September 8, 2007
Dear Chairman Cox:
I am writing today to ask the Commission to preserve the nonbinding shareholder proposal. In my own view, many of the most profound problems in American corporations, from fraudulent accounting to excessive mergers to out-of-control executive compensation, are a direct result of shareholders behaving less like owners and more like stock speculators. Shareholders who just hold the stock to see whether it goes up and never assert their rights as owners are abdicating the management of their investment to managers.
Shareholder proposals are one of the few ways that shareholders have been able to exercise their role as owners. Shareholder proposals have helped to promote transparency, improve corporate governance and performance, and raise important issues ranging from greenhouse gas emissions to sweatshops to sustainability reporting. In this way, investors have also brought visibility to important business risks that can have a profound impact on the value of our investments.
I am concerned that questions raised by the SEC may lead to the restriction or elimination of shareholders' rights to propose advisory resolutions under Rule 14a-8. As an investor, I regard shareholder resolutions as a valuable tool for shareholders to make their voices heard about the direction of our companies. I specifically oppose granting companies the ability to "opt out" of the shareholder resolution process, substituting electronic petitions or chat rooms for resolutions, or increasing the percentage vote required for resubmission in subsequent years.
It is to the credit of the SEC and our democratic system that small investors as well as large ones can participate in this process. Many of the most critical corporate reforms of recent years have been promoted by these small individual and institutional investors. The current proxy rules have facilitated a rich and diverse dialogue on some of the most critical issues of our time, from climate change to excessive executive compensation. I urge you to keep these current rules in place.
The many corporate scandals of recent years have underlined the importance of more communication, more transparency, and more accountability - not less. Nonbinding shareholder resolutions have proven effective in holding companies accountable to their owners. I ask that the Commission safeguard, not undermine, their use.
Please let me know what action you intend to take on this issue.