>I've read more than once that, as fiduciaries, they are legally
>bound to the bottom line as the only proper goal and could be
>sued for malfeasance for pursuing any other goal. Does anybody
>know if this is true, or just the excuse for slavishly following
>Capital's wishes?
The law is that they're supposed to maximize returns without taking undue risks - what used to be called the prudent man rule, in the days before gender-neutral language. In the old days, this usually meant selling underperforming stocks and buy ones you'd hope would do better - the so-called Wall Street rule. Calpers' innovation - partly under the influence of modern porfolio theory, which claims, not unpersuasively, that it's nearly impossible to beat the market through active buying and selling - was to hold onto underperforming stocks and lobby managers to boost profits. And we know how corporations boost profits: downsizing, outsourcing, etc.
Calpers was joined in this by several other public pension funds, like New York City's (Nycers). Private pension funds felt inhibited by potential conflicts of interest - GM's pension fund couldn't really lobby Ford on management policy - and mutual funds like Fidelity were afraid of the potential for bad publicity. So it was left to the public pension funds - Nathan's avatars of financial market socialism.
Doug