Careers
Reforming Corporate Governance
As a board member of two of the country's largest public pension plans, Controller Chiang has asked both the California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System (CalSTRS) to encourage companies in which they invest to obtain the best talent on corporate boards by including a broader mix of people with different types of experiences and backgrounds.
Controller Chiang believes diversity is a solid business proposition – one that fosters good corporate governance by ensuring a wider range of talents, ideas and viewpoints. This depth and breadth of experience leads to greater creativity, more vigorous deliberation and debate, more independence and more integrity. These all are desirable traits for a board and are consistent with principles of good corporate governance.
Acting on the Controller's request, CalSTRS received commitments from six of eight firms to actively consider diversity as a criterion when recruiting board members. CalPERS now includes board diversity as an engagement topic when placing companies on its Focus List for poor corporate governance or performance, encourages proxy voting firms to adopt board diversity principles, and is developing best practices for corporations to follow when seeking diverse board candidates.
The Controller also has led the call for corporate governance reform. Chiang has urged companies to increase the independence of board members from company executives, and to make boards more accountable to shareholders.
Acknowledging that both CalPERS and CalSTRS need compensation plans that reward leadership and significant contributions to the plans, and assist in the recruitment and retention of key executive and investment staff, Chiang nonetheless has called for both systems to adopt new policies that reduce or eliminate incentive awards during years when overall fund investment returns are low or negative.