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Xerox CEO--hiring directors hard under new rules
WASHINGTON, April 2 (Reuters) - Recently criticized by a big pension fund for having an ineffective board, Xerox Corp. (NYSE:XRX - News) Chairman and Chief Executive Anne Mulcahy said on Wednesday the new sweeping overhaul of securities rules are making it difficult for companies to recruit good directors.
Speaking to a business group, Mulcahy said there were "unintended consequences" from well-meaning reforms under the Sabanes-Oxley Act, which is aimed at strengthening corporate boards and improving corporate governance

One example is the challenge that companies now confront in recruiting good board members," Mulcahy told a group at the U.S. Chamber of Commerce.

"As a relatively new CEO, I'd like to bring a few exceptional people on the Xerox board," she said. "Getting them in the post-Enron environment is proving to be very difficult."

Her remarks came a week after Calpers, the No. 1 U.S. pension fund, criticized the Stamford, Connecticut-based office equipment maker for having "one of the most ineffective" boards in corporate America.

The $131 billion pension fund, also known as the California Public Employees' Retirement System, urged Xerox to expand its board with three independent directors and split the position of chairman and chief executive at the company.

It said Xerox's board of directors had not exercised effective oversight during a period in which the company was reeling from accounting problems and earnings shortfalls.

Xerox, which was one of six companies cited by Calpers, returned to profitability in 2002 after a two-year effort marked by a Securities and Exchange Commission (News - Websites) probe and earnings restatements.

Xerox has said it has taken steps to strengthen its corporate governance and and the firms CEO repeated the company's criticism of Calpers' 10-year study.

"I think it is reflective of the past not reflective of the actions that we've taken," Mulcahy told reporters after her speech. "We have been working hard to make real substantive changes in our business and we certainly would have liked to have seen that reflected with the Calpers' report and it didn't seem to merit their attention."

Mulcahy said Xerox is expected to name a new director when the company files a proxy statement on April 11.

Calpers said the target companies were selected from its investments in more than 1,800 U.S. companies based on stock performance, governance practices and an analysis of how much "economic value" the companies were generating.

Public pensions across the country have become more vigilant about governance reforms after after racking up billions of dollars in losses in companies hit hard by a wave of major accounting scandals.