updated 12/1/2004 5:37:14 PM ET 2004-12-01T22:37:14

Sean Harrigan, a longtime union official and one of the nation's most outspoken advocates for corporate governance reform, was ousted from his post Wednesday as president of the $177 billion California Public Employees Retirement System.

In a 3-2 vote in San Francisco, the California State Personnel Board pulled Harrigan from his CalPERS post after five years as the board's representative to the pension fund and replaced him with Ron Alvarado, whose background is more aligned with the private business and government sector. One of the votes to replace Harrigan was provided by a new appointee of Republican Gov. Arnold Schwarzenegger.

In a statement, Harrigan said he "saddened" to end his involvement in "restoring much needed integrity and accountability to our capital markets," while his supporters alleged corporate pressure and Republican lobbying, including some from the governor, helped drive the move.

State Treasurer Phil Angelides, a Harrigan ally on the CalPERs board, criticized Schwarzenegger and the personnel board for siding with "corporate interests and against taxpayers, pension fund members and ordinary American investors."

Tumultuous year
Elected as CalPERS board president in February 2003, Harrigan led the nation's largest public pension fund through a tumultuous year with positions that angered parts of the nation's business establishment, including the Walt Disney Co., the U.S. Chamber of Commerce and Washington, D.C.-based Business Roundtable.

Harrigan's statement made no mention of corporate foes, but earlier this week he described his possible ouster as retaliation for CalPERS stands that included withholding support from directors of 2,400 companies this year, and persuading fellow institutional investors to withhold votes for the Disney's Michael Eisner as board chairman.

The international vice president and executive director of the Food and Commercial Workers International Union Region 8 States Council, Harrigan also led a drive last May to withhold votes for Safeway Chief Executive Officer Steven Burd, while the union was on strike against the company.

At the time, California Chamber of Commerce President Alan Zaremberg said the withholding move represented "an effort by organized labor to intervene in the corporate board room rather than settle issues at the bargaining table." Other Harrigan critics said the board under his leadership focused more on social activism than generating profits. But CalPERs assets have jumped this year from $161 billion to $177 billion, according to the fund.

Alvarado, a member of the State Personnel Board since 1995, will take over from Harrigan Jan. 1 on a CalPERS board that oversees retirement savings of 1.4 million members, said personnel board spokeswoman Sherry Hicks.

Hicks said personnel board members Alvarado, Anne Sheehan and Maeley Tom voted to make Alvarado the personnel board's CalPERS representative. Board member William Elkins sided with Harrigan, she said.

Sheehan, appointed by Schwarzenegger following his election last year, is executive director of the California Building Industry Foundation, a homebuilders advocacy group, and Tom is chief executive officer of Tom & Associates, which specializes in government and public affairs.

Last year, Harrigan defeated former Assembly speaker and San Francisco mayor Willie Brown to become president of the 13-member CalPERS board.

Harrigan and some CalPERS board members said the fund's tradition of using its clout as a major corporate shareholder in U.S. companies would continue. Harrigan and Angelides said recently that 2005 would feature a CalPERS initiative to curb executive salaries and lucrative executive payouts when corporations merge.

State Controller Steve Westly, a former eBay executive and CalPERS board member, cited the fund's leadership on corporate governance reform issues, saying in a statement, "I'm confident CalPERS will continue to lead on these issues regardless of any change in board membership."

According to the personnel board Web site, Alvarado's career has included stints as vice president of a real estate development company and a former official in the state Consumer Services agency and Health and Welfare Agency. He has also worked in the federal government.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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