CalPERS Names Emerson Electric to 2004 Focus List

The California Public Employees' Retirement System (CalPERS) has named Emerson Electric Co. as one of four companies on its 2004 Focus List. Emerson's overall 2003 sales topped USD $14 billion. CalPERS, with over $160 billion in assets, is the largest, most influential and outspoken pension fund in the United States. The fund's management said it named the four in order to publicly pressure them to substantially reform corporate governance and/or finance issues. Emerson is home to four well-known bearing manufacturing operations -- Browning, Sealmaster, Rollway and McGill -- in its Industrial Automation - Emerson Power Transmission division. The bearing companies produce mounted ball and roller bearings, rod end and spherical bearings, cam followers, needle roller and spherical roller bearings, along with cylindrical radial, cylindrical thrust and steel cage journal bearings. CalPERS said, "Emerson Electric was placed on the list because of its board structure and the excessive retirement package of its Chairman." It is also, "dissatisfied with the Company¡¯s classified board and the generous retirement package granted to former CEO and current Chairman Charles Knight." Specifically, CalPERS, "wants Emerson to reduce the employee representation on the Board, declassify the board by the 2005 annual meeting, and renegotiate the terms of Mr. Knight¡¯s contract." According to the fund, it conducts a yearly performance review for the US companies in its stock portfolio. It identifies and begins to focus on the long-term underperformers, meeting with the directors of each to discuss its performance and governance concerns. After that effort, companies which fail to respond or meet CalPERS expectations are named to its Focus List. The Focus List is meant as a way to draw public and investment community attention to those companies. Although Emerson Electric is relatively low profile, the other three companies targeted by CalPERS for 2004 have already shown an alarming propensity to appear in the bad-news business news headlines: Maytag Corporation, Royal Dutch / Shell Group, and Walt Disney Company.