Corporate Governance

The California State Teachers' Retirement System is suing Wal-Mart Stores Inc. executives and board members, accusing them of using bribery and corruption to gain approval from Mexican government officials to build new stores. Late Thursday, the board of CalSTRS, the country's second-largest public pension fund, filed the so-called derivative lawsuit seeking changes in the corporate governance of the world's biggest retailer. "CalSTRS is seeking to remedy the damages sustained by Wal-Mart as a result of alleged gross misconduct by Wal-Mart's executive officers and directors," CalSTRS Chief Executive Jack Ehnes said.

SACRAMENTO — The California State Teachers' Retirement System will cast its 5.3 million shares of Wal-Mart Stores Inc. against the reelection of the company's board after allegations of bribery in the retailer's Mexican operations. Citing "a breakdown of corporate governance and lack of oversight," Jack Ehnes, chief executive of CalSTRS, made the announcement Tuesday "CalSTRS believes former and current Wal-Mart executives and board members breached their fiduciary responsibilities," Ehnes said.

Hospital chain HCA Inc. agreed Tuesday to overhaul its corporate governance under a settlement with state pension funds. "The corporate governance plan being adopted by HCA significantly raises the bar on accountability for all of corporate America," New York Comptroller Alan Hevesi said.

The California State Teachers' Retirement System is suing Wal-Mart Stores Inc. executives and board members, accusing them of using bribery and corruption to gain approval from Mexican government officials to build new stores. Late Thursday, the board of CalSTRS, the country's second-largest public pension fund, filed the so-called derivative lawsuit seeking changes in the corporate governance of the world's biggest retailer. "CalSTRS is seeking to remedy the damages sustained by Wal-Mart as a result of alleged gross misconduct by Wal-Mart's executive officers and directors," CalSTRS Chief Executive Jack Ehnes said.

CalPERS said Wednesday that it would withhold votes for seven of Ford Motor Co.'s 16 directors, including former Treasury Secretary Robert E. Rubin, as part of an effort to combat conflicts of interest among corporate directors and auditors. The California Public Employees' Retirement System said Rubin and Ford board members John R.H. Bond and John Thornton had potential conflicts of interest. Rubin, 65, is chairman of the executive committee of Citigroup Inc.

The New York Stock Exchange and Nasdaq Stock Market should consider prohibiting corporations from donating money to institutions that have ties to corporate audit committee members, a top Securities and Exchange Commission official said. SEC Chief Accountant Robert Herdman said that, in the wake of Enron Corp.'s collapse, regulators for the two leading U.S. markets also should weigh a proposal to stop audit board members from doing consulting work for companies they oversee.

Billionaire investor Carl Icahn said Tuesday that he was starting a blog to discuss ideas on corporate governance, an area in which he has strong opinions. "This country is losing its economic hegemony," Icahn said at a corporate governance conference in New York. "I want to see who is interested in this. I really think there's a lot to do." The blog, whose address is icahnreport.com, will be a forum where readers can respond or present ideas and Icahn will respond.

CalPERS Moves Activism Overseas: The investment board of the nation's largest public pension fund approved a plan for a so-called corporate-governance program in Japan, Britain, France and Germany, where the fund has almost 62% of its international investments.

* Today, Senate takes up accounting reform bill. Brookings Institution and American Enterprise Institute hold conference on corporate disclosure. * Tuesday, President Bush goes to Wall Street to address business leaders on corporate reform. Senate Judiciary subcommittee holds hearings on identity theft. .* Wednesday, Treasury Secretary Paul H. O'Neill addresses U.S. Chamber of Commerce on the economy, investor confidence and corporate governance issues.

Pfizer Inc. said Thursday that its board would invite the drug maker's largest shareholders to a meeting this fall to discuss corporate governance issues including executive pay.

Bob Iger has signed a new five-year contract with the Walt Disney Co. that will keep him at the helm until 2015, when he will step down as chief executive and leave the entertainment giant the following year at age 65. In March, Iger will assume the additional role of chairman with the retirement of Disney's current board chairman, John E. Pepper Jr. Iger will serve in the dual capacity as chairman and chief executive for three years, until a...

Financial reform seems certain to usher in rules that shareholder advocates have been trying to win for decades as a way to rein in runaway executive pay and make corporate boards more responsive to shareholders. That could be very good news for the roughly 70% of investors who hold company stocks in their investment portfolios. Issues including better regulation of both financial and consumer services are part of the sweeping financial reform measure that's now being reconciled in Congress and is expected to land on President Obama's desk before July 4. Although all the details won't be known until the reconciliation between the House and Senate bills is complete, experts believe the bulk of these "corporate governance" rules are likely to survive.

Officials at the country's largest government pension fund on Monday said they were "disturbed" about a federal lawsuit contending that investment bank Goldman, Sachs & Co. defrauded investors with mortgage-backed securities that allegedly were set up to fail. The lawsuit also pointed out the need for increased federal regulatory oversight of the securities industry, the officials said. The California Public Employees' Retirement System, which owns 1.8 million shares in the company, also said it intended to question company executives at an upcoming meeting to discuss the way they operate.

Lawmakers trying to avert the next Wall Street bailout are still struggling to reach consensus on how to overhaul the country's financial regulatory regime. One sticking point has been a proposal to let the Securities and Exchange Commission give shareholders more say over who gets elected to boards of directors. Business groups fiercely oppose it, arguing that it would give labor unions and public pension plans the power to force their agendas on management. But a more likely result is that directors would have to become more responsive to shareholders' concerns about executive pay and corporate governance.

The nation's biggest public pension fund, which has lost more than a quarter of its value in the last seven months, is planning to rally big investors nationwide to demand changes in the way Wall Street operates.

CalPERS, the largest U.S. pension fund, asked Standard Pacific Corp. shareholders to declassify the Irvine-based home builder's board of directors because of "abysmal" performance. The proposal would require directors to run for election annually. Standard Pacific, which has lost 74% of its value in the last 12 months, has a "poor stock performance and a subpar governance structure," the California Public Employees' Retirement System wrote in an April 10 letter to shareholders, filed with the Securities and Exchange Commission.

"Vote Urges BofA Curb on Severance" [April 25] states, "The measure (shareholder proposal, if passed) is only a request that the company's board could reject or modify." Many institutional investors and individual investors delude themselves into thinking that they have some positive impact on corporate governance by simply sponsoring nonbinding shareholder proposals. Most of the proposals that pass are never implemented. And, even when implemented, no one can determine that the implementation enhanced shareholder value.

Billionaire investor Carl Icahn said Tuesday that he was starting a blog to discuss ideas on corporate governance, an area in which he has strong opinions. "This country is losing its economic hegemony," Icahn said at a corporate governance conference in New York. "I want to see who is interested in this. I really think there's a lot to do." The blog, whose address is icahnreport.com, will be a forum where readers can respond or present ideas and Icahn will respond.

Financial advisors and wealthy investors believe corporate boards act in the best interests of executives rather than shareholders, according to a survey released Tuesday. Most of those surveyed last month by FTI Consulting Inc. also said they believed that corporate governance practices had improved since the passage of the post-Enron Sarbanes-Oxley corporate reform law in 2002.