The nation’s two largest public pension funds will urge corporate boards to disclose political campaign contributions, a response to a court decision lifting the lid on some donations that do not have to be reported.
The California Public Employees Retirement System adopted the policy last week on a split vote. An opponent, board member Dan Dunmoyer, said “this has more political overtones than policy benefit.”
The California State Teachers Retirement System adopted the policy early this month. The California Chamber of Commerce warned that public companies who report contributions might be at a competitive disadvantage to private firms who do not report.
The pension boards acted at the request of state Treasurer Bill Lockyer. He cited a U.S. Supreme Court decision last year that allows unlimited corporate and labor union political contributions to independent campaigns, but not directly to candidates.
The ruling in the Citizens United suit also upholds federal rules requiring the reporting of political contributions. But the disclosure requirements do not apply to trade associations and nonprofit groups.
“Increasingly, corporations are using such groups in an attempt to cloak massive political spending in secrecy through ‘independent expenditure’ campaigns, many of which are notorious for making unfair and unfounded personal attacks with which no company or its investors would want to be publicly associated,” Lockyer said in a letter to the pension boards last June.
“When such contributions are uncovered, public backlash often follows, and the economic and reputation risks to such companies are significant,” he said.
The pension funds added the reporting of political campaign contributions to their wide-ranging corporate governance policy, which began in the 1980s as a response to “greenmail” payments to prevent hostile takeovers and other problems.
Pension fund corporate governance expanded to pushing reforms aimed at correcting poor performance. With their large stock holdings, institutional investors have the means to represent shareholder interests and some say the responsibility.
Academic studies have suggested that investment returns may be improved and risk reduced by pushing corporations on environmental, social and governance issues, often referred to as ESG.
Pension funds and other big investors pursue these goals through a number of organizations. Among them: Council of Institutional Investors, International Corporate Governance Network and United Nations’ Principles for Responsible Investing.
Both of the big California pension funds have corporate governance units that engage corporations, pushing for reform. CalPERS decided last fall to stop publicizing an annual “Focus List” of poorly performing corporations.
Some said it was a needlessly heavy-handed “name and shame” tactic. A Wilshire consultant analysis given to the CalPERS board this month said that “privately engaged companies outperformed the publicly engaged companies.”
A big governance issue is the selection and composition of corporate boards. A pension fund-backed provision in federal legislation last year allowed shareowners holding 3 percent of company stock for three years to put board candidates on corporate ballots.
But in a business-backed lawsuit, a Securities and Exchange Commission rule allowing “proxy access” was overturned by an appeals court. The two California pension funds and others urged the SEC to issue new proxy access rules.
Some studies suggest that diversity can improve corporate board performance, particularly by adding women. CalPERS and CalSTRS created a listing of potential board candidates this year, the Diverse Director DataSource.
The shareholder clout of pension funds has been openly used for political ends. Legislation directed CalPERS and CalSTRS to divest South African-related stock during apartheid, and the pension funds voluntarily divested tobacco stock.
Consultants estimated that the boycotts cost the two pension funds billions of dollars, with no hard evidence of any results. Last month Gov. Brown signed legislation, AB 1151, to reinforce previous legislation on Iran divestments.
The view that the vast stock holdings of labor-friendly pension funds are potentially political is not new. A book in 1976 by the late Peter Drucker is still cited today: “The Unseen Revolution: How Pension Fund Socialism came to America.”
The president of the U.S. Chamber of Commerce competitiveness center, David Hirschmann, said in a news release last year “the proxy access rule empowers unions and other special interests at the expense of the vast majority of retail shareholders.”
In the CalPERS board discussion of corporate campaign contribution reporting, Dunmoyer said he thought the policy had “more political overtones than policy benefit” because there is no clear evidence that reporting benefits the pension fund.
The letter from Treasurer Lockyer last June cited two studies showing “the negative impact of corporate political spending” on shareholder value. Last week Lockyer said there also are academic arguments on the other side.
“So I think the point is mixed but probably subject to additional and future research,” he said.
Dunmoyer said he strongly supports campaign contribution reporting. But he argued that the new policy would give private firms that do not report contributions an advantage over publicly traded firms that do report them.
He mentioned competition for government contracts and defending against a monopoly or other actions that could harm a publicly traded company and “impact” its bottom line.
