for the owners of the company. Until the culture of the boardroom changes, CalPERS and other corporate reformists will never stop banging doors down demanding change.

I was forced out by behind-the-scenes maneuverings of Arnold Schwarzenegger’s administration and the powerful interests in the U.S. Chamber of Commerce. You won’t find their fingerprints on my removal, but the record is replete with Republican and Chamber of Commerce operatives condemning my role. They think they can, through this action, derail our reform agenda.

But even if I’m kept out of CalPERS, it won’t work. I believe that the attempt to silence one voice will be so repugnant that it will awaken a chorus of thousands more to speak out against corporate wrongdoing each and every time it raises its ugly head.

The Securities and Exchange Commission has before it now the “proxy access” proposed rule that would give shareowners more of a say in nominating directors of the worst companies, using the proxy to do so. This rule is the mother lode of meaningful corporate reform, and now the same interests that quieted my voice are holding this proposed rule hostage at the SEC.

It is time for individual investors throughout America to break this logjam, to call and write the SEC and demand that this vital tool of shareowner protection be approved now.

The corporate-governance movement in America has become a mighty current. It can’t be stopped -- not by politicians or pawns of politicians, not by arrogant CEOs who plow all the money in the world to try to push us out of the way, not even by powerful lobbies such as the U.S. Chamber of Commerce or the Business Roundtable that spend millions each year fighting to maintain cozy board rooms. They are playing a losing hand because I believe “right is might” and right will prevail in the end.