Milwaukee Employes' Retirement System

June 11, 2003

Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

RE: File No. S7-10-03 Proxy Access and the Shareholder Proposal Process

Dear Mr. Katz:

We are writing on behalf of the Milwaukee Employes' Retirement System, which is a $3.7 Billion pension fund with 20,000 plus members.

Public retirement funds have a strong interest in the new rule making from the Securities and Exchange Commission that would provide a right of proxy access for the purpose of electing corporate directors. We are large long-term holders of public securities with substantial assets in market indices. As such, we view corporate governance as one of the most important tools we have to protect and enhance the long-term value of our investments in companies. Public funds have been leaders in corporate governance reforms for many years. Today most public funds embrace corporate governance as fundamental to their duty as fiduciaries.

We believe that access to the company proxy card for the purpose of electing directors will lead to increased accountability of corporate boards to shareowners and improve the internal dynamics of board member succession. As recent events have shown, even boards with independent directors on key committees have not provided adequate safeguards for shareholder interests. The direct effects of Enron, WorldCom, Tyco and the long list of scandal-plagued companies have cost our pension systems losses totaling in the many billions of dollars.

Shareholders clearly have the right to nominate directors under current state law, but that ability has been constrained in practice because of high costs and regulatory requirements that make independent solicitation impractical for public funds. Proxy access will help level the playing field so that funds interested in reform, but not take over, have a realistic opportunity to challenge self-perpetuating boards.

The procedural regulations established by Sarbanes-Oxley are an important first step to returning confidence to the market. However, they do not address the fundamental problem in corporate governance that shareholders are functionally cut off from meaningful involvement in the selection of board nominees. We believe that a proxy access right would be used infrequently: at companies that have been non-responsive to shareholders seeking to work through company nominating committees, or at companies that have been dismissive of their accountability to shareholders. Nonetheless, the existence of new proxy access rules will do much to make shareholder voices more clearly heard in the board room.

In addition to board nominations, we believe that shareholders should have a reasonable ability to make shareholder proposals, a vital communication tool for shareholders. A key shareholder proposal area is executive compensation policies. Presently, executive compensation proposals generally fall under the ordinary business exclusion rule. Shareholders should be allowed to make proposals on executive compensation; otherwise, the present situation will persist. In the case of senior management, the employees determine their own pay. In every other facet of corporate America, managers negotiate with their subordinates' to determine the subordinates' pay levels.

We thank the Commission for starting this examination of the process for proxies and shareholder proposals. We greatly appreciate your efforts as you move forward, and we look forward to the improved processes.

Sincerely yours,

Michael J. Murphy
Chairman, Investment Committee
Milwaukee Employes' Retirement System
  Jennifer A. Shannon, CFA
Chief Investment Officer
Milwaukee Employes' Retirement System