To: Public File
From: Brian A. Stern
Counsel to Commissioner Glassman
Date: December 22, 2003
Re: File No. S7-19-03

On October 15, 2003, Commissioner Glassman and Brian Stern met with Ted White of the California Public Employees' Retirement System (CalPERS).

Mr. White indicated that CalPERS sometimes invests in underperforming companies to improve the value by working with management to improve the governance. He said that they tend to focus public attention on companies, and drive companies to perform better by changing their behavior. Mr. White noted that, as a pension system investor, he can be patient, whereas many mutual funds are not willing to wait several quarters or years for an eventual turnaround.

Mr. White said that opening shareholder access to the proxy for director nominations could have a significant impact on corporate governance. He said that proxy access for director nominations would be a significant benefit to improve governance at companies that ignore shareholders.

Overall, Mr. White said he viewed the proposal as a significant improvement that CalPERS could support, but that they would seek a few changes. He indicated that CalPERS intended to provide detailed comments through the comment letter process.