At the CalSTRS board, Jennifer Berrera of the California Chamber of Commerce gave the example of a publicly traded company reporting a campaign contribution that drew criticism from members of the “political arena” or the public.
“That private corporation may be doing the very same thing,” she said, “but because they won’t be required to disclose they would not be subject to that same criticism.”
In a presentation to the CalSTRS board last June on the reporting issue, Valentina Judge of the Center for Political Accountability said Target gave a $150,000 contribution to a group that supported a Republican candidate opposed to same-sex marriage.
Gay rights groups organized a boycott of Target stores, Judge said, resulting in media attention, a shareholder resolution and a “huge controversy” for the corporation that still lingers.
“We bring up the Target example because it really is sort of a perfect case of all the things that we are talking about,” Judge told the board.
Brad Smith, chairman of the Center for Competitive Politics, said in an opinion article in the Wall Street Journal on Nov. 10 that the boycott fizzled and had no effect on Target’s stock price.
He said Judge’s Center for Political Accountability is leading an effort by the political left to “convince American businesses to voluntarily disarm and leave the playing fields to unions and foundation-funded lobbying groups.”
Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at https://calpensions.com/ Posted 21 Nov 11
Calpensions 
November 21, 2011 at 3:22 pm
It IS 100% political, but I have no problem with it.
We need the big $$$ OUT of the political arena. Same goes for public unions. we need to cap and have their money disclosed in the same manner. Two evils.
November 21, 2011 at 6:28 pm
This is an excellent argument for getting the control of the Calpers board out of the hands of political union activists who know little to nothing about investments and into the hands of impartial professionals. Time for the legislature to move forward with the governor’s proposed governance reforms – at a minimum!
November 21, 2011 at 7:29 pm
Shane, would you mind explaining what you are getting at. There are six of 13 Board Members, who are elected by the CalPERS members, and they are that, because of their financial managment expertise, not because they might have been a member of a union, at some previous time. All of the other members are CA elected officials, or appointees of the Governor, and I don’t think any of those are union activists. The CalPERS investment officers should be the ones depended on, to make the proper investments.
Yes, I agree the legislature should move forward with the governor’s proposed reforms–after they have been thorougly vetted, and amended.
November 22, 2011 at 8:55 am
seesaw, I see you have been posting on the LA Times again 😛
November 22, 2011 at 6:45 pm
And?
November 22, 2011 at 10:33 pm
We live in his head Seesaw– he dreams of us………spooky troll— no life! OUUUUUCH
November 22, 2011 at 11:31 pm
I need to pay Teddy rent I have camped out in your mind so long 😛
November 23, 2011 at 4:21 pm
case in point– see the above post!
November 23, 2011 at 4:24 pm
Teddy, I have my rent check made out for camping in your mind, where do you want me to send it 😛
November 23, 2011 at 9:30 pm
case in point yet again…the above post…lol….this is just too easy !!
November 24, 2011 at 1:59 am
Which of your 100 names do I make it out to 🙂
November 24, 2011 at 3:15 am
lol— case in point yet again! I live in the Poodle’s head…..he can’t stop talking about me! WOW little buddy! Quick— type another post– I am in your head right now calling your name!
November 24, 2011 at 4:38 pm
Teddy, send me the gimmick handle you want me to write the ckeck to!
BAM!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
OK, time to go have some Teddy…opps..I mean TURKEY 😛
November 25, 2011 at 5:09 am
LOL case in point yet again! He can’t get me outta his head! Bing bang boom! This is too easy!
November 25, 2011 at 8:21 am
Oh…that Teddy…err..TURKEY dinner was so gooooddd!!!!!!
BOOM!!!!!!!!!!!!!!!!!! 😛
November 25, 2011 at 5:05 pm
I live in the poodle’s head! He can’t stop! Wouldn’t the day be more useful to you if you went out to look for a job! OOOOOOOOUch! lol
November 26, 2011 at 3:13 am
Teddy, I owe you rent for this month!
November 26, 2011 at 6:05 am
ok little buddy— have the last one it’s on me little troll! It’s fun living in your head…..”RENT FREE” ! Bam—- OOOuch! OK— Type now slave troll!!!!! lol
November 26, 2011 at 6:43 am
You two ought to apologize to the author of this column.
