|
Investment
Office
|
(916) 795-3400
phone (916) 796-2842 fax
|
www.calpers.ca.gov
|
May 28, 2009
Dear
Fred's Inc. Shareowner:
SUPPORT PROPOSAL #3 TO
PROVIDE FOR MAJORITY VOTE IN DIRECTOR ELECTIONS
We are
writing to urge you to vote FOR Proposal #3 at
Fred's Inc. June 17, 2009 annual meeting of shareowners. CalPERS is the nation's
largest public pension fund with approximately $165 billion in assets and as of
record date May 1, 2009, CalPERS owned approximately 202,600 shares of Fred's
common stock. Proposal #3 is a non-binding shareowner proposal asking the Board
of Directors to amend the Company's articles of incorporation and/or bylaws to
provide that director nominees shall be elected by the affirmative vote of the
majority of votes cast at an annual meeting of shareholders, with a plurality
vote standard retained for contested director elections. CalPERS urges Fred's shareowners to
vote "FOR" Proposal #3.
FRED'S STOCK PRICE
UNDERPERFORMANCE
Fred's
stock has underperformed both the Russell 3000 lndex and Russell 3000 GlCS
Industry Peer lndex over the 5 year period ending April 30, 2009.
|
Time
period
ending
4/30/2009
|
Freds
Inc
(FRED)
|
Russell
3000
Index
|
Relative
Return
Russell
3000
Index
|
Retailing
Russell 3000
GlCS
Industry Peer Index
|
Relative
Return
Russell
3000
GlCS
Industry
Peer
Index
|
|
5
years
|
-24.14%
|
-10.78%
|
-13.36%
|
22.28%
|
-46.4%
|
|
3
years
|
-1.72%
|
-29.37%
|
27.64%
|
-1.26%
|
-0.47%
|
Source:
Factset
LACK OF ACCOUNTABILITY TO
SHAREOWNERS
Shareowners
lack the ability to hold Board members truly accountable for poor performance
because of the ease of director re-elections under the current plurality voting
structure. In addition, the company has disregarded multiple shareowner attempts
to correspond in a constructive dialog surrounding the issue of majority voting.
CalPERS believes this lack of correspondence is indicative of a culture where
the Board of Director's believes it does not need to be accountable to
shareowners.
CalPERS Public
Employees’ Retirement System Shareowner Alert
BOARD ACCOUNTABILITY
STANDARDS SHOULD APPLY TO COMPANIES OF ALL SIZES
A
majority voting standard holds corporate directors accountable for company
performance. Plurality voting is rapidly being replaced with majority voting in
director elections. Approximately 66% of the S&P 500 has adopted some form
of majority voting – an indication of the current direction of good corporate
governance – and this trend does not apply to large companies alone. Currently,
there are a growing number of mid-sized and small companies that are adopting a
majority vote standard.
YOU CAN HELP – VOTE FOR
PROPOSAL #3
|
·
|
Send
a message by voting FOR proposal # 3 on the
Fred's Inc. proxy card.
|
|
·
|
Ensure
every account, no matter how many or how few shares, supports this
proposal.
|
|
·
|
Furthermore,
we ask our fellow investors – to publicize their vote when cast. We
believe this will further unite and encourage investors to both support –
and benefit from – this campaign.
|
|
·
|
Do
not be misled. If you are a large holder and find yourself under pressure
from Fred's management to vote against our proposal, ask yourself why
defeating this initiative – which is intended to improve board
accountability, shareowner rights, and shareowner value – is so
important to them.
|
Sincerely,
Eric
Baggesen
Senior
Investment Officer -CalPERS Global Equity
PLEASE NOTE: The cost of this
solicitation is being borne entirely by CalPERS and is being done through the
use of the mail and telephone communication. CalPERS is not asking for your
proxy card. Please do not send us your proxy card but return it to Fred's
Inc.
For
additional information, please contact Garland Associates, Inc. Tel:
561-366-1165
CalPERS Public
Employees’ Retirement System Shareowner Alert