CalPERS Censures Board Member, Implements Governance Reforms

CalPERS has publicly censured a board member for alleged involvement in a personnel action based on complaints filed by coworkers in addition to adopting governance reforms.

(September 15, 2011) — The California Public Employees’ Retirement System (CalPERS) Board of Administration has publicly censured current board member JJ Jelincic as a result of personnel complaints filed against him by coworkers at the pension fund.

“The CalPERS Board does not condone harassment or similar conduct of any kind and all our Board Members are expected to meet this standard,” said Rob Feckner, president of the CalPERS board, in a statement. “Our employees are one of our greatest assets and we are committed to ensuring that their work environment is professional, safe and free from all forms of discrimination and harassment.”

The board suspended Jelincic — who was elected to the CalPERS Board in December 2009 as an at-large representative of state employees — from his position as chairman of the pension fund’s Investment Policy Subcommittee and as vice chairman of the Health Benefits Committee until March 1.

Meanwhile, the largest public pension fund in the United States has also adopted governance reforms in an effort to further strengthen accountability, transparency, and ethics at the fund.

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“When we released our special review report on placement agents in the spring, it was a clear reminder that the stewards of CalPERS have to protect a sacred trust, one that should never be allowed to be compromised,” said Feckner in a statement. “We dedicated ourselves to pursuing all of the appropriate policy changes to strengthen transparency, accountability and integrity of this fund. Today, those changes are in place.”

As outlined in a release by the scheme, the governance reforms urge:

1) Each Board Member to sign a statement acknowledging their fiduciary responsibilities in conjunction with fiduciary training and self-assessment processes.

2) An independent third party to assess Board performance once every two years.

3) New roles and responsibilities for the Board President, Vice President, Committee Chairs and Vice-Chairs.

4) A new Powers Reserved structure for the Board and its committees that outlines responsible parties for approvals, standards of conduct, strategy, policy and performance.

5) Certification of a “no undue influence” document to be signed by all senior executives and investment officers.

6) Adoption of a new confidentiality policy that will assist in guiding Board conduct.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

(September 15, 2011) — The traditionally secretive Abu Dhabi Investment Authority (ADIA) has opened up a bit, releasing its yearly statement of what is perceived to be the world’s largest sovereign wealth fund.

Spurred by global economic growth, the fund revealed that annualised rate of return increased to 7.6%, compared with 6.5% in 2009.

“While remaining diversified across all major global markets, ADIA continued to benefit during 2010 from its decision a year earlier to tilt exposures in the portfolio towards asset classes and regions able to benefit from better growth prospects,” Sheikh Hamed bin Zayed al-Nahyan, the managing director and a senior member of Abu Dhabi’s ruling family, wrote in the review. “This is an approach that remains in place as we enter 2011.” He continued: “While developed economies continue to demonstrate their ability to innovate and grow, the secular shift in global economic weight from developed to fast-growth emerging economies has accelerated as a result of the financial crisis.”

According to the report, ADIA’s assets are largely allocated to developed equity investments. With an estimated $342 billion in assets according to Monitor Group, the fund allocates 60% of its total portfolio to externally-managed indexed funds. Overall, roughly 80% of the fund’s assets are invested by external fund managers. Allocations to developed equity markets constitute 35% to 45% of the fund’s portfolio, the report showed. Emerging market equities make up 10% to 20%. Government bonds make up 10% to 20% of the portfolio.

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In terms of geographic prevalence, ADIA allocates 35% to 50% in North America, 25% to 35% in Europe, 10% to 20% in developed Asia, and 15% to 25% in emerging markets, according to the report.

The report is the first to be released under Sheikh Hamed. He succeeded his older brother, Sheikh Ahmed bin Zayed Al Nahyan, who died in March 2010 in Morocco after his glider crashed into a lake near the capital of Rabat. The shift in power was not a surprise, reflecting an effort to keep control of the world’s biggest fund in royal hands.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

CalPERS Censures Board Member, Implements Governance Reforms

ADIA Opens Up, Reveals Rising Long-Term Returns

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