November 26, 2011 at 6:45 am
seesaw, he should PAY me and Teddy for keeping this place from turning into Dullsville 😛
Dullsville is what happened to OC Watchdog once Rex was put in time out 😉
November 26, 2011 at 6:47 am
OK Teddy Steals and seesaw, Rex is crashing for the night, no more barkyuntil morning time 😛
November 26, 2011 at 2:47 pm
Correct Seesaw– I apologize—- It was too easy spinning the troll up– I will stop….
November 26, 2011 at 2:59 pm
New Topic—- 64 cents of every Calpers pension dollar paid out comes from the investment pool—- for the last 20 years! pretty good I would say!
November 26, 2011 at 6:30 pm
New Topic- 99 cents of every dollar CalTURDS has and receives from invetsments the last 10 years is from taxpayers! Pretty good I would say.
November 26, 2011 at 6:49 pm
I think, Ted, until the recent global, financial collapse, it had been 75 cents of every benefit dollar.
Rex, it is a question of who is providing the money, and where is it being directed. You will never get the money out of politics. (I would never have cast my vote for Meg Whitman, knowing what her plans were, for the use, of her own stockpile.)
The leaders of CalPERS and CalSTRS should have as much information, as possible, about the ideological aims of the movers and shakers in the financial entities, with which they place their, respective, investment dollars. There is nothing secretive about the public unions.
November 26, 2011 at 7:04 pm
Rex, your, “Kindergartner”, antics contributed to pushing the OCR away, from anonymous commenting, and now, you are bound and determined to destroy any remaining avenues, for our discourse.
November 26, 2011 at 7:37 pm
I think, Ted, until the recent global, financial collapse, it had been 75 cents of every benefit dollar.
Me thinks you are wrong- again! Look, the taxpayers cover 95%-100% of the contributions, and the money from investments comes from that 90%+ so the employee is paying less than 10% of their pensions costs, probably less than 5%.
Rex, your, “Kindergartner”, antics contributed to pushing the OCR away, from anonymous commenting, .
Says who??? YOU!!!!
I think it was Teddy Steals comments that forced the change myself, remember, I was long gone by the time they changed format.
Rex, your, “Kindergartner”, antics contributed to pushing the OCR away, from anonymous commenting, and now, you are bound and determined to destroy any remaining avenues, for our discourse.
Seesaw, you have no idea how much that hurts me 😛 I guess if I am kindergarten, then you and Teddy are preschoolers 🙂 I’ll bring my ratlles and other toys for you next week!
November 27, 2011 at 3:31 pm
The Poodle troll can’t accept the fact that the majority of pension benefits are paid from the fund—which of course means little so called taxpayer funds——- the amount paid in by the employee (and employer) is compensation money –once a salary is earned for services taxpayers have no claim on it— or do you think employees are like slaves and should work for free? LOL Of course you do——-and this is where you lose all cred!
November 27, 2011 at 10:08 pm
Teddy, your nose grew 50 feet with that whopper. Many public employees pay NOTHING, not even THEIR share.
November 27, 2011 at 11:04 pm
ya see Poodle– that comment is unworthy of a response– it’s disrespectful, arrogant and of course–wrong. Many employes pay, the employer part can be viewed as employee earned and the rest is investment earned—- how you convolute that as nothing of the employees is beyond me since in all cases they gave at least 40 hours of their time for it a week! I feel sorry for ya little friend!
November 28, 2011 at 12:31 am
Rex, if an employee paid nothing out of their gross wages, the contribution to the pension fund, paid by the employer, was a bargained benefit, and was earned, as part of compensation. You are going to have to get over it. You can whine about it 24/hrs. a day, and its going to result in nothing, but your elevated blood pressure.
November 28, 2011 at 3:50 am
Oh brother, that old whopper lie that the scam was a “bargained for benefit”….seesaw, your nose is now as long as Teddy Steals!
Biggest bunch of lies ever told……….Can you two say “Central Falls RI” 😛
November 28, 2011 at 3:51 am
And when those Central Falls type cuts come here to CA I am going to say;
“You are going to have to get over it. You can whine about it 24/hrs. a day, and its going to result in nothing, but your elevated blood pressure.”
