September 23, 2003

Sacramento, CA – The California State Teachers’ Retirement System has called for a reform of the current governance structure of the New York Stock Exchange in a letter sent to H. Carl McCall and Leon Panetta, the co-chairs of the Special Committee on Governance for the Exchange.

Jack Ehnes, CalSTRS chief executive officer and signer of the letter, outlined recommendations for reform in the areas of board independence, committee structure, regulatory responsibilities and transparency. The recommendations include:

• Separating the Exchange’s regulatory function from its business dealings, in order to eliminate conflict of interest;
• Requiring that a majority of independent directors constitute the board;
• Setting standards for disclosure, including requiring annual public reports from key committees;
• Reducing or eliminating the practice of cross-directorships (directors serving on each other’s boards);
• Establishing independent Nominating and Compensation committees;
• Separating the roles of chairman and chief executive officer; and
• Annually electing and evaluating the members of the board of directors.

“Now’s the time for the Exchange to come in line with the governance reforms corporate America is embracing in this new environment of transparency and accountability,” said Mr. Ehnes. “By tackling these important issues and making the hard decisions, the Exchange will be truly responsive to its ultimate constituents, the country’s shareholders.”

The letter also noted that the CalSTRS portfolio’s exposure to the New York Stock Exchange companies represented $32.2 billion, making it a major investment partner with the Exchange.

CalSTRS, with a $100 billion portfolio, is the nation’s third largest public pension fund. It administers retirement, disability and survivor benefits for California’s public school educators in grades kindergarten through community college, serving more than 715,000 members and benefit recipients.

Click here to see Mr. Ehnes’ letter.