How CalPERS Plans to Pick Up the Pieces

The retirement system’s board talked stability and governance changes at its latest meetings.

Sacramento, California. (David Paul Morris/Bloomberg)

Sacramento, California.

(David Paul Morris/Bloomberg)

Over the past three days, the CalPERS board and members of its staff convened digitally with the goal of moving forward following the sudden resignation of the retirement system’s chief investment officer last month.

During the public meetings — the first since CIO Ben Meng resigned in controversy — board members highlighted a need for CalPERS to stabilize itself and to make changes to certain governance structures as it moves forward.

“This year we’ll be all about refreshing our strategy around our people,” the retirement system’s interim chief investment officer, Dan Bienvenue, said during Monday’s meeting. “Specifically, how we recruit, develop, and retain our team to position ourselves for success both now and in the future.”

According to Bienvenue, this includes the creation of a research and strategy group and the board governance and sustainability program.

“All of these changes that we’ve made have been directly migrating from a total siloed culture and business model to a one team, one fund approach,” Bienvenue said.


The board is also looking to change how it does business. On Tuesday, the board considered an information item (meaning, they didn’t vote on the matter) on whether it should oversee investigations into allegations of misconduct by the chief executive officer, CIO, chief financial officer, general counsel, and other high-level positions.

At present, the full board is notified of investigations after they are completed. Some board members said they believed this is appropriate, as they want to avoid tarnishing reputations during investigations into false accusations.

Members also discussed whether the investment committee should involve all 12 board members, rather than just nine.

Board member Margaret Brown, who does not sit on the committee, pointed out that board members who are not on the committee cannot make motions or vote on them. She added that all members should also sit on the pension and health benefits committee, which she sits on.

However, other members pushed back on that, noting that members who are not on the investment committee are given time to speak at investment meetings. “I have seen great deference given to individuals who are board members that are not a member of that particular committee,” board member Lisa Middleton countered.

At the time of reporting, the full CalPERS board was still deliberating whether this will be approved. However, the board governance committee voted to approve this motion at its Tuesday meeting.

[II Deep Dive: CalPERS’ CIO Resigned in Controversy. Now the Board Is Ready to Tackle the Fallout.]

Also at that meeting, the board considered an information item on the reporting structure between the chief executive officer and the chief investment officer.

At present, the CalPERS CIO reports to its CEO, who in turn reports to the board. The board discussed whether a dual reporting structure — in which the CIO would be accountable to both the CEO and the board — would make sense.

“I really wanted the discussion to take place prior to the chief investment officer search process really getting underway,” said California state controller Betty Yee, a board member. Yee said she believes that CalPERS would be best served if the board and the CEO shared responsibility in both the hiring — and, if necessary, firing — of a CIO.

“Let’s face it,” Yee said. “We have not had the strongest track hiring in the past and I want to share in that responsibility and we’re accountable for those decisions that we haven’t had a hand in.”

David Miller, another board member, said he doesn’t think the dual reporting structure will bring stability, which, following Meng’s resignation, is important for the retirement system.

“It’s hard to serve two masters,” Feckner said, echoing another meeting attendee. “You have to have someone in charge. That’s the CEO. We have delegated responsibility to hold the CEO responsible.”