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Central Pension Fund Pension
funds are providing a voice The Central Pension Fund has become an active voice on behalf of its participants in correcting corporate governance practices that enrich and entrench management at the expense of the best interests of plan participants. In doing so, CPF has joined a growing movement among U.S. pension funds that can be traced to 1984 when California State Treasurer Jesse Unruh asked the nation’s public pension funds to support a new shareholder organization whose mission would be to monitor and possibly fight corporate management decisions that could financially hurt the funds’ participants. Mr. Unruh’s efforts spearheaded the establishment of an organization known as the Council of Institutional Investors or CII. CII’s initial membership consisted almost exclusively of public pension plans for state and municipal employees, and those plans built a consensus for the proposition that pension plans, as shareholders of corporate stock, have an obligation to participate in the affairs of those corporations to assure that they are being operated in a manner consistent with the best interests of the pension plan participants. The creation of CII was a direct response to the 1980’s frenzy of corporate acquisitions, mergers and pension reversions, in which pension plan participants were losing their jobs while corporate executives were protecting and enriching themselves through corporate governance practices with names such as “golden parachutes,” “greenmail” and “poison pills.” In many cases companies were merged and then disappeared, with the executives walking away rich, leaving the employees and shareholders holding the bag. Pension plan trustees, spurred on by the U.S. Department of Labor recognized that they had an obligation, on behalf of their participants, to assure that judgements being made in corporate boardrooms maximized the value of the corporation to all shareholders--large and small alike. As the recognition of this obligation of fund trustees grew, membership in the activities of the CII grew from just public pension plans to include labor-management pension plans, one of them being the Central Pension Fund, as well as corporate pension plans. Today the Central Pension Fund has an established and active program for monitoring every proxy vote cast with shares of stock in its portfolio, and for initiating proxy ballot issues where deemed appropriate. CPF has been especially active in proposing proxy votes to eliminate corporate governance practices which have the effect of weakening the voices of shareholders in corporate decision making. It is the belief of CPF’s Board of Trustees that the Fund’s participants have an important interest in the governance practices of the companies they own through CPF’s investment portfolio. Accordingly, both independently and with the many other pension fund members of the Council of Institutional Investors CPF will continue to be an active voice for its participants in corporate affairs. Originally
published in the International Operating Engineer |