November 28, 2011 at 6:23 am
Rex you obviously know nothing about how the collective bargaining process works. Yes, the pension amount that my employer paid, was bargained in lieu, of a salary increase. If you are going to discuss issues, you should start from a point, of knowledge, about your subject–you don’t just call something a lie, because you don’t like the reality, that it is the truth. I have no worry that Central Falls-type cuts are going to affect my pension. If such should happen, I would deal with whatever needs to be dealt with. Your silly threats, are a joke.
November 28, 2011 at 6:45 am
There is no good reason to raise taxes and fees when wage concessions are available. CA public employees wages must reflect California’s ability to pay, not what other munis are paying.
November 28, 2011 at 6:58 am
Wage concessions have been ongoing for the last three years. in many public entities. I don’t think you will have a say, in how they draw up the salary schedules, in your area, unless you are going, to be elected, to office. Even if you were, you can’t just go in and demand wage deductions–there we are back at that collective bargaining process, again.
November 28, 2011 at 4:06 pm
.It has been common for cities and counties to pay both parts — the normal employee share as well as the employer contributions.
http://www.latimes.com/news/local/la-me-city-pensions-20111128,0,1938506.story
OK, I was right AGAIN 😛
November 28, 2011 at 5:26 pm
in some places little fella but in many places employees pay…..sorry.
November 28, 2011 at 6:44 pm
Regardless of how the total amount due to the Pension Plan is split between the employer and the employee, it is all determined in the process of Collective Bargaining.
November 28, 2011 at 7:21 pm
Ted, please leave the third grade, and join the adult world. This is serious stuff, and we only have a few sites left, that allow posting, without joining Facebook.
November 28, 2011 at 9:20 pm
Seesaw– What’s your beef with my last comment? I responded to Rex in what I think is the correct manner with the correct information….. I agrere this stuff is important but I don’t suffer fools gladly—
November 29, 2011 at 12:17 am
No beef with your comment. Just a beef with your continuing change of screern names. It helps to give credibility to one’s words, if we know where they are coming from–are you a public sector worker, a doctor, a pension actuary, or what?
November 29, 2011 at 12:31 am
Seesaw— I don’t know what to tell you amigo— I guess you believe what “Rex The Wonder Dog” says about identities. I have no idea at all about what Rex The Wonder Dog is talking about re my thinking he was a Register employee etc etc etc—-My name is and has been some version of Ted Steele—– Obviously “Seesaw”, Ted is not my real name. Do you want me to post in some other way?
November 29, 2011 at 7:08 am
Ted, why do you playact, about your identity, with Rex? Are you just trying, to put some humor, into his drab existence? I know that Rex has always used multiple screen names, and, I believe that he is a dissaffected, former school teacher. I post with an anonymous screen name, but there has never been any pretense, on my part, about who I am–a retired, miscellaneous public employee. That provided the experience, where from, I speak. Skipper has told us that he is former LE, and Charles has stated that , he is a retired CalTrans Engineer. I believe them, and would be disappointed, to learn that their true identities were other, than what they say. If somebody says they are a rocket scientist, I would like to believe that’s what they are. Of course, I know you are not that, because you have been, a dozen other things. I have decided that, for covert reasons, you are not able to give the slightest hint, about your true identity–I am going to respect that probability, and will not bother you about it, any more.
November 29, 2011 at 2:42 pm
Good.
November 29, 2011 at 10:18 pm
Ted, why do you playact, about your identity, with Rex?
Because I nusted Teddy on his100+ gimmick handles, and he thought I worlded atteh OCR!!!!!!!!!!!!!!
Are you just trying, to put some humor, into his drab existence?
That crushed me seesaw, I may never recover from that insult 🙂
I know that Rex has always used multiple screen names,
seesaw, Rex does NOT use “multiple screen names”, where do you come up with this nonsense???
Put the bong down seesaw, you have already lost too many brain cells.
November 29, 2011 at 10:20 pm
Teddy Dork, Serious clown posting under 100 sock puppet accounts
Fixed!!!!!!!!!!!!!!!!!!! 😉
November 30, 2011 at 2:46 pm
you got fixed?
December 3, 2011 at 4:23 am
Hi “Cormac”!