CITY OF LOS ANGELES
BOARD OF
ADMINISTRATION
CALIFORNIA
___
LOS ANGELES CITY
EMPLOYEES’
RETIREMENT SYSTEM
360 EAST SECOND STREET
2ND FLOOR
LOS ANGELES, CA 90012-4207
THOMAS J. MIZO
PRESIDENT
SHELLEY I. SMITH
___
VICE PRESIDENT
ROBERT AGUALLO, JR.
___
GENERAL MANAGER
(213) 473-7280
MARVIN ADAMS, JR.
ERIC L. HOLOMAN
RICK ROGERS
VICKY SCHIFF
KEN SPIKER
JAMES K. HAHN
MAYOR
DANIEL P. GALLAGHER
CHIEF INVESTMENT OFFICER
(213) 473-7124
___
TTY (888) 349-3996
January 11, 2005
Subject:
CORPORATE GOVERNANCE INVESTING – REQUEST FOR INFORMATION
Dear Responder:
The Los Angeles City Employees' Retirement System (LACERS), an $8.3 billion fund, seeks information from
managers actively running corporate governance investment portfolios.
Responding firms should currently and actively manage investment portfolios where value is added to
underperforming companies using corporate governance techniques. The firm must have a live (i.e., not simulated)
performance history for at least 24 months for the period ending December 31, 2004. Managers meeting this
requirement should be available to make presentations to, and provide consultations with, the Board on issues
relating to corporate governance investments. Consideration will be given to minority- and women-owned firms to
ensure that women and minorities have an opportunity to participate.
The following documents will need to be completed in order to participate in the RFI: 1. RFI questionnaire; 2.
Electronic Response Spreadsheet; 3. Affirmative Action Program Form; 4. Vendor Child Care Policy Form; 5.
Child Support Obligations Form; and, 6. Americans with Disabilities Act Form. All documents may be
downloaded from LACERS’ website at www.lacers.org. The completed spreadsheet and your questionnaire
responses in MSWord must be received at LACERS at lacers1@mindspring.com no later than 4:30 P.M. Pacific
Standard Time, Friday, February 11, 2005. Fourteen hardcopies of the RFI responses to the questionnaire along
with the four completed City forms (one original set only) are due by 4:30 pm, Pacific Standard Time, Friday,
February 11, 2005 and sent to:
DANIEL P GALLAGHER, CHIEF INVESTMENT OFFICER
LOS ANGELES CITY EMPLOYEES’ RETIREMENT SYSTEM
360 EAST SECOND STREET, 2nd FLOOR
LOS ANGELES, CA 90012-4207
ATTENTION: CORPORATE GOVERNANCE INVESTING
IT IS THE RESPONSIBILITY OF THE RESPONDER TO VERIFY WITH LACERS THAT THE
ELECTRONIC AND HARDCOPY RESPONSES ARE RECEIVED BY THE APPLICABLE
DEADLINES. FACSIMILE COPIES WILL NOT BE ACCEPTED. RECEIPT OF THE EMAILED
COPY AND THE HARDCOPY IN THE REQUESTED FORMAT ALONG WITH THE FOUR
COMPLETED CITY FORMS BY THE RESPECTIVE DEADLINES ARE REQUIRED IN ORDER TO
BE CONSIDERED RESPONSIVE TO THIS REQUEST FOR INFORMATION.
Firms responding to the RFI may be requested to submit additional copies of their responses. Any questions should
be directed to Dan Gallagher at (213) 473-7124 or e-mailed to lacers1@mindspring.com.
Robert Aguallo, Jr., General Manager
Los Angeles City Employees' Retirement System
LACERS RFI Corporate Governance Investing
- 24-
January 11, 2005
REQUEST FOR INFORMATION - QUESTIONNAIRE
CORPORATE GOVERNANCE INVESTING
Los Angeles City Employees’ Retirement System
January 11, 2005
In MS Word format, please state the question number and restate the question first followed by your response.
Save the file using the format “YOUR FIRM’s NAME_CGI_RFI.doc” and forward to lacers1@mindspring.com
by 4:30 p.m. PST, Friday, February 11, 2005. Please be direct and concise with your answers.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Please state your firm’s name, address, phone number, fax number, website address, email address, and
contact person who can discuss your firm’s responses.
