(In "Calpers Flags Four Health Firms For Governance,
Performance," published at 10:26 a.m. EDT, a press release from
Calpers incorrectly identified one of companies put on its focus
list. A corrected version appears below.)
DOW JONES NEWSWIRES
The largest public pension in the U.S. is calling out drug giant
Eli Lilly & Co. (LLY) and three other companies for what it
says is a combination of poor returns and resistance to governance
changes that could improve performance.
The California Public Employees' Retirement System added the
four to its latest "focus list." Calpers, which has $167 billion in
assets, also called out medical-technology provider Hill-Rom
Holdings Inc. (HRC) and pharmaceutical research firm IMS Health
Inc. (RX), as well as real-estate investment trust Hospitality
Properties Trust (HPT).
Calpers, which has been publishing the list each year since
1987, is known for pushing for governance changes at companies
where it believes such changes could improve board accountability
and financial performance. "In today's current economic
environment, no company should resist strengthening their corporate
governance, but these four companies did," said Calpers President
Rob Feckner in a statement.
The fund criticized Eli Lilly for continuing "to deny
shareholders any opportunity to amend bylaws - a restriction used
by only 4% of S&P 500 companies." Calpers is seeking shareowner
support for a resolution to overturn the bylaw amendment provision
at the company's annual meeting next month. Moreover, Calpers said,
Eli Lilly has underperformed its peers by 64% during the past five
years.
Hill-Rom lagged its peers in the health-care equipment industry
by 84% over the same period, Calpers said. The fund objects to "the
company's refusal to remove its staggered board structure and to
allow shareowners to amend its bylaws."
IMS underperformed by 63%. The pension fund cites IMS' denial of
shareholders' right to call a special meeting and to adopt annual
nonbinding advisory votes on executive compensation practices.
"Placing these companies on the Focus List and bringing
shareowner resolutions against them in some cases are last resorts
for us," said George Diehr, head of Calpers' Investment Committee.
"We much prefer engaging them first to achieve better alignment
with management, boards and investors and set the table for
improved share value over time."
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com