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Putnam's Parent Responds to Pension Funds' Proxy Bid

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Dec. 9, 2003 — In response to a statement by four big pension funds seeking to nominate board members at Putnam Investment’s parent corporation, Marsh & McLennan Cos. (MMC), the company said it was “surprised and disappointed” that a group of institutional shareholders “concerned with corporate governance would communicate their opinions through a press release and not directly to our management and board.”

Early yesterday, four of the nation’s most powerful public pension funds, AFSCME Employees Pension Plan, New York State Common Retirement Fund, California Public Employees’ Retirement System and the California State Teachers’ Retirement System, said they plan a shareholder proposal that seeks access to the proxy to nominate and elect directors not hand-picked by MMC. The pension funds indicated that MMC is the target of the resolution “for its failure to properly control its money management business and for its severe lack of independent board leadership.”

Together, these four pensions funds hold 6.85 million shares, or about 1.3% of MMC.

In a letter to the institutional shareholders, MMC wrote “we believe strongly that the premise of your press release is flawed and not supported by the facts,” citing, among other things, that nine of MMC’s fifteen board members are already independent, and that Putnam has put in place a new management team and “taken decisive actions to establish the most rigorous governance, oversight, trading and compliance standards in the mutual fund industry.”