September 28, 2007
Mr. Christopher Cox
Dear Commissioner Cox:
Because I believe in democracy, I have long believed in the process of shareholder actions. I am a member of the Congregation of Divine Providence in San Antonio, Texas. As a Catholic Religious Community, we have participated in shareholder actions for many years. We have engaged companies about their policies and practices. This has had beneficial results for both groups. It is with great dismay that I hear of your intent to make drastic changes to the shareholder resolutions process.
I oppose the resubmission of the thresholds for shareholder resolutions (release 34-56160)which would raise the thresholds from 3%, 6%, and 10% vote levels for resubmitting resolutions to 10%, 15%, and 20% levels.
In release 34-56161, I oppose the prohibition on nominations of directors in the first proposal, which would reverse a 2006 Federal Court decision. This decision reversed an SEC ruling which omitted the AFSCME resolution from AIG asking for a vote on access to nominate directors. In short, this proposal prohibits the right of investors to nominate Directors for a vote on the company proxy.
In that same release, 34-56161, I also oppose the 5% threshold in the second proposal, which would allow shareholders to nominate on the proxy, BUT only if investors with 5% of the shares of the company banded together to present the nomination. This 5% level of shares required to nominate a Director is onerous.
On p. 57 of release 34-56160, SEC asks, "Should the Commission adopt a provision to enable companies to follow an electronic petition model for non-binding shareholder proposals in lieu of 14a-8?" This question builds on the SEC Roundtable discussin of "electronic chat rooms." The proposal suggests an electronic forum or chat room process should be a SUBSTITUTE for the right to file shareholder resolutions. I insist that chat rooms and electronic forums must be additional tools of communication, combined with the existing right to file a resolution through the proxy process. I cannot support a SUBSTITUTION of one for the other.
The SEC asks for comments on the right of a company to "opt-out" of the shareholder resolution process either by seeking a vote of the shareholders to give them that authority or, if empowered under State Law, to have the Board vote to opt-out of receiving advisory resolutions. As a member of a community of socially responsible investors, I would be opposed to any opportunities for companies to opt-out.
The severe curbs on the shareholder input process put forward by the SEC are unacceptable. There is no documented problem or problems that would justify such extreme restrictions on shareholder rights. It would be better for the SEC to take no action on their shareholder resolution initiatives than it would be to irreparably harm a process that effectively informs our civic economy. In a democratic society, there needs to be more tools to engage with companies rather than less. The stockholder resolutin has been such a tool since 1934.
Sister Theresa Anne Billeaud, C.D.P.