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#WomenInFinance Demand Accountability - an Interview with Anne Sheehan of CalSTRS

State Street

May 15,2018

#WomenInFinance celebrates strong women in all corners of the financial services industry who are using their talent and power to change the game.

According to the New York Times,1 the corporate governance heads at seven of the 10 largest institutional investors are women. Anne Sheehan spent a decade as one of them as the director of corporate governance at the California State Teachers’ Retirement System (CalSTRS). As the first person to hold that position, Anne oversaw all corporate governance activities for the largest educator-only pension fund in the world.

Now that she is retired, we wanted to find out how Anne’s political career showed her first-hand how policies impact people; and how she brought those insights to the investment industry to become part of a growing governance force that has since changed the industry forever, “…working quietly behind the scenes to advocate for greater shareholder rights.”

What attracted you to politics and public policy in the first place?

In college, I was a liberal arts major studying American and European history. I ended up taking a few courses in political science and I developed a love for it, so I changed my major in my junior year. My senior thesis was on the senate years of Lyndon B. Johnson, so I really got deep into congressional public policy.

A year after I graduated, I moved to DC and worked on Capitol Hill. Eventually, I was appointed by the Reagan administration to be Assistant Secretary for Congressional Affairs in the Department of Energy (DOE). Working in Washington as a young person was such a wonderful opportunity. You literally saw history unfolding before you.

What was working at that level of the federal government like, particularly as a young woman (only 29!) in that era?

I’d get the obnoxious comments — the catcalls and whistles — even from some members of Congress, which unfortunately is still happening today, but I didn’t have to deal with that in my work environment. I wasn’t differentiated for being a woman. Maybe I was fortunate because I had a forceful personality, but I always had men working for me and both the women and men I worked for were very supportive. I had great mentors.

With five sisters and one brother, I grew up in a world where the sky was the limit —not gender. But I don’t think I appreciated what it meant to be such a young woman in that position at the time.

Is there anything you wish you could go back and do differently during your tenure with the federal government?

I wish I had paid more attention to the little things.

I was at the DOE during the Chernobyl incident. When you are living through points in time like that you appreciate it; you recognize the history being made, but some of the day-to-day I didn’t fully appreciate until much later.

How many people get to say they watched President Reagan deliver a State of the Union address, live and in-person? I knew it was cool, but you don’t appreciate just how rare of an opportunity it all was.

Governance is about accountability and risk management. 

What did your path from public policy to corporate governance look like?

In hindsight, my world has always been an intersection of public policy and the corporate world. I was at the DOE in the 70s during the oil embargo and natural gas deregulation, and those public policy issues still resonate today.

I eventually came to Sacramento and worked for two governors. As the Chief Deputy Director for Policy in the Department of Finance under Governor Schwarzenegger, I represented the Governor on more than 80 state boards, commissions and public authorities including the board of directors of both CalSTRS and the California Public Employees’ Retirement System (CalPERS).

I paid close attention to how the board conducted itself and oversaw funds. I actually got Arthur Levitt, former Chairman of the United States Securities and Exchange Commission (SEC), to come speak to our board about conflicts of interest, pay-to-play regulations and limiting campaign contributions to officials. If managers who made financial decisions could have also made donations to the election of CalSTRS Board members...I felt the potential for conflict was too great.

I wanted to ensure CalSTRS was making the best investment decisions for our teacher beneficiaries. This governance move was the first step to really pique my interest in corporate governance.

Personally, what governance issues are you the most passionate about and why?

When I started at CalSTRS it was the Monday after Lehman Brothers went under. We watched the value of the fund go down and down. It was quite the lesson in both the managing of assets and the need for good governance.

Governance is about accountability and risk management. As investors, we want to be good stewards of the money that teachers have entrusted to us, so we need to hold companies responsible. If they aren’t accountable, can we replace the board? If we can’t replace them, what mechanisms do we have to say enough is enough; we want reform? We want to make sure there are accountability mechanisms.

I am personally very passionate about diversity. Diversity in the boardroom isn’t just a social issue, it’s a business issue. I want the best, highest caliber, most diverse group making decisions on my behalf, because it’s been proven that diversity works and more importantly, it results in better company performance.

How do public policy and corporate governance work together?

With the 2008 election, my public policy background came back into play. I helped form a group with other public pension funds to communicate with the new administration about reforming the financial system; our funds live and die by the market’s success. If it fails, we can’t pay out our pensions. We had a vested interest to ensure that whatever steps were taken helped our markets. We spent time working on Dodd-Frank, fighting to get shareholder-friendly provisions included. Following the passage of the legislation, I was fortunate to be named to the SEC’s Investor Advisory Committee and serveed as the Chair — to be a voice for investors, both large pensions funds like CalSTRS but also small retail mom-and-pop investors working to save for their retirements. Funds don’t just exist for Wall Street, they exist for real people.

The Investor Stewardship Group, which I co-founded, is a grassroots effort of asset managers and asset owners coming together to create a nation-wide code of conduct for stewardship and governance. The signatories, representing $22 trillion of AUM, all agreed to a certain set of principles and we are now asking companies to tell us how they apply these principles. It is our hope this effort will encourage other investors and companies to support this stewardship and governance framework in the US. It is one of the most significant governance developments I've been part of in the last 10 years.

What would you tell women just beginning their careers in either public policy or financial services?

Public policy and finance are noble industries, so don’t be fearful of either of them! We need more good women in both sectors. Women see things differently because they have different experiences and insights than their male colleagues. Having that viewpoint is so important in both industries. So just do it. Follow your heart, because you can be a great contributor to the system and we need your mind — don’t be afraid.

Women naturally take on roles like managing household finances, but don’t naturally see themselves as finance professionals. It’s an attitude that’s slowly changing with the generations. By virtue of my own career, I tell women that the finance industry is empowering. Finance is a great profession and a terrific industry, notwithstanding the bad rap the media and Hollywood have given it. Public policy and finance are noble professions, in part, because you protect people’s retirement at the legislative, regulatory and market levels. This combination of professions has led me to very gratifying work on the behalf of California’s teachers in a seriously mission-driven organization. If you’re just beginning your career, consider combining the two professions or if you’re already established in finance, look at adding public policy to your CV or vice versa.

1. Stevenson, A., & Picker, L. (2017, June 16). A Rare Corner of Finance Where Women Dominate. The New York Times. Retrieved May 8, 2018, from


Topics: Pensions , Dodd-Frank , Transparency

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