Innovator Article

CalPERS’ Anne Simpson Stresses Management Responsibility
Corporations Require Accountability for the Exercise of Power

Image of CalPERS’ Anne Simpson Stresses Management Responsibility

By most measurable accounts, the modern corporation is a wild success, with products and services that touch every moment of our lives and companies with so much wealth that some are valued at more than the GDP of industrialized nations.

WalMart, for example, posted $444 billion in net sales last year, slightly more than the GDP of Norway. Apple has a value greater than the GDP of Poland, and selling the company at its market value of about $490 billion would more than pay off Greece’s crisis-causing debt.

But while recent decades have seen corporations accumulate exponential amounts of power, wealth and resources, many of the world’s seven billion people are still suffering. Close to 780 million don’t have safe drinking water, 20 percent live without electricity and almost 40 per- cent don’t have access to basic sanitation.

Meanwhile, issues surrounding corporate governance are as important and controversial now as they were in the 18th century, when the modern idea of corporations first took root, and accountability, transparency and fairness will be a priority for the next generation of CEOs. That’s the message that Anne Simpson, senior portfolio manager of investments and director of corporate governance at CalPERS, shared with MBA students in September as a Dean’s Distinguished Speaker.

With $250 billion under management, California Public Employees’ Retirement System is the largest public pension system in the U.S, providing retirement and health benefits to more than 1.6 million public employees, retirees and their families.

Simpson oversees CalPERS’ Focus List of shareholder engagement with underperforming public companies, global proxy voting, legal and regulatory reform and its actively managed corporate governance investment strategy. She is also a senior faculty fellow at the Yale School of Management and a member of the Investor Advisory Group of the Public Company Accounting Oversight Board.

Scandals, malfeasance, greed and corporate manipulation—Simpson highlighted many instances throughout history. These examples, she said, remind us that despite legal constructs and Supreme Court decisions, a corporation is not a person.

“It’s not a person in the sense that you and I are people. It’s not a person in the sense of having volition, or responsibility, moral agency, the ability to make decisions,” Simpson said. It’s more like a robot.

“It’s something that we have invented and we are responsible for,” she said.

Corporations require accountability for the exercise of power. MBA students, as future corporate leaders, will need to ask, if not the shareholders, then who will be responsible and accountable for the corporation. The government? Workers? The media?

“It seems absolutely right to me, this alignment of interests between the providers of capital and the company,” Simpson said.

CalPERS is defining its responsibilities as an influential institutional investor, Simpson said. The pension fund has developed a new framework for its investment strategy focusing on the creation of value, rather than individual strategies and decisions.

The idea, which Simpson described as “old-fashioned basics,” is that value comes from financial, human and physical capital. The Graduate School of Management will play a key role in CalPERS’ new focus by researching and providing analysis on incorporating environmental, social and corporate governance issues into CalPERS’ investment strategies (see page 20).

Simpson’s inspirational final message for the students: “Have imagination. That is probably one of the most undervalued things in a business leader.”

[A corporation] is not a person in the sense that you and I are people. It’s not a person in the sense of having volition, or responsibility, moral agency, the ability to make decisions. The best we can think of is that it is a robot. It’s something that we have invented and we are responsible for.

— Anne Simpson, senior portfolio manager of investments and director of corporate governance, CalPERS

 

 

 

 

 

View the video of Anne Simpson’s talk: www.gsm.ucdavis.edu/simpson

Commands

Twitter Feed

Loading tweets...
News Release

UC Davis Part-Time MBA Ranked in Nation’s Top 9%
Fourth Consecutive Year among U.S News & World Report's Premier Programs

Image of UC Davis Part-Time MBA Ranked in Nation’s Top 9%

(Davis, CA) — The UC Davis Part-Time MBA program offered in Sacramento and the San Francisco Bay Area is ranked among the top 9% in the U.S., according to U.S. News & World Report’s latest graduate business school rankings.

At No. 29, this is the fourth consecutive year the UC Davis Part-Time MBA program is among the top AACSB International-accredited part-time MBA programs surveyed. This year, there were 323 part-time MBA programs surveyed.

News Release

UC Davis Full-Time MBA Ranked among Nation’s Premier Programs for 20th Consecutive Year
MBA Programs among Top 10% in U.S.
Record Salary and Bonus

Image of UC Davis Full-Time MBA Ranked among Nation’s Premier Programs for 20th Consecutive Year

(Davis, CA) — The UC Davis Graduate School of Management’s Full-Time MBA program is ranked among the premier business schools in the nation for the 20th consecutive year, according to U.S. News & World Report’s latest graduate business school rankings released today.

U.S. News’ latest ranking places the Full-Time MBA program at No. 48, placing it among the top 10% of the 464 Association to Advance Collegiate Schools of Business International’s accredited full-time MBA programs surveyed.

Key statistics from the School’s Full-Time MBA ranking include:

News Release

UC Davis Graduate School of Management partners with Lawrence Livermore and Sandia National Labs to drive technologies from lab to market

Image of UC Davis Graduate School of Management partners with Lawrence Livermore and Sandia National Labs to drive technologies from lab to market

(Davis, Calif.) – With a joint goal of speeding the transfer of new technologies from the laboratory to the commercial marketplace, the UC Davis Graduate School of Management, Lawrence Livermore National Laboratory and Sandia National Laboratories have announced a new partnership for researchers to develop their entrepreneurial skills.

Spotlight Story

Vickie Sherman MBA 13 Finds Her Passion, Her Career—and Herself

Image of Vickie Sherman MBA 13 Finds Her Passion, Her Career—and Herself

What opportunities, decisions, events have shaped your professional life?

My career path has been a climb across a jungle gym rather than a tangent up a corporate ladder. As a child, I used to thumb through the three-inch JCPenney catalogue, picking out the professional women who I would grow to be. I wanted to rule the world from a corner office in a suit and heels. I wanted to shed my humble origins and become Corporate Barbie.

Spotlight Story

MBA Student Consultants Make an IMPACT
Projects Put Business Needs Front and Center

Image of MBA Student Consultants Make an IMPACT

Agilent Technologies’ Electronic Measurement Group is a $3.6 billion business that over the past decade has seen a dramatic shift in its customer base from U.S., and Western European customers to predominantly Asia-based customers. Today, the majority of the division’s revenues are generated outside of the U.S., with an increasing concentration in China.