At Deadline

The board of the $994 million Fulton County (Ga.) Employees Retirement System rejected all the bids it received in response to a consultant RFP issued earlier this year, said James W. Stephens, chairman. Some presented conflicts of interest, and others were not satisfactory, he said; he declined to elaborate.

The board came to an agreement with existing investment consultant Watson Wyatt for a new 12-month contract while it considers a new consultant RFP; the firm's contract was to expire Dec. 31. Mr. Stephens said the board has not determined a timeline for issuing a revised RFP.

An appropriate 10-year return assumption for pension plans with a 60/40 equity/fixed-income split is 8.5%, according to an SEI research study on FAS 87.

For plans with a 70/30 split, 8.75% would be appropriate.

The historical return from Jan. 1, 1995, through Sept. 30, 2004, was 10.44% and for plans with a 60/40 split and 11.53% for plans with a 70/30 split, both higher than typical assumptions.

"It is not sufficient to look at only historical returns when determining the ROA assumption," the study said. "Despite the bear market experienced from 2000 to 2002, the past 10 years have provided returns that were well above what was expected. For this reason, it is important that plan sponsors continue to use forward-looking models to set these assumptions."

"Discount rates between 5.75% and 6.25% are likely for the 2004 disclosure," according to the study. The median rate was 6.25% in 2003, the paper noted.

U.S. Bankruptcy Court in Chicago denied Independent Fiduciary Services' motion to participate fully in proceedings related to United Airlines' potential termination of collective bargaining pacts. Jean Medina, United spokeswoman, said Chief Judge Eugene R. Wedoff denied the motion on Dec. 9, saying the independent fiduciary is not a party to the matter, unlike the PBGC and the airline's unions.

According to court papers filed in November, the airline wants to reject its collective bargaining agreements and terminate its defined benefit plans. The plans' assets totaled $6.9 billion as of Dec. 31, 2003, according to the company's annual report.

United objected to the motion, arguing the IFS request "impermissibly exceeds the scope" of the fiduciary's authority.

The $45 billion Minnesota State Board of Investment hired six active domestic large-cap equity managers to run a total of $600 million to $700 million — INTECH, Jacobs Levy, Knelman Asset, Sands Capital Management, Transamerica Investment and Winslow Capital.

Individual portfolio sizes will be decided later, said Howard J. Bicker, executive director. Funding will come from reducing portfolios of existing U.S. large-cap growth stock managers; details weren't available.

Trustees also made additional commitments to existing alternatives managers. Up to $100 million will be awarded to private equity manager Goldman Sachs Capital Partners, and up to $150 million to CSFB Strategic Partners for investment in a secondary interest fund with real estate and venture capital components. The fund also committed $60 million to a new venture capital manager, Split Rock Partners.

The $1.9 billion Montgomery County (Md.) Employees' Retirement System is reviewing Capital Guardian's performance; the firm manages a total of $40 million in two active emerging market equity portfolios. When fund officials receive Capital Guardian's response to their request for information, they will determine at the March board meeting whether to terminate Capital Guardian and search for a new manager, said Linda Herman, executive director. Wilshire Associates is assisting.

Capital Guardian spokesman Chuck Freadhoff could be not be reached for comment.

The Pacific Legal Foundation challenged the state of California's plan to issue $929 million in pension obligation bonds to fund part of its contribution to CalPERS. The foundation, which represents the Fullerton Association of Concerned Taxpayers, claims that the bond issue — part of this year's state budget — would violate the California Constitution because the bonds weren't submitted to voters for approval. A nearly identical bond issue was rejected by a state court last year.

H.D. Palmer, spokesman for the state finance department, did not return calls requesting comments.

Institutional Shareholder Services will toughen recommendations on executive compensation, CEOs who serve on boards of other companies and auditor ratification as part of the revised U.S. proxy-voting policies it will apply to companies with shareholder meetings after Feb. 14.

Among new policies, ISS will support non-qualified employee stock purchase plans, so long as they include all employees at a company except those with 5% or more beneficial ownership. ISS will also recommend withholding votes for the entire board when directors receive a no-confidence vote from at least 50% of shareholders; withholding votes when high levels of opposition in prior elections were not addressed; and opposing directors who are CEOs of publicly traded companies and serve on more than two public boards other than their own.

ISS will continue to hold board compensation committees responsible for linking executive pay to performance but will expand its compensation evaluation and improve its pay-for-performance metrics, while taking a tougher view on director pay.

Chad Clark, a partner and international investment analyst at Harris Associates, was named co-portfolio manager of the Oakmark International Small Cap Fund, effective Jan. 28, said spokeswoman Kelly Arnold. He joins David Herro, who has managed the International Small Cap Fund since its November 1995 launch. Mr. Clark replaced Michael Welsh, who will remain co-manager of the Oakmark International Fund and Oakmark Global Fund. Officials at Harris haven't decided if they will hire another international investment analyst to replace Mr. Clark, said Ms. Arnold.