“The CalSTRS portfolio is the bedrock of our members’ retirement security and good corporate governance is essential to the safety of that portfolio,” said Gary Lynes, Teachers' Retirement Board chair. “We’ve worked for years behind the scenes for good corporate governance, however, recent meltdowns such as Enron and Global Crossing have shown us it’s time to elevate our level of activism.”

The CalSTRS action plan’s top priorities are such board governance issues as audit committee members’ independence and qualifications. Other areas addressed in the action plan include external auditor independence and disclosure, accounting standards, disclosure of executive compensation and reforms of deferred compensation and defined contribution plans.

Specific reforms sought by CalSTRS include:

· independent and qualified audit committee members
· independent oversight of the accounting industry
· non-audit services by external auditors limited to taxation issues
· external audit firm limited to seven consecutive years of audit service and a one-year moratorium before an audit firm employee is hired as staff or board member of the company

“We will team with other pension funds, regulatory agencies and legislative bodies to advocate for improving corporate governance practices,” said Lynes. “We all, including the companies themselves, have a stake in maintaining the integrity of the financial markets.”

CalSTRS is the third largest pension fund in the U.S., with a $100 billion investment portfolio. The pension system serves approximately 687,000 members and benefit recipients by providing retirement, disability and survivor benefits to California’s public school educators in grades kindergarten through community college. Those benefits are guaranteed by law and are not affected by changes in the investment portfolio.

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