The California Public Employees' Retirement System has dropped it public "name-and-shame" Focus List in favor of engaging the underperforming companies in its portfolio through private contacts and proxy actions.

For the 2011 proxy season, CalPERS says it will use a new screening process, the "Shareowner/Corporate Engagement Program," to identify target companies for possible shareowner resolutions that previously might have been placed on the Focus List.

"The Focus List has served us well by calling public attention to some of the worst market players, but the time has come for a more effective approach," CalPERS Board President Rob Feckner said in a press release announcing the change. "Many of our portfolio companies are adopting improved governance practices, and we're getting better alignment of interest with them than we experienced even a few years ago."

CalPERS didn't publish a Focus List last March because 14 of the 15 companies it engaged in the final round improved their stock performance and governance practices. It had previously named 142 companies to the list since 1987.

The change follows a study of the performance of 155 companies from 1999 through 2008 by Wilshire Consulting found that 96 privately contacted companies significantly outperformed the 59 companies named to the Focus List.

The public pension giant, which has assets of about $220 billion, says it will review the performance of its top 500 domestic equity holdings, and will initially screen for total stock returns for one, three, and five years relative to a broad index and industry group. CalPERS will then conduct a secondary screening for key governance factors, financial analysis and market expectations, and will sponsor or support shareowner resolutions addressing practices at companies that continue to resist governance changes.