Calpers CEO exits, following fund\'s top investor

Date: Tuesday, April 29, 2008
Author: Jim Christie, Mark McSherry and Peter Henderson, Reuters

The chief executive officer of the California Public Employees' Retirement System (Calpers), the biggest U.S. pension fund, said on Monday he would retire, days after its chief investment officer said he would step down.

CEO Fred Buenrostro, said in a statement late on Monday he would leave the fund, best known as Calpers, which manages roughly $240 billion, to pursue private sector opportunities.

News of Buenrostro's pending retirement after six years as the fund's chief executive comes less than a week after Calpers said Chief Investment Officer Russell Read was resigning to pursue environmental investments.

Anne Stausboll, the chief investment operating officer at Calpers, has been designated as Read's interim replacement.

In January, hedge fund group Capital Z Asset Management said it had hired as chief executive Calpers senior investment advisor Christianna Wood, who had been responsible for overseeing $150 billion in assets dedicated to global equities plus many of the pension fund's hedge fund allocations.

Calpers president Rob Feckner said the pension fund is in discussions with Buenrostro about when he would retire, adding that the move that was not a surprise.

"He was talking to us for a while about retiring and seeing about doing something else," Feckner said in a telephone interview.

Feckner said the fund has not identified a candidate from either within or outside Calpers to replace Buenrostro, adding that reports of controversy between Buenrostro and the fund's board were exaggerated.

"We'll look at everything, inside, outside, open up things," Feckner said.

Buenrostro said in a statement: "I want to publicly state what I have told the board: I have reached a decision to retire from public service. Media speculation about reasons for my departure are unwarranted and incorrect."

Recent news reports have claimed Calpers board members have been in conflict with Buenrostro and Read.

Read had been steering Calpers into more aggressive investments since joining the fund in June 2006. Infrastructure was one area he was especially keen on investing in, raising concerns among some unionized state employees concerned about private competition to public works.

"He had clearly had a somewhat different investment strategy than what Calpers had had for a very long time," said James Hawley, director of the Elfenworks Center for the Study of Fiduciary Capitalism at St. Mary's College of California.

"I don't think he was out of step with where a lot of institutional investors both public and private have been going over the last three to four years but for Calpers it was somewhat different," Hawley said.

Calpers board vice chairman George Diehr told Reuters by telephone that the first he heard Buenrostro would follow Read was from media reports.

"I thought there might be something," Diehr said, adding he does not believe the motivations for the departures of Buenrostro, Read and Wood are related.

"I don't believe that there is any sort of common element or underlying issue that has connected the three," Diehr said.