CalPERS names underachievers

The California Public Employees’ Retirement System on Thursday took its annual potshot at companies it has identified as corporate underachievers.

The $230-billion government pension fund -- the biggest and most influential in the nation -- released a so-called Focus List of 11 companies in its portfolio that staff rated as having subpar earnings and undemocratic corporate governance policies.

The companies are “the poster children for bad performance and bad corporate governance,” said CalPERS President Rob Feckner in a conference call with reporters.

“Their long-term performance is at least 20% behind their peers, and they have resisted appeals to change corporate practices that make their boards unresponsive to share-owner interests.”

Among the companies on the 15th annual Focus List is Tribune Co., the Chicago-based owner of the Los Angeles Times that is in the midst of making a high-profile decision to sell all or parts of the company. It also owns the Chicago Cubs baseball team, KTLA-TV Channel 5 in Los Angeles and other media properties.

Two California corporations also got the nod from CalPERS: Corinthian Colleges Inc. of Santa Ana, which offers technical and business training, and Sanmina-SCI Corp. of San Jose, an electronics components manufacturer.

Others on the list were retailer Dollar Tree Stores Inc. of Chesapeake, Va.; drug maker Eli Lilly & Co. of Indianapolis; information storage and software systems developer EMC Corp. of Hopkinton, Mass.; and International Paper Corp. of Memphis, Tenn.

Clothing maker Kellwood Corp. of St. Louis; insurance broker Marsh & McLennan Cos. of New York; food processor Sara Lee Corp. of Chicago; and hospital and medical services provider Tenet Healthcare Corp. of Dallas rounded out the eleven.

In addition to reporting poor earnings over the last five years, the companies earned CalPERS’ ire by not allowing shareholders to have a greater voice in picking corporate directors and voting on proxy issues, said Senior Investment Officer Christy Wood. “We asked companies to seek reforms and gotten resistance,” she said.

Many of the firms on the new list stressed that they had been talking to CalPERS about how to continue improving their corporate governance practices.

Tribune spokesman Gary Weitman said the company had been working with CalPERS on a request to stop requiring that changes in corporate bylaws be approved by more than a simple majority of shareholders.

“We agreed to communicate CalPERS’ proposal to Tribune’s full board at its May meeting, and it is premature to say what action the board will take before that time,” Weitman said in a statement.

Corinthian Colleges, which operates 126 postsecondary schools in the United States and Canada, said it was “committed to effective corporate governance and has recently added three highly qualified independent directors and an independent chairman.”

Sara Lee spokeswoman Julie Ketay said her company saw no reason to change its proxy voting procedures and noted that stock prices had shown strength in the last year.

Tenet Healthcare, a company whose stock has been hard hit since a 2002 Medicare billing scandal, said it made a complete change in its management team and told CalPERS that it would consider next year a change in voting requirements for bylaws.

Though most companies dread being singled out by CalPERS’ Focus List, they often wind up benefiting from being in the reform-oriented spotlight, corporate governance experts say.

“Once a company is on the list, it attracts a lot of attention,” said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. “When the reformers focus on you, it creates a culture of accountability within the organization, which leads to long-term, greater shareholder value.”

marc.lifsher@latimes.com