August 27, 2007
Dear Chairman Cox,
As a faith-based institutional investor, I want to express my opposition to any attempt to weaken or cripple shareholders’ right to file non-binding advisory resolutions under Rule 14a-8.
For over three decades, shareholder proposals have provided large and small shareholders with a voice in the governance of corporations on which their financial futures depend. Doing away with these proposals would be a setback for shareholder democracy and corporate governance more generally.
Corporations have an enormous impact on our society – arguably greater than even our civil government. I believe strongly in the notion that rights confer responsibility. Public corporations are given numerous rights and privileges in this country. Among the reasonable and commensurate responsibilities it seems is giving shareholders the ability to make their concerns known in a public way regarding objectionable policies and/or business practices of the corporation. Just because a corporation’s activities may be legal, does not always make them right. There can be an enormous difference.
Eliminating this right would remove an important tool of management accountability to shareholders. I strongly oppose any effort to curtail this important component of shareholder democracy. I am also aware that engaged investors across the country are prepared to publicly defend their ownership rights should those be threatened by proposed rulemaking. I hope that instead of issuing controversial proposals that are harmful to shareholder interests, the SEC will consider how to enhance the dialogue between corporations and their owners on matters of strategic and moral importance.
P.S. If you are interested in stronger corporate governance, may I suggest you consider a proposal to limit the term of independent board members to 10 years. I would argue forcefully that “tenure” does not promote independence and strong governance. How many “independent” board members have served 15, 20 or even 30 years on a corporate board and are, in effect, more inside than the management representatives?