Dear Amy:

Following our conversation last week, my discussions with other coalition members has led me to the following statements and proposals:

Community Investment

·         We are pleased that TIAA-CREF is pursuing various community investing (CI) options, but still have some concerns. You noted flexibility in application of the Social Investment Forum (SIF) "1% or more" campaign. If you are interested in working toward that recommendation for CI, we are fine with that level in particular funds or calculated as a percentage of TIAA-CREF's total assets. However, we would like some of the CI to be in the Social Choice Account (SCA) for reasons I stated in our call. If, as you note, participants are not choosey about which funds they want CI to be placed in, then other factors must come into play in determining CI placement. If CI belongs anywhere, it belongs in a fund already designed to be socially responsible. Even if there is less flexibility in the SCA, there is enough. If there are enough options available for other socially responsible mutual funds include CI, the SCA can do so, as well.  Thus, as they say, it is a matter of "will," not "skill."

 ·         Certainly those participants with investments in the SCA and not in Traditional Annuity would like CI in that fund; that figure may be in the 75,000-100,000 range based on your survey and past level of SCA participation. We believe TIAA-CREF can and should accommodate them. TIAA-CREF has rightly promoted itself as a leader in corporate responsibility; why not make the SCA a model fund that other institutional investors might follow? There already exists a fixed-income component to the SCA that could be complemented; TIAA-CREF could strengthen the social impact of the fund with a small amount of CI (and venture capital). I should note that we trust that TIAA-CREF will pursue the type of CI that will most help communities in need.

 ·         If the largest socially responsible fund--that of the United Methodists--is still working towards 3-5% in CI (with some or much at a subsidized market return rate), then TIAA-CREF can pursue a 2-3% level of CI. (I realize that the fund is a "pension" rather than a "mutual" fund so under less restrictions.) The United Methodists Board of Pension and Health Benefits was quite open to talking to TIAA-CREF folks about their fund when I was in contact with them a few years back. Of course Calvert has been doing CI for many years and is a good, long-term model.

·         I would like to clarify one thing we discussed. Back when our campaign was in serious discussions with TIAA-CREF on this matter, we did not get mixed signals from those high-level officers we talked with. We got very clear signals that they wished to move ahead with CI in some manner (and even a public statement by the CEO, as I noted). This only changed when we felt that discussions were not leading to action fast enough and so we needed to resume our public campaign. That then led to the discouraging letter we received from Mr. Wilcox that revived issues we thought had been laid to rest. At this point, given the decision you outlined in your recent letter, we must begin again our public campaign for CI in the SCA.

Shareholder advocacy 

·         Thank you for extending your shareholder advocacy from corporate governance issues to those of social responsibility. We do acknowledge and appreciate your decision to do this. 

·         Yes, we are ready to discuss ways of having input into your decision-making. In addition to you and Mr. Wilcox, might we have on the call two or three others (besides myself)? Please suggest several possible times for an hour or more discussion that might focus on (1) the logistics and nature of our future contact; (2) what type of information you want on our companies of concern, issues of best practice, etc.; and (3) how you feel that information might be utilized. As you noted, our organizations use different means of influence. We might conceivably complement each other if we find some common ground--be it some formal collaboration or just informally keeping each other aware of our efforts.  

      While we want to continue this dialogue with you, there is consensus in our coalition that at this point we have seen no evidence that TIAA-CREF intends to use its influence to affect our target companies. Hence, we feel we must restart our active campaign of demonstrations, phone calls, and the like. We realize that this could undermine our relationship with TIAA-CREF, but given the lack of progress, we feel we must take this step. You had asked how we see the nature of us working together; i.e., if we don't get all we want then will we keep pushing? (if I am interpreting you correctly). We feel that we need to see concrete movement on the part of TIAA-CREF before we can consider changes in tactics or modification of our requests.  

·         We ask you to consider further the following points: 

1.      Many of our target company issues of concern are covered in your in your Policy Statement on Corporate Governance and Social Responsibility.

2.      These target companies have engaged in considerable egregious behavior.

3.      While TIAA-CREF may want at times to affect companies that are flying under the radar, or use other strategies, overall impact will likely be greatest by influencing the corporate leaders that we suggest, and others. There will be a ripple effect among corporations and you will likely engage more activist allies (such as our coalition members) who can continue to draw public attention to such efforts, enhancing your effectiveness.

 In summary, we welcome further discussions on these CI and shareholder advocacy concerns, but we feel we must restart our public efforts.

 Let us know about that phone conference call,

 Neil

 Neil Wollman; Ph. D.; Senior Fellow, Peace Studies Institute; Professor of Psychology; Manchester College, North Manchester, IN 46962; nwollman@bentley.edu; 260-982-5346; fax 260-982-5043