UPDATE 3-Calpers adds Disney, 3 others to performance list
June 09, 2004 7:33:00 PM ET
(Adds Emerson Electric, Maytag and Harrigan comments)
By Jim Christie
SAN FRANCISCO, June 9 (Reuters) - Calpers, the biggest U.S. pension fund, said on Wednesday it had placed Walt Disney Co. (DIS), Royal Dutch/Shell , Emerson Electric Co. (EMR) and Maytag Corp. (MYG) on its "focus list" for poor financial and corporate governance performance.
Sean Harrigan, president of the California Public Employees' Retirement System, said each of the four companies required corporate governance reforms to "restore long-term profitability and investor confidence."
Disney was not immediately available for comment.
A spokesman for Emerson said the manufacturer of products ranging from industrial automation equipment to closet organizers "completely" disagreed with Calpers' decision.
Royal Dutch/Shell spokeswoman Bianca Ruakere said the oil company had started to address shareholder concerns. "We have already conducted a very thorough review," she said. "If we have not implemented changes, we are in the process of implementing them."
Roger Scholten, Maytag's senior vice president and general counsel, said in a statement the company had discussed Calpers' concerns on several occasions and has adopted or is in the process of adopting several of the fund's suggestions.
He noted that 10 of Maytag's 11 directors are independent and that much of the compensation to Maytag's chief executive and senior executives is tied to financial performance.
DISNEY'S PERFORMANCE AT ISSUE
Calpers said it put Disney on its focus list because of "continuing issues with corporate governance" at the entertainment conglomerate.
The $166-billion pension fund, an aggressive corporate governance and shareholder rights activist, and other state pension funds have accused Disney's board of being a rubber stamp for management and criticized its long-term strategy.
The funds led a protest at Disney's March annual meeting, but relations appeared to have improved after a May meeting between pension leaders and some Disney board members.
Calpers did not repeat calls for Chief Executive Michael Eisner's ouster after the May meeting, and after the meeting funds said they liked Disney's response to their issues and were waiting for actions such as linking executive pay to company performance and setting up an investors' committee.
However, Calpers continues to have concerns about Eisner's leadership and Disney's share performance. "You look at Disney over the last seven to 10 years and their performance has been abysmal," Harrigan told Reuters.
Calpers put Royal Dutch/Shell on its list because the company's stock has lagged its peers for five years and the company restated oil reserves downwards twice this year. Additionally, Calpers said it is concerned the company's board has failed to respond effectively to shareholder demands.
Emerson made the list because of its board structure and a retirement package for its chairman that Calpers called "excessive." The fund said it wanted Emerson to renegotiate terms of Chairman and Chief Executive Charles Knight's contract, a demand ruled out by the company.
Calpers noted that Maytag's stock has lost more than 40 percent of its value over the last five years through March 31, the company's debt has "drastically" increased and its board has refused to implement shareholder-backed proposals.
Harrigan said Calpers meant to send a strong message: "At the end of the day, Maytag would not commit to addressing the major concerns we had," he said.
Companies on Calpers annual focus lists have a history of corporate reforms that help improve returns for investors, it said. Shares of companies on its 2003 list rose by an average 64 percent, compared with an increase of 26 percent posted by the Standard & Poor's 500 Index . (Additional reporting by Peter Henderson in Los Angeles and Michael Kahn in San Francisco) REUTERS
June 09, 2004 7:33:00 PM ET
(Adds Emerson Electric, Maytag and Harrigan comments)
By Jim Christie
SAN FRANCISCO, June 9 (Reuters) - Calpers, the biggest U.S. pension fund, said on Wednesday it had placed Walt Disney Co. (DIS), Royal Dutch/Shell , Emerson Electric Co. (EMR) and Maytag Corp. (MYG) on its "focus list" for poor financial and corporate governance performance.
Sean Harrigan, president of the California Public Employees' Retirement System, said each of the four companies required corporate governance reforms to "restore long-term profitability and investor confidence."
Disney was not immediately available for comment.
A spokesman for Emerson said the manufacturer of products ranging from industrial automation equipment to closet organizers "completely" disagreed with Calpers' decision.
Royal Dutch/Shell spokeswoman Bianca Ruakere said the oil company had started to address shareholder concerns. "We have already conducted a very thorough review," she said. "If we have not implemented changes, we are in the process of implementing them."
Roger Scholten, Maytag's senior vice president and general counsel, said in a statement the company had discussed Calpers' concerns on several occasions and has adopted or is in the process of adopting several of the fund's suggestions.
He noted that 10 of Maytag's 11 directors are independent and that much of the compensation to Maytag's chief executive and senior executives is tied to financial performance.
DISNEY'S PERFORMANCE AT ISSUE
Calpers said it put Disney on its focus list because of "continuing issues with corporate governance" at the entertainment conglomerate.
The $166-billion pension fund, an aggressive corporate governance and shareholder rights activist, and other state pension funds have accused Disney's board of being a rubber stamp for management and criticized its long-term strategy.
The funds led a protest at Disney's March annual meeting, but relations appeared to have improved after a May meeting between pension leaders and some Disney board members.
Calpers did not repeat calls for Chief Executive Michael Eisner's ouster after the May meeting, and after the meeting funds said they liked Disney's response to their issues and were waiting for actions such as linking executive pay to company performance and setting up an investors' committee.
However, Calpers continues to have concerns about Eisner's leadership and Disney's share performance. "You look at Disney over the last seven to 10 years and their performance has been abysmal," Harrigan told Reuters.
Calpers put Royal Dutch/Shell on its list because the company's stock has lagged its peers for five years and the company restated oil reserves downwards twice this year. Additionally, Calpers said it is concerned the company's board has failed to respond effectively to shareholder demands.
Emerson made the list because of its board structure and a retirement package for its chairman that Calpers called "excessive." The fund said it wanted Emerson to renegotiate terms of Chairman and Chief Executive Charles Knight's contract, a demand ruled out by the company.
Calpers noted that Maytag's stock has lost more than 40 percent of its value over the last five years through March 31, the company's debt has "drastically" increased and its board has refused to implement shareholder-backed proposals.
Harrigan said Calpers meant to send a strong message: "At the end of the day, Maytag would not commit to addressing the major concerns we had," he said.
Companies on Calpers annual focus lists have a history of corporate reforms that help improve returns for investors, it said. Shares of companies on its 2003 list rose by an average 64 percent, compared with an increase of 26 percent posted by the Standard & Poor's 500 Index . (Additional reporting by Peter Henderson in Los Angeles and Michael Kahn in San Francisco) REUTERS