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May 7, 2004
SACRAMENTO – Concern regarding a sharp decline in the
value of Qwest Communications International Inc. and a desire
for improved corporate governance practices have prompted
the California State Teachers’ Retirement System to
seek shareowner support for its proposal to separate the role
of Qwest’s board chair from its chief executive officer.
CalSTRS, which owns 4.7 million shares of common stock in
Qwest, sent a letter yesterday to fellow shareowners requesting
support for its proposal requesting that an independent director
serve as board chair. The proposal will be considered at the
board’s annual meeting scheduled May 25.
“If enacted, this proposal will provide a valuable
oversight safeguard for shareowners and promote increased
management accountability and transparency for investors,”
said Jack Ehnes, chief executive officer of CalSTRS. “It
will eliminate the inherent conflict of interest created when
an individual simultaneously serves as overseer and manager.”
The letter states that CalSTRS’ belief that the recent
financial performance of Qwest – its current $7.4 billion
capitalization represents a 94 percent decline from a five-year
high recorded in February 2000 – and the operation of
the company under the former CEO and chair “provides
a case study of what can go wrong in a company that vests
its two most critical positions in one person.” The
letter urges other Qwest shareowners to support CalSTRS’
proposal.
To view the letter, click
here.
With a $116 billion investment portfolio, CalSTRS is the
third-largest public pension fund in the United States. It
provides retirement, disability and survivor benefits to California’s
public school teachers from kindergarten through community
college, serving more than 735,000 members and their families.
CalSTRS is a defined benefit plan, with guaranteed, lifetime
benefits, which are not dependent on the performance of the
investment portfolio. CalSTRS currently is involved in litigation
against Qwest, certain present and former officers and directors
of Qwest, and other unrelated entities, involving claims of
fraud, breach of fiduciary duties and violations of state
and federal securities statutes. The claims asserted in that
litigation do not relate to the proposal explained above.
Qwest Proposal Letter
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