Kern County Employees' Retirement Association
Board Of Retirement
Sharon Lesser, Chairman
Tony Plante, Vice Chairman
Brent M. Dezember
Michael Bradley, Alternate
Lois B. Maujer, Alternate
David J. Deutsch, CFA
June 11, 2003
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street N. W.
Washington, DC 20549-0609
Subject: SEC File No. S7-10-03
Dear Secretary Katz:
The Board of Retirement of the Kern County Employees' Retirement Association (KCERA) wishes to share with you its views regarding the changes now under consideration with respect to proxy voting regulations.
The KCERA board currently manages $1.6 billion of investment assets aimed at providing retirement benefits for approximately 8,121 active and 4,485 retired members, the employees of the County of Kern and other public entity districts in California. As more than 60% of the funds for benefits derive from investment returns, the stability and integrity of investment markets is a key factor impacting retirement benefits. These markets have been seriously shaken in recent years by a long series of corporate scandals involving false information, breach of fiduciary duty and exploitation of the firm by management for its own benefit. Investor confidence is currently at low ebb.
It would go a long ways toward rebuilding confidence in the markets, if shareholders were to have better access to the proxy voting process, especially allowing institutional long-term investors to freely nominate director candidates without the need for a proxy fight. In addition, the KCERA recommends more rigorous disclosure requirements for directors with respect to the relationships among directors and managements and with respect to director and executive compensation. Currently, shareholders are provided with only partial information on both matters. KCERA supports the provision of all-inclusive and comprehensible information to shareholders on proxy statements.
Recent experience suggests that such enhanced regulations would permit institutional investors to better evaluate the efficient allocation of capital.
David J. Deutsch, CFA
cc: Trustees, Board of Retirement