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Pension fund may overhaul voting policy

Monday, June 28, 2004 | 9:04 a.m.

SACRAMENTO -- California's state pension fund, the nation's largest public plan, may overhaul its voting policy after opposing directors at a record 83 percent of all the companies it holds this proxy season.

The cascade of "no" votes ensnared even billionaire Warren Buffett, a long-time advocate for shareholder rights and former U.S. Treasury Secretary Robert Rubin. It was mostly the result of a new policy of voting against any director who gave outside nonaudit contracts to their auditors.

The fund is trying to call attention to directors who don't respond to shareholders and have business links to the company that may compromise independence. Calpers withheld votes from 40 percent of the 1,500 directors who stood for election at 214 of the largest companies by sales -- and dislodged none of them.

The fund's "inflexible approach" may backfire, said California Controller Steve Westly, a Calpers board member who is calling for an overhaul of the voting policies. "Calpers adopted a scatter-shot approach," Westly said in an interview. "We need to hit the bad guys. Calpers hit everybody."

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