CalPERS is putting the screws to board dissent
Later this week, the CalPERS board will consider a new rule that requires board members to submit articles and other materials to the CEO rather than transmitting them directly to fellow board members. The CEO will then determine the appropriateness of forwarding the material to the rest of the board. The pension’s counsel claims that this new rule is needed to remain in compliance with the state’s public records law, known as Bagley-Keene. Bagley-Keene isn’t a model of clarity and I’m not in the habit of reading it. However after reading the statute, I’m hard pressed to understand how the proposed rule has anything to do with the open meeting law.
Yet again, the financial press hasn’t picked up this pending rule change. It was left to Naked Capitalism to unearth this proposal. Moreover, NC has also figured out that CalPERS has been reproducing full-length articles of copyrighted material on its internal website without permission from the owners of the content. This is one more example of bad governance from a supposedly sophisticated organization.
The rule’s real purpose is to snuff out dissent, stifle discussion, and give the professional staff unfettered control of the pension. Having observed hours of board and committee meetings on the Internet, I already thought that dissent and discussion were extremely limited and that the professional staff had too much control over the proceedings. The proposed reinforces the bad corporate governance model of the nation’s largest public pension plan.
In advance of the meeting, board members should be doing the very thing this rule would proscribe. They should be gathering the evidence and opinions necessary to meet this proposed rule with the rebuke it deserves. Despite the outrageousness of this proposal, I’m betting that only one board member will raise concerns. Sadly, JJ Jelinicic will be leaving the board.
CalPERS claims to be an enlightened investor that promotes high standards of corporate governance for the companies in which it has an investment. Those lofty principles do not appear to apply to CalPERS itself.