CalPERS Dings Health Care Firms in Annual Review
CalPERS included medical provider Tenet Healthcare and drug manufacturer Eli Lilly on its annual list of companies in its portfolio that have exhibited insufficient earnings and poor corporate governance policies, the Los Angeles Times reports. The pension fund released its 15th annual Focus List on Thursday (Lifsher, Los Angeles Times, 3/16).
Rob Feckner, CalPERS board president, said, "The companies on this list are the poster children for bad performance and bad corporate governance." He added, "The long-term performance of these companies is at least 20% behind their peers, and they have resisted appeals to change corporate practices that make their boards unresponsive to shareowner interests."
CalPERS listed Tenet for refusing to remove a supermajority voting rule for articles of incorporation (Marois, Bloomberg/Philadelphia Inquirer, 3/16).
Eli Lilly was cited for not permitting shareholders to amend company bylaws (Anderson, Sacramento Business Journal, 3/15).
Phil Belt of Eli Lilly said that giving shareholders a majority vote could make the company vulnerable to excessive influence by a small group of shareholders. Belt noted that Eli Lilly will begin holding annual elections for directors, a move CalPERS supports (Chan, Sacramento Bee, 3/16).
Tenet said that it recently has undergone a complete change in management, and company officials have told CalPERS that new shareholder voting bylaws are under consideration (Los Angeles Times, 3/16).