View Appeal

New York City Comptroller William C. Thompson, Jr. today made the following statement regarding his appeal of the recent decisions by the Securities and Exchange Commission (SEC), which effectively nullify the New York City Pension Funds' shareholder proposal calling for the establishment of channels for shareholders to communicate directly with non-management directors at PeopleSoft, Inc. and Advanced Fiber Communications, Inc.

"As fiduciary and advisor to the New York City Pension funds, I believe it is of paramount importance for companies to facilitate unfiltered communications between their shareholders and non-management directors on corporate governance matters. To effect this, my office drafted a proposal which we submitted to several companies calling on their boards to enable direct communications, including meetings, between independent directors and shareholders, based on the standard proposed by the New York Stock Exchange."

"In response to our proposal, SAFECO instituted procedures which will enhance independent-director/shareholder communications. Moreover, The Council of Institutional Investors and the National Association of Corporate Directors last week announced the formation of a joint Task Force on Improving Director-Shareholder Communication. These actions clearly recognize the need for this important means to enhance independent directors' oversight of corporate management."

"In the wake of Enron and the Sarbanes-Oxley Act, I find it unfathomable that the SEC Division of Corporation Finance staff has issued No-Action Letters permitting the companies to exclude the Funds' proposal, based on the premise that the proposal for direct communication is merely 'ordinary business.' This decision is particularly confusing because the SEC recently stated in an analogous situation that 'There must also be frank, open and clear channels of communication so that information can reach the audit committee.'

"These No-Action letters run counter to the emphasis of the SEC and other regulators on the need for meaningful director independence. As a result, I have initiated an appeal which requests that both No-Action Letters be submitted to the SEC Commissioners for review, and that the SEC then direct that both No-Action letters be withdrawn. It is my sincere hope that after giving sufficient weight to the new regulatory landscape that strongly supports our proposals, the SEC will grant our appeal. I look forward to the swift resolution of this issue."

# # #