"I WILL NEVER FORGET my first day on the job at CalPERS. It was May 1, 1986, and the president of the board of CalPERS called me up. I thought he was calling to welcome me. Why he was calling was to tell me, "We want you to get after those corporations! We want something done about the outrage going on in Corporate America!" My reaction was, "Hmmm...okay?."
Jesse Unruh was the state treasurer at the time and he was on the board of CalPERS. He was a masterful politician. The year before I got there, he and Jay Goldin of New York and Roland Machold of New Jersey founded the Council of Institutional Investors. What sparked them to do that was their outrage over the greenmail paid by Texaco to the Bass brothers. Jesse went on a rampage about why they were getting all that money and not the shareholders, and he began pushing the CalPERS board to do something in the area of shareholder rights, although we didn't know what to call it then.
The board had fired the previous general counsel, who was more or a government bureaucrat. The board had taken charge of filling this position because they wanted to get someone who would be more active. When they asked me during my interview why I was interested in the job, I frankly told them that I wasn't as interested in the retirement funding part of it but I was very interested in the fact that they had $28 billion in assets which was a lot of money and that we could do a lot with it. They liked that answer, because that is exactly what they wanted to do.
The route we initially chose to get some response from corporations was the shareholder proposal process. In 1987, the first proxy season after I arrived, we filed 22 shareholder resolutions. Kayla Gillan and I filed those proposals. One of my best decisions had been to hire Kayla, which I did the second week I was at CalPERS. She was a young attorney only a year out of law school, and she was very smart. She eventually became my successor as general counsel.
We didn't have a clue what we were doing. CalPERS had never filed a shareholder proposal, so this was unheard of. We had to figure out the process. Many of those proposals -- which, by the way, were against poison pills, that was the issue of the day -- were thrown out that year. The companies got them thrown out at the SEC. And we probably deserved to have some of them thrown out. But I remember saying to the companies that got us thrown out, "You can treat us that way but we'll be back next year...