SACRAMENTO, Calif. -- Michael's Stores Inc., Irving, Texas, and Sybase Inc., Emeryville, Calif., were the biggest duds in the $128 billion California Public Employees' Retirement System last year.
CalPERS, which releases an annual list of companies in its portfolio that have underperformed their peers and practiced poor corporate governance policies, targeted seven other companies this year.
They are: Advanced Micro Devices Inc., Sunnyvale, Calif.; Electronic Data Systems Corp., Plano, Texas; International Flavors & Fragrances of New York, New York; Louisiana-Pacific Corp., Portland, Ore.; Stewart & Stevenson Services Inc., Houston; TBC Corp., Memphis, Tenn.; and A. Schulman, Akron, Ohio.
The California retirement system's target companies were selected based on stock performance, corporate governance practices and a new economic value added evaluation.
CalPERS added the EVA statistical screen to evaluate corporations that aren't adding economic value for shareholders. EVA is a company's after-tax net operating profit, minus its cost of capital for one year.
By combining EVA and stock performance, the pension fund is targeting companies where poor performance is due to underlying performance problems, not industry problems.