FOR IMMEDIATE RELEASE

August 19, 2009

STATEMENT FROM MELINDA KATZ ON

THE NEW YORK CITY PENSION FUNDS
Proposes Reforms for Management of Pension Funds and
Calls for Recovery of Unearned Fees

Democratic candidate for Comptroller and Councilwoman Melinda Katz issued the following
statement regarding the performance of the New York City’s pension funds and the fees it pays
to money managers:

“There is no excuse for the below average performance of the City’s pension funds over the past
7 years. New York should be a national leader when it comes to its investment strategy – not
lagging amid the 30th percentile. Moreover, taxpayers’ hard-earned pension dollars should not
be ripped off by exorbitant fees during periods of such subpar returns. We can – and must – get
refunds of these fees through negotiations and “claw back provisions” the same way in which
private investors are doing so.

“This is one more example of why we need a tough negotiator as the City’s next Comptroller
who will fight for hardworking New Yorkers and protect their tax-dollars. I will use every
power of the Office to recoup unearned incentive fees that have unjustifiably compensated
private equity managers for poor results. Once again, we’ve seen how the financial industry’s
shenanigans have deprived New Yorkers of their hard-earned tax dollars, and I will take the
following steps as the next Comptroller to ensure that this exploitation ends immediately:

For current private equity managers, I will implement the following reforms:

™ Performance evaluation of all managers: I won’t let managers whose initial investment
strategies have produced poor results continue to risk more of our money on new
strategies.

™ No unearned incentive fees: Existing managers should not get paid on short-term
success when they’ve been contracted to produce long-term results. I will demand that
they return any and all advances on incentive fees they took, but didn’t earn.

™ No automatic fund extensions: I will demand that managers lay out an exit plan for
current investments that ensures they can wrap-up their existing portfolios on time and at
a profit. No extensions will be granted without a full evaluation.

(more)
For future private equity managers, I will demand the following concessions:

™ Incentives tied to performance: Other than reasonable management fees, I will put an
end to all fees unrelated to performance over the life of the contract. We just can’t afford
to pay fees that let managers make money even when we don’t.

™ Comprehensive evaluations: Before we make any new investments in new funds, we’re
going to look back at our previous experience with that manager holistically, and we’ll
negotiate concessions that help us recoup past losses.

“If managers won’t meet our requirements, we won’t participate in their next capital raises, and
I’ll organize other pension fund managers to ensure that they won’t invest either. New York
City must be a national leader on this front and set an example that other public funds can follow
– not fall to the back of the pack. It’s time for us to use our economic power as investors to end
Wall Street’s abusive practices. For too long, we’ve let them get away with highway robbery.
As the next Comptroller, I’ll hold them accountable.”

###

CONTACT: Ben Branham | 347-271-2317 | ben@melindakatzforny.com