0:00 Intro.

1:31 Start of interview

2:30 Anne's "origin story". She grew up in Colorado and after attending college, she moved to DC to work on the Hill and later in the Reagan Administration (U.S. Department of Energy). She moved to Sacramento in the late 1980s, where she worked in and out of state government. In her role as Chief Deputy Director of the CA Department of Finance (under Governor Schwarzenegger) she served on the boards of CalPERS and CalSTRS, among many other state boards. In 2007 Stanford issued the first Clapman Report, outlining best practices principles that she used to improve the governance of the CalSTRS board. The next year, she joined CalSTRS as the first Director of Corporate Governance, just in time for the GFC of 2008! She got very involved with the Dodd Frank legislation in 2011 and the rules that came out of it, such as say-on-pay, proxy access, and others. She retired from CalSTRS in 2018 and later joined the boards of Victoria Secret & Co, Cohn Roberts Holding Corp (NYSE:CRHC) and joined PJT Camberview as a senior advisor.

8:45 On the governance of state-owned or public entities, and the influence on politics on those boards. "Anytime there is a politician on a board, there will be a political bent to it." She did not sit on the board of CalPERS when they went after Safeway in their labor dispute (2004). At CalSTRS, they worked very hard to make sure that they did not pursue any political agenda. They made sure to follow a process when making any divestment decision.

11:58 On joining the board of CRHC, and the state of SPACs. CRHC is merging with Allwyn Entertainment, a European lottery operator in a listing valued at $9.3bn.

14:57 On the evolution of ESG. "The history of ESG at CalSTRS goes way back, they had a Statement of Investment Responsibility in 1978, outlining 21 risk factors (now called ESG factors). These are investment risks to the portfolio if they are not managed properly." There is a history of divestment from South Africa by California public pension funds during the Apartheid regime. UNPRI in early 2000s. "One of the issues is all the terminology that is thrown around: CSR, ESG, impact investing, moral or ethical investment, DEI, etc."

20:27 On the evolution of shareholder engagements. The example of CalSTRS and CII. The Engine No.1-Exxon Mobil case. "I've always thought that the acronym should be GES, because the "G" of governance is the infrastructure that sets in place how boards should handle these issues." "The advent of Say-on-Pay forced the engagement between investors and companies."

25:53 On the new criticisms of ESG and politicization of corporations.

27:54 On the exclusion of Tesla from the S&P500 ESG Index.

30:42 On the new SEC climate disclosure rules. "It's probably one of the boldest and most progressive proposals that has come out, probably ever, from the SEC."

34:35 Board diversity and her thoughts on CA courts striking down SB-826 and AB 979, and what these rulings mean for board diversity. Her role in promoting board diversity from CalSTRS starting in 2008, the Diverse Director Database. The role of the big institutional investors such as BlackRock, Vanguard and State Street to promote board diversity. The Nasdaq board diversity rule. DEI beyond the boardroom (racial equity audits, pay gaps, etc.)

41:26 On the governance of private companies, and the rise of private markets. The role of CalSTRS on improving governance of private companies via its LP role and influence.

45:00 Her recommendations on how directors should handle down cycles and recessions. "The governance processes are there to be the guardrails during the uptime and the downturns."

47:11 The 3 books that have greatly influenced her life in the last few years:

Biography of President Ulysses Grant, by Ron Chernow (2017)
From Strength to Strength, by Arthur C. Brooks (2022)
The Road to Character, by David Brooks (2015)

48:40 - Who were your mentors, and what did you learn from them?

Rich Koppes (former GC of CalPERS), on the governance side.
Bill Hauck (former head of the California Business Roundtable)

49:45 - Are there any quotes you think of often or live your life by? "Play the hand that's dealt to you." "Don't obsess over the bitter, go forward." "Perfect is the enemy of tGood" "80% is better than 100% if you can get it, or zero." "The only constant of life is change."

50:39 - An unusual habit or an absurd thing that she loves: When she travels to a new city she gets on those hop in hop off buses (typically tourist traps).

51:10 - The living person she most admires: Zelensky and the people of Ukraine.

Anne Sheehan is a former Director of Corporate Governance at CalSTRS and currently serves on the boards of Victoria's Secret & Co and Cohn Roberts Holding Corp (NYSE:CRHC) and is a senior advisor at PJT Camberview.