View Level 3 letter
View the Repeal Classified Board resolution

Comptroller William C. Thompson, Jr. announced today that in response to a shareholder proposal filed by the New York City Pension Funds, Level 3 Communications has agreed to propose a resolution to repeal the classified structure of their Board of Directors, and allow for the annual elections of all of their directors.

In a letter from Level 3 Communications, a Colorado-based company, they stated: "The Level 3 Board of Directors approved a proposed amendment to the company's Restated Certificate of Incorporation, which if approved by the company's stockholders, would have the effect of declassifying the Board of Directors."

A company with a classified board groups directors into classes, typically three, with each class elected at successive annual meetings. The Pension Funds are opposed to the structure because it limits shareholders' ability to evaluate and elect a company's entire Board of Directors on an annual basis, and it reduces accountability.

"I am pleased to learn that Level 3's Board of Directors has agreed to put the declassification measure before their shareholders at the annual meeting next month," Thompson said. "The election of directors by classes, for three-year terms, minimizes accountability and precludes the full exercise of the rights of shareholders to approve or disapprove annually the performance of a director or directors. The ability to elect directors is the single most important use of the shareholder franchise."

The proposal is sponsored by the New York City Employees' Retirement System (NYCERS), Teachers' Retirement System for the City of New York (TRS), New York City Police Pension Fund, New York City Fire Department Pension Fund and the New York City Board of Education Retirement System (BERS).

Collectively, the Pension Funds have more than $6.2 million invested in Level 3 Communications.

In addition to Level 3 Communications, the Funds submitted the resolution to repeal the classified structure of Boards of Directors to six companies this season: BEA Systems of San Jose, CA; Convergys Corporation of Cincinnati , OH ; ICOS Corporation of Bothell , WA ; King Pharmaceuticals of Bristol , TN ; and, Newell Rubbermaid Incorporated of Atlanta , GA

In October 2005, the Comptroller learned that Charles Schwab Corporation responded to a 57 percent majority vote cast by its shareholders in favor of the Funds' declassification proposal. As is the case with Level 3, Schwab also agreed to put the issue to a shareholder vote this year.

Besides Thompson, the Pension Funds trustees are:

Fire Department Pension Fund: Mayor Michael Bloomberg; New York City Fire Commissioner Nicholas Scoppetta (Chair); New York City Finance Commissioner Martha E. Stark; Stephen Cassidy, President, James Slevin, Vice President, Robert Straub, Treasurer, and John Kelly, Brooklyn Representative and Chair, Uniformed Firefighters Association of Greater New York; Peter Gorman, President and Captains' Rep., Nicholas J. Visconti, Chiefs' Rep., and Stephen J. Carbone, Lieutenants' Rep., Uniformed Fire Officers Association; and, Joseph Gagliardi, Marine Engineers Association.

Police Pension Fund: Mayor Michael Bloomberg; New York City Finance Commissioner Martha E. Stark; New York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch, Patrolmen's Benevolent Association; Michael Palladino, Detectives Endowment Association; Edwin Mullins, Sergeants Benevolent Association; Anthony Garvey, Lieutenants Benevolent Association; and, John Driscoll, Captains Endowment Association.

NYCERS: New York City Finance Commissioner Martha E. Stark (Chair); New York City Public Advocate Betsy Gotbaum; Borough Presidents Scott Stringer (Manhattan), Helen Marshall (Queens), Marty Markowitz (Brooklyn), Adolfo Carrion (Bronx), and James Molinaro (Staten Island); Lillian Roberts, Executive Director, District Council 37, AFSCME; Roger Toussaint, President Transport Workers Union Local 100; and, Carroll (Carl) Haynes, President, International Brotherhood of Teamsters, Local 237.

TRS: New York City Finance Commissioner Martha E. Stark (Chair); Deputy Chancellor Kathleen Grimm, New York City Department of Education; and, Sandra March, Melvyn Aaronson and Mona Romain, all of the United Federation of Teachers.

BERS: mayoral appointees Schools Chancellor Joel Klein, Alan Aviles, Philip Berry, David Chang, Tino Hernandez, Augusta Souza Kappner, Richard Menschel and Marita Regan; Borough President appointees Martine G. Guerrier (Brooklyn), Vivian Farmery (Manhattan), Michael Flowers (Queens), and Joan Correale (Staten Island); and employee members Thomas J. Malanga of the International Union of Operating Engineers, Local 891 , and Milagros Rodriguez of District Council 37, Local 372.

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