• Eric Lister, MD, Moderator
  
  Dennis A. Johnson, CFA, Senior Portfolio Manager
  California Public Employees’ Retirement System (CalPERS)
  
  

Presentation on Excellence in the Boardroom:

CalPERS is 1 of largest purchasers of healthcare in U.S. [after US gov./GM]
Just approved $700 million through private equity group products
Spent upwards of $5 billion per year in healthcare services for more than 1.2M members
They’ve been targeting corporate governance since 1985
Corporate governance activism is important to them because:

• Investors in general like to buy companies with good corporate governance practices – minimizes risk
• Corporate governance premium companies get in their valuation whether they're publicly-traded or privately-held
• Companies with good corporate governance practices have relatively easy time attracting capital – "reduction in cost of capital"
• Companies with good corporate governance practices have relatively easy time attracting capital – "reduction in cost of capital"
• Fully-accountable governance structures @ companies produce best long-term results

Three components of good corporate governance structures:

• Independence (on Board – no conflict of interest between mission of organization [hospital, in this case] and individuals representing Board)
• Board members should be thoroughly familiar with healthcare industry
• Closely aligns share/stakeholders with interests of end users (patients/health plan enrollers, in the case of CalPERS)