CalPERS in August became one of the latest institutional investors to alter its governance model when its board instituted sweeping changes, including reducing the number of committee and board meetings, and stripping its investment committee's decision-making power.
The move by the $376.3 billion California Public Employees' Retirement System, Sacramento, comes at a time when the pension plan is making a number of other changes to improve its returns, funded status and resilience in an economic downturn. Indeed, Boston College research released in August found pension plans with the most effective boards — in terms of structure, composition, size and member tenure — had higher returns than less effective boards.
CalPERS board members who favored the changes said the revamp would give investment staff more time to do their day jobs by removing the need to prepare for multiple board and committee meetings. The new schedule reduces the number of annual board meetings to six from nine; an off-site meeting to one from two; and committee meetings to four from a current schedule that varies widely, ranging from nine times a year for the investment committee to about four times annually for the risk and audit committee.
What's more, changing the investment committee from a committee of the whole to a smaller board committee without the power to make final decisions would give CalPERS an extra screening of investment decisions, supporters said.