September 28, 2007
I am writing on behalf of Catholic Healthcare Partners, a Catholic health system based in Cincinnati, Ohio. As part of our commitment to utilize our assets in furtherance of our mission and values (including the approximately $2.5 billion in investment assets we are responsible to prudently invest), we are actively involved in integrating environmental, social and governance issues into our investment decisions. We have been active in the process of shareholder advocacy through letters and dialogue with companies, co-sponsorship of shareholder resolutions and by voting proxies.
We oppose any action by the SEC which would limit or otherwise weaken the right of shareholders to present advisory shareholder resolutions. This process has been a central means for formalizing communication between concerned investors and management/boards on social, environmental and governance issues for many years. There are numerous examples of major improvements in corporate accountability practices (environmental/social/governance) that have resulted through shareholder engagement and resolutions. Increasingly, analysis suggests that companies with strong records of performance in these areas are more likely to achieve long term business success.
While methods to improve investor – management communications, such as an electronic forum, would be welcome to foster ongoing exchange between companies and their owners, it should not be implemented as a replacement for our right as investors to petition the Board and management and to seek support of other shareowners through advisory resolutions.
We also oppose the proposal to more than double the thresholds for resubmission of a resolution. Frequently, shareholders need time to gain knowledge and understand an issue and to evaluate a companys response (or lack or response) to determine how to appropriately vote their proxy on the resolution. In addition, an analysis based on the annual report of the ISS on proxy results on social issues, demonstrates that in 2006, 81% met the threshold for resubmission under current rules, and that would reduce to 36% under the proposal to increase the thresholds. The proposed increase in thresholds would stifle constructive engagement by investors with companies.
Finally, the SEC presented two different positions on utilizing the proxy to nominate directors for election to the Board. We support the right of shareholders to be able to nominate directors via the proxy process, since directors represent shareholder interests. We believe a threshold of 5% in the first director nomination proposal is unreasonably high. We oppose the second SEC proposal which would allow companies to exclude shareholder proposals to nominate directors.
Thank you for consideration of our input on these important matters.