SACRAMENTO, Calif. - James E. Burton, assistant executive officer for investments at the California Public Employees' Retirement System, is a semi-finalist for the vacant chief executive officer position and seemingly has won the informal support of some fund trustees, financial industry sources say.
Following its first cut for the CEO post, left vacant in July with the resignation of Dale Hanson, the fund has been sending notices to people it has rejected for the post.
Sources say that fewer than 100 people applied for the job. The fund is now doing background checks on the remaining candidates. Fund officials probably will interview two dozen people for the job and a finalist might be selected this fall.
Another fund official who is being considered for the post is Sandra Lund, assistant executive officer for member and benefit services.
Ms. Lund is an appointed board member to the Sacramento County Employees' Retirement System who has been extensively involved with the California Association of Public Retirement Systems and is first vice president of that organization. She has been involved in the benefit and the administrative side of the California Public Employees' system. Her entire career has been centered on administration and service.
Ms. Lund also has been involved in helping the federal government write Internal Revenue Service regulations for public service workers that limit excessive pensions, primarily for retiring executives.
However, sources say Mr. Burton already is being pushed as a replacement for Mr. Hanson. The sources say Mr. Burton is a government insider and would be in a position following an appointment as CEO to influence some executive job appointments.
Sources say Mr. Burton may have as many as four or five of the 11 fund trustees informally supporting him for varying reasons. That claim is denied vigorously by some fund officials.
If Mr. Burton becomes the fund's chief executive, he will be one of the most influential investment executives in the world.
As chief executive of the giant fund, Mr. Hanson visited an estimated 65 corporate CEOs. Mr. Hanson, representing the fund, is believed to have played a role in the ouster of top executives at Westinghouse Electric Corp., Eastman Kodak Co. and IBM Corp., and the pension fund pressured corporate boards to be more accountable at General Motors Corp., ITT Corp., Occidental Petroleum Corp. and Lockheed Corp.
Now the retirement system is working to expand that corporate governance effort internationally.
Mr. Burton came to his current post early in 1992, replacing Basil Schwan, who became chief executive officer of the Washington State Retirement Board.
Mr. Burton had been deputy state controller, advising Controller Gray Davis on pension matters and frequently representing Mr. Davis as a trustee on the employees' fund board.
As assistant executive officer for investments, Mr. Burton handles the day-to-day administrative work of the investment office. That includes overseeing requests for proposals.
The chief investment officer had been reporting to Mr. Burton. But fund trustees are going through a restructuring and are considering a plan proposed originally by Mr. Hanson that would create an executive level above the assistant executive officer and below CEO.
The new executive level would allow whomever is picked as chief executive officer to have more free time to spend on major fund issues such as corporate governance.
According to industry sources, that new executive level could create jobs where the new CEO could influence appointments.
Mr. Burton couldn't be reached for comment. However, Lillian Rowett, a deputy personnel director who represents David Tirapelle, state personnel director on the retirement system board, said the suggestion that some trustees might be endorsing Mr. Burton at this point is "outrageous."
Ms. Rowett said: "We (trustees) have made no deals. This is crazy and totally false. We are going through a process (for selection of a CEO) and we are going to go through it."
Another trustee, William Rosenberg, said he had not been contacted about the claims that some board members are informally supporting Mr. Burton.
"I would think it would be ridiculous for any board member (to support Mr. Burton at this point)," he said. "It would be a violation of the fiduciary responsibility of the board since we haven't interviewed the other candidates.
He added: "We are strongly supportive of corporate governance, and we would certainly be against any of the directors of any corporation taking such action if they were out to interview various people such as the CEO or the chairman of the board."
Mr. Rosenberg said that for board members to be pushing for Mr. Burton now might cast aspersions on the governor or the state controller because it might look like they were exerting political influence on the retirement system.