calstrs

By Dale Kasler
dkasler@sacbee.com
Published: Sunday, May. 26, 2013 – 12:00 am | Page 1D

CalSTRS has been making waves on Wall Street lately, taking a more aggressive stance with corporations while grabbing a bit of the spotlight from its big brother CalPERS.

In the past year, the California State Teachers’ Retirement System has picked high-profile fights with the firearms industry and Wal-Mart Stores Inc. Earlier this month, it scored a major coup by winning a shareholder vote against the management of a $5 billion-a-year steel manufacturer in Ohio.

CalSTRS’ feistiness is getting noticed in boardrooms and by experts who track corporate governance issues.

“They’ve taken a very activist position. You have some successes and you become more visible,” said Charles Elson, finance professor and director of the Weinberg Center for Corporate Governance at the University of Delaware.

As the United States’ second largest public pension fund, with a portfolio valued at $167.2 billion, CalSTRS is no stranger to throwing its weight around the investment world.

It has prodded boards of directors on issues like executive pay, diversity and the environment. It has sold its tobacco stocks and unloaded investment holdings in rogue regimes such as Sudan.

But until recently, it was largely overshadowed by the largest U.S. public pension fund, the California Public Employees’ Retirement System. CalPERS has $267 billion in assets and tends to make more headlines when it comes to making corporate executives uncomfortable.

CalSTRS’ higher profile emerged after the financial markets crashed in 2008 and the pension fund hired its first-ever director of corporate governance, Anne Sheehan.

“The whole governance movement, especially in the post-crash environment, has taken on a new priority,” said Sheehan, a former chief deputy at the Department of Finance. “We wanted to get more involved.”

Public pension funds such as CalSTRS often perform a balancing act when it comes to investment decisions. They’re legally obligated to earn as much money as possible, but can get tugged in multiple directions by political forces, particularly when it comes to issues of socially responsible investing.

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