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Group Turns Governance Spotlight on Pension Plans

Publication Date: 
June 04, 2007
The Wall Street Journal
Phred Dvorak

A committee of the Stanford Institutional Investors’ Forum at Stanford Law School, in cooperation with the Arthur and Toni Rembe Rock Center for Corporate Governance, announced today new standards designed to improve fund governance and curb abuse of fund assets. The Clapman Report, a set of best practice principles for managing pension, endowment, and charitable funds, calls for institutional investors—who today are the central repository of capital in the United States—to adopt basic policies aimed at improving how they govern themselves.

The Wall Street Journal ran this coverage of the Clapman Report:

Activist investors such as public-employee pension funds have long advocated good governance in corporations. Now, a group of institutional investors have turned the governance lens on themselves, publishing "best practices" for fund oversight to address what they see as haphazard standards in the industry.

Pension funds have been "neglected in terms of governance," says Peter Clapman, chairman of the committee that drafted the recommendations, and former head of corporate governance for TIAA-CREF, a big retirement-plan provider for teachers and others. "If we're going to espouse certain principles to companies we invest in, we should make sure we're upholding the same things we're espousing."

The recommendations were to be released today by a committee of the Stanford Institutional Investors' Forum, an informal group of about 25 institutional investors. The suggestions are aimed at lightly regulated, nonprofit investors such as pension funds, endowments and charitable foundations. Most are simple ground rules such as disclosing governance guidelines and outlining the duties of trustees, a fund's equivalent to board directors.