California State Teachers' Retirement SystemSeptember 12, 2003 Mr. Jonathan Katz
Dear Secretary Katz: RE: FILE NO. S7-14-03 This letter is sent on behalf of the California State Teachers' Retirement System's (CalSTRS) members. CalSTRS supports the Commission's decision to require increased proxy statement disclosure of the director nomination process and the attention to the ways in which shareholders communicate with directors. As you are aware, CalSTRS is a public pension fund, established for the benefit of California's public school teachers over 80 years ago. CalSTRS has assets of approximately $104 billion; $43 billion of this amount is invested in the domestic equity market. These assets represent the retirement plan for approximately 715,000 participants. We previously registered our support for the Commission's decision to review the proxy rules surrounding this matter, back in June of 2003. Then, as now, the long-term nature of our liabilities makes us keenly interested in efforts to restore investor confidence in the capital markets. We are concerned that the moment may pass to reform the systemic problems in the face of any sustained market rally and applaud the Commission for keeping a forward-looking, long-term view. The disclosure reforms articulated thus far are an important initial step and we look forward to the actual adoption of the rules that will give shareholders the necessary access to the corporations' proxy materials. The current hodge-podge of rules regarding shareholder nominations is inconsistent and unsatisfactory as a means of participating in what is arguably, the most important corporate governance decision that shareholders can make. CalSTRS believes that this is an important issue and as an example of how vital it is, I serve on a joint task force between the Council of Institutional Investors and the National Association of Corporate Directors to vet the barriers to effective director-shareholder communication. CalSTRS believes that it is important that any final rules on this matter clarify that shareholders (either singly or in groups) will not jeopardize 13G filing status by submitting director candidates for nomination and urges the Commission to create a "safe harbor" for such activities. Again, thank you for your leadership in this matter and we look forward to the final rules regarding the director nomination process. If you would like to discuss this matter, please feel free to contact me with any questions.
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