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Comptroller William C. Thompson, Jr., on behalf of the New York City Pension Funds, has filed shareholder proposals calling for two corporations to establish higher standards of independence for directors who serve on key board committees.

Comptroller Thompson is urging the EMC Corporation of Hopkinton , MA , to adopt stronger standards for its Audit Committee and Clear Channel Communications, Inc. of San Antonio , TX , to adopt stronger standards for its Compensation Committee. In addition, Thompson filed a proposal with Safeway, Inc . of Pleasanton , CA , requesting that the company establish a formal mechanism for direct communications between its independent directors and shareholders.

The City's funds are The New York City Employees' Retirement System (NYCERS), New York City Police Department Pension Fund, New York City Fire Department Pension Fund, New York City Teachers' Retirement System and New York City Board of Education Retirement System. The EMC and Clear Channel proposals were submitted by all five funds, while the Safeway proposal was filed by NYCERS.

"Tougher standards would buttress the independence and integrity of directors who serve on these very important committees," Thompson said. "The New York City Pension Funds, as well as the Council of Institutional Investors and the National Association of Corporate Directors' Blue Ribbon Panel on Director Professionalism, call for standards of independence for directors serving on key board committees that are stronger than the standards adopted by the stock exchanges for their listed companies."

The funds are urging EMC Corporation to amend its charter to specify that its Audit Committee be composed solely of independent directors as defined by the shareholder resolution. The proposal defines an independent director as, "someone whose only nontrivial professional, familial or financial connection to the corporation, its chairman or its executive officers is his/her directorship, and who is not currently or has not been, or whose relative is not or in the past five years has not been, employed by the corporation or employed by, or a director of, an affiliate of the corporation." EMC shareholders showed strong support for the proposal last year with 22.2% of the votes cast.

"The protection of shareholder value through adequate internal financial controls is among the most important duties of the corporation's Board of Directors," Thompson said. "We believe that the effective performance of this duty can be achieved best through an Audit Committee composed solely of truly independent directors."

The funds' resolution for an Independent Compensation Committee for Clear Channel requests that the company amend its charter and apply the same stronger standard for committee members. Last year, Clear Channel successfully petitioned the Securities and Exchange Commission to omit the proposal from its proxy statement. The Comptroller has revised the proposal based on guidance set forth in a recent SEC staff legal bulletin. Despite the revision, the company again submitted a petition to the SEC seeking to omit the proposal from its proxy statement. The Comptroller opposes the petition.

The Safeway proposal calls on the Board of Directors to establish an Office of the Board to facilitate direct communications on corporate governance matters concerning non-management directors and shareholders. The office would report directly to a committee of non-management directors. The goal of this committee would be to benefit the company through constructive discussions of perspectives, enhanced understanding, valuable feedback, and the fostering of meaningful links between directors and the shareholders by whom they are elected.

"As long-term investors, we believe that directors must be accountable to the shareholders by whom they are elected," Thompson said. "This proposal is intended to improve director and shareholder communications on corporate governance matters, and to strengthen the relationship between the Board of Directors and the shareholders. We believe that direct communications and accountability are essential ingredients for restoring investor confidence and establishing productive dialogue between directors and shareholders."

The funds collectively own: 7,577,596 shares valued at $103,585,737 in the EMC Corporation; 1,350,002 shares valued at $32,130,047 in Safeway, Inc.; and, 1,637,626 shares valued at $51,568,842 in Clear Channel Communications, Inc.

Besides Thompson, the Pension Funds trustees are:

Fire Department Pension Fund: Mayor Michael Bloomberg; New York City Fire Commissioner Nicholas Scoppetta (Chair); New York City Finance Commissioner Martha E. Stark; Stephen Cassidy, President, James Slevin, Vice President, Robert Straub, Treasurer, and John Kelly, Brooklyn Representative and Chair, Uniformed Firefighters Association of Greater New York; Peter Gorman, President and Captains’ Rep., Nicholas J. Visconti, Chiefs’ Rep., and Stephen J. Carbone, Lieutenants’ Rep., Uniformed Fire Officers Association; and, Joseph Gagliardi, Marine Engineers Association.

Police Pension Fund: Mayor Michael Bloomberg; New York City Finance Commissioner Martha E. Stark; New York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch, Patrolmen’s Benevolent Association; Michael Palladino, Detectives Endowment Association; Edwin Mullins, Sergeants Benevolent Association; Anthony Garvey, Lieutenants Benevolent Association; and, John Driscoll, Captains Endowment Association.

NYCERS: New York City Finance Commissioner Martha E. Stark (Chair); New York City Public Advocate Betsy Gotbaum; Borough Presidents Scott Stringer (Manhattan), Helen Marshall (Queens), Marty Markowitz (Brooklyn), Adolfo Carrion (Bronx), and James Molinaro (Staten Island); Lillian Roberts, Executive Director, District Council 37, AFSCME; Roger Toussaint, President Transport Workers Union Local 100; and, Carroll (Carl) Haynes, President, International Brotherhood of Teamsters, Local 237.

TRS: New York City Finance Commissioner Martha E. Stark (Chair); Deputy Chancellor Kathleen Grimm, New York City Department of Education; and, Sandra March, Melvyn Aaronson and Mona Romain, all of the United Federation of Teachers.

BERS: mayoral appointees Schools Chancellor Joel Klein, Alan Aviles, Philip Berry, David Chang, Tino Hernandez, Augusta Souza Kappner, Richard Menschel and Marita Regan; Borough President appointees Jesse Mojica (Bronx), Martine G. Guerrier (Brooklyn), Vivian Farmery (Manhattan), Michael Flowers (Queens), and Joan Correale (Staten Island); and employee members Thomas J. Malanga of the International Union of Operating Engineers, Local 891, and Milagros Rodriguez of District Council 37, Local 372.

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