To: mflaher@alum.mit.edu
From: James McRitchie
Subject: election process
Cc: bill_crist@calpers.ca.gov
First I'd like to thank you for allowing me to address issues related to the proposed rules on candidate statements during the hearing. As I indicated, revising that section alone will not accomplish what I and many members believe is needed, something which vaguely approaches fair and impartial elections.
I will be filing formal comments on the new proposal, prior to the deadline. While, of course, I applaud the move to allow 200 words, I cannot embrace the other wording by Dr. Crist which would encourage candidates to file poorly crafted and perhaps deceptive arguments while reaping the benefit of anything of value submitted by their opponents. In addition, it is unclear at what point, if any these submissions are confidential. Can a candidate read all the submissions as they come in and file their own at the last minute. Perhaps they can even file a few days late, if they're just getting back into town? I see the election coordinator can extend the 10 day period to all candidates...but does she need to tell them all or can she simply indicate that although she extended it for one candidate she would have extended it for all, had they simply asked if the deadline was real. Once the 10 day deadline has passed will candidates have an opportunity to correct "errors and omissions"? What do those or any other terms mean? Sorry, I've still got a bitter taste in my mouth.
I'm sure you and Dr. Crist will view this as a cynical interpretation of the proposal but my experience in the 1998 elections and surrounding events [such as my friends at the UFCW trying to get me uninvited from a conference in Hong Kong at the prompting of you know who or the repeated refusal of CalPERS to list my Corporate Governance site at http://www.calpers-governance.org/links (even though it is referenced by more internet sites than any other on the subject)] have left me with the impression that I cannot even conceive of the conspiracies which appear to intrigue people who should find a more constructive use of their time.
A better approach to candidate statements would be to ensure that initially submitted statements cannot be revised at the request of the candidate and can only be revised by staff, in cooperation with the candidate, to correct remarks which are false, misleading, etc. Do we need to put in something here about staff not prompting the incumbent that it would be misleading if he did not use a pleasing format? In addition, the incumbent should not be involved in helping staff fact check, as was the case in 1998. Beyond all those absurdities, which I never would have imagined would occur, we could provide that candidate's get a second round which is kept confidential, to address issues raised by their opponents or to simply add additional material...perhaps another 100 words.
While I must take Dr. Crist at his word, and his new proposal appears to be a genuinely constructive effort which also avoids his own political suicide, I am still disturbed by the process. I welcome bold and creative actions by the board in many instances, but I hope you will see to it that members are more involved in considering the other aspects of the election code. My day job is ensuring proper implementation of the APA and CEQA at my department; these are intended to be participative processes.
Obviously, if stakeholders are involved in the process and the rulemaking introduced is one which they can embrace, there would be no need for anyone to air past sins which are too often compounded without such cooperative efforts. Mr. Duclus, with RPEA, appears content but then his testimony indicated he is part of "workshops, constituency meetings, and so forth." I'm sure that if I had taken part in such events, my attitude might be a little closer to that of Mr. Duclus.
Personally, I'd be delighted if the board co-opted me on every issue I have. I started my internet site on corporate governance because I wanted a job, not because I wanted a seat on the board. I'm busy with other endeavors. However, I cannot sit on the sidelines on so many important issues when every suggestion I make is flatly rejected. Most of the corporate boards I have sat on or have trained have been cooperatives...little companies, valued $50 million or less. Perhaps the ideals which bring people together at such institutions have no place in the cold hard politics of CalPERS but they will someday if I have anything to say about it. I'm not going away anytime soon.
On another subject, I hope CalPERS will join with others, such as Leonard Chazen, a partner at Covington & Buling, in attempting to get the SEC to abide by the provisions of Rule 14a-8(g). In 1999 no-action letters the SEC consistently refused to include a position on shareholder proposals raising unsettled questions of state law, such as many issues surrounding poison pills. The new "agnostic" position of staff is inconsistent with Rule 14a-8(g), which gives companies the burden of proving they are entitled to exclude the proposal. The SEC's failure to apply that burden means companies can exclude a proposal with little risk if they believe the proponent lacks the resources or resolve to litigate. The SEC should return to its earlier position that the improper subject exclusion does not apply to a proposal that raises an unsettled question of state law since, in such instances, companies cannot meet the burden of proving the proposal is improper, as is required under Rule 14a-8(g).
One of my own proposals, most likely at Pfizer, may face such a fate considering the objections their attorney has raised. The proposal seeks to facilitate more knowledgeable voting by providing better information to shareholders (yes, democracy is practically a religion for me). Perhaps CalPERS would consider supporting this and similar proposals on corporate monitoring at the 10 firms where it has been submitted (obviously limited to those which CalPERS holds). If you or Dr. Crist are interested, take a look at http://www.corpmon.com.
Of course, as always, I'd be delighted to discuss this or other initiatives if anyone at CalPERS believes member involvement can add value...or we can just stay with the status quo.
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