State the number of years the firm has been in existence, ownership structure (e.g. corporation,
partnership, sole proprietorship, subsidiary), and number of years actively engaged in corporate
governance investing. Please state if your firm’s primary activity is corporate governance investing. If
corporate governance investing is not the primary activity, please state the primary activity of your firm
and how corporate governance investing fits into your business. Do you consider your firm a U.S.
and/or non-U.S. corporate governance investor? Please elaborate.
Describe your firm’s organizational structure. Please include a detailed organizational chart in the
appendix. What is the current market value of the current assets under management for said mandate?
Please describe your corporate governance investing philosophy and process. What specific process or
action does your firm take to influence company valuations leading to added alpha?
Describe the investment management team, their professional experience and credentials that qualify
them as seasoned professionals in corporate governance investing.
Explain how your firm projects investment returns. Explain how returns are calculated. Also explain
the various kinds of risks associated with US corporate governance investing, and how those risks are
assessed and quantified. How are these risks mitigated?
If your firm engages in non-US corporate governance investing, please elaborate on the differences
between US and non-US corporate governance investing. What added risks are associated with non-US
corporate governance investing? How are these risks mitigated?
What would be the anticipated annual return (gross and net of fees) for a minimum five-year
commitment period? What would be a typical commitment period? What would be the anticipated rate
of return (gross and net of fees) for that commitment period?
Please provide return information for two representative accounts/funds (public fund investors, if
possible), the inception dates, initial funding amounts, and any additional allocations to said mandate.
For the two accounts, state whether the returns are for a separate or commingled account, and whether it
is public fund. Please state the annualized gross and net returns for the 1, 3, and 6 months, 1 year, and
2, 3, 4 and 5 year annualized periods ending December 31, 2004. If you run any separate accounts in
this mandate, please include a representative(s) client’s return(s) gross and net of fees for the same time
periods and the amount managed.
What is your preferred benchmark? How much alpha is anticipated/projected above the benchmark over
3, 5, and 10 years time period?
What would be a typical fee structure and the fees in dollars the first year for a public pension fund
investing $30 million, $40 million, and $50 million? Would the fee structure allow for a decrease in
fees over time? If so, please explain.
Please explain how you would calculate the management fees. Do you prefer a performance-based fee
or asset-based fee structure?
Please provide references from five of your clients along with the corresponding firm’s contact
representative, address, phone number, and email address. Secure advanced permission from these
LACERS RFI Corporate Governance Investing
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January 11, 2005
14.
15.
16.
17.
18.
19.
20.
references for LACERS staff to contact them. Also, please provide a complete client list for those
under said mandate.
How many clients and the dollar value of assets under management have you gained in the past 12
months in said mandate? Has your firm lost any clients under the corporate governance investment
mandate? Please state reasons for client loss and dollar value of assets under management.
Discuss departed principals, executive staff, or other key investment professionals during the past five
years including their names and titles. State reasons for each departed personnel and their former
responsibilities and duties at your firm. Discuss the addition of staff and responsibilities anticipated for
the next 12 months.
Is your firm certified as a minority- or women-owned business? Elaborate on your firm’s relationship
with minority- or women-owned brokerage firms. How would such a brokerage firm arrange to do
business with your firm?
Please disclose the nature of any relationship you have or had in the past three years with any LACERS
Board Member, consultant, or staff. If you have no conflicts of interest to report, please state: “There
are no conflicts of interest to report.”
Over the past three years, has your organization, affiliates, parent company, officer, or principals been
involved with litigation, legal proceedings, or SEC investigations related to your firm’s investment
activities? If so, please provide a brief explanation including the current status and/or resolution of this
action.
Please provide a list of your portfolio holdings, share position, and share market value of one of your
representative funds as of December 31, 2004 in an appendix.
Any additional information that will help LACERS understand corporate governance investing and
your firm’s ability to manage money in said mandate leading to superior performance.
LACERS RFI Corporate Governance Investing
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January 11, 2005