Clout, Conflicts and Controversies: Everything about CalPERS is BIG

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     As for CalPERS investor activism, that dates to the dark days of greenmail in the 1970s, when well-financed would-be takeover artists bought large chunks of stock and sold them back to worried companies — Texaco was the poster child in this practice — at a hefty premium to market price.  Because these shakedowns diminished the book value of the remaining outstanding stock, other shareholders, including CalPERS, had to pay the difference.            

     Jesse Unruh, state treasurer at the time, and others formed the Council of Institutional Investors to oppose the practice, and ever since, CalPERS has been increasingly embroiled in very public disputes with managements and boards of companies across the country.            

     At first, the senior investment executives of CalPERS could not get the time of day from most companies.  Requests for meetings were curtly denied or, often, simply ignored.  Soon, CalPERS learned the value of a well-crafted press release, and more and more companies grudgingly acquiesced — not necessarily to CalPERS demands for reform, but at least to high-level meetings.

The fund generates controversy like a Michael Moore film.  Even some state employees are unhappy, claiming its healthcare policies favor holding down costs instead of increasing services.

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