CalPERS considering collaborative engagement on Wal-Mart’s human capital issues

Fund has conveyed concerns directly to Chairman and CEO Duke

The California Public Employees Retirement System (CalPERS), the largest US pension fund at $266.3bn (€200bn), is considering working with other investors in Wal-Mart to address the giant retailer’s “human capital issues”.

The fund voted against six of the company’s directors at its annual meeting in June due to its concerns about the board’s oversight of operational and reputational risk.

Issues include allegations of corruption at its Mexico operations, questions over supply chain following a series of tragedies in Bangladesh and the company’s fines for violating laws on hazardous waste disposal in California, the fund says in its latest governance update, prepared for an Investment Committee meeting on August 19.

CalPERS’ staff attended the AGM and conveyed their concerns directly to Chairman and CEO Michael Duke, the fund says. It adds: “Staff is considering next steps including collaborative shareowner engagement initiatives with respect to human capital issues at Wal-Mart.”

The report adds that the fund has succeeded in its five-year campaign to get annual director elections at Hospitality Properties Trust.After repeated strong shareholder support for CalPERS’ proposals, the real estate investment trust (REIT) has announced that it would include a management proposal at its 2014 AGM to implement annual director elections.

CalPERS has also said that it voted against 212 say-on-pay resolutions, or 9% of the total proposals that went to the vote, in the first half of 2013. It is working with three unnamed asset owner partners in the UK, within its 13-member, $1.5trn asset ‘Global Peer Exchange’ set up in 2011, to “sharpen our global vote practices on executive remuneration”.

The fund is also engaging with 19 energy companies to persuade them to integrate sustainability performance into executive pay.

CalPERS also said it has met with new Securities and Exchange Commission Chair Mary Jo White and presented her with a series of 13 financial market reform priorities, including universal proxy access, proxy plumbing, enhanced disclosure of board quality and diversity and climate risk disclosure.

“We urge the Commission to establish a proactive agenda to advance the mission of protecting investors, maintaining fair, orderly, and efficient markets, and to facilitate capital formation,” CalPERS said.