Calpers' New Chief: Same Fire, Less FlashEric Schine
No one who knows him will dispute that Jim Burton has chutzpah. A few years ago, Burton gave his boss, Dale Hanson, then chief executive of the California Public Employees' Retirement System (CalPERS), a book for Christmas. The subject: how to lead. Burton, who has held senior jobs for an assortment of California politicians, including former Governor Jerry Brown, clearly has his own ideas on the matter.
Now, the 43-year-old Burton will have a chance to try them out. On Sept. 16, the CalPERS board named Burton to replace Hanson as head of the powerful $80 billion fund. To most outsiders, Burton is a total unknown. Soft-spoken and cerebral, he seems the complete opposite of the extroverted and sometimes confrontational Hanson. And Burton's appointment has no doubt stirred a sigh of relief in corporate boardrooms from Boston to Los Angeles. After Hanson's seven-year reign of terror aimed at the likes of General Motors Corp. and Lockheed Corp., Burton at first glance seems like a bland bureaucrat.
BACKFIRE. Burton and others who know him say otherwise. He vows that CalPERS will remain vigilant in its self-appointed job of stirring up shareholders wherever corporate directors are falling asleep at the wheel. "Corporate governance is alive and well at CalPERS and will continue unabated," insists Burton. "It's not dependent on Dale Hanson." After Hanson snagged the headlines, Burton says that he often helped set policy and work out negotiations with companies. "Dale was good at rattling cages," explains Sarah Teslik, executive director of the Council of Institutional Investors, a Washington-based shareholder-rights group. But she adds: "I expect more, not less, out of Jim."
But Burton knows he's going to have to take a more subtle approach than his charismatic predecessor. Hanson's high-profile activism eventually backfired when the CalPERS board publicly worried in 1993 that his agitating was going too far at the expense of the fund's investment performance. "Dale tended to shoot from the hip and follow his instincts," says DeWitt Bowman, former CalPERS chief investment officer. "Jim takes more of an effort to scope out his choices."
So what should chief executives and investors expect? CalPERS will continue its practice of naming the 10 worst corporate performers. Although he says he will employ a carrot wherever possible, he is quick to point out that the "iron fist" of shareholder proposals will still be used for companies "that still need that kind of prompting."
HIRED GUN. Unlike Hanson, Burton has no plans to jet around the country personally confronting recalcitrant boards. For that, he has a hired gun: Sheryl Pressler, formerly McDonnell Douglas Corp.'s tough, intense chief investment officer, who last spring assumed the same title at CalPERS. Pressler is also busy arranging trips to Europe and Japan to bring religion to boards of overseas corporations, where a growing portion of CalPERS' assets are invested. "She's from the corporate world," says Burton. "That can only help us."
Burton's world is strictly Sacramento. An army brat, his outlook was transformed attending college in San Francisco at the height of the antiwar movement in the 1960s. He eventually became Jerry Brown's deputy chief of staff in 1982. He worked closely with California Treasurer Jesse M. Unruh in the 1980s as a finance staffer, sitting in for the legendary shareholder activist at CalPERS board meetings. "I bring my own credentials to corporate governance," says Burton, who is one of the more plugged-in players in the state capitol. His wife, Susanne, a former top finance staffer for Governor Pete Wilson, heads a pension education firm.
Although Burton plans to stay out of the limelight for now, Jonathan Lukomnik, New York City's deputy controller who has worked with Burton, says "less visible doesn't mean less effective." To make sure he can pull that off, Burton might want to reread that book about being a leader.