September 14, 2007
SEC File Numbers S7-16-07 and S7-17-07
Dear Chairman Cox:
RE: File S7-16-07 and S7-17-07
I write today concerning the proposed rule changes contained in the above noted files, and to express my deep concern that shareholder access and rights are at considerable risk if the proposals are enacted. I ask that the Commission preserve a critical tool for corporate accountability and investor protection: the nonbinding shareholder proposal.
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 using either state law, corporate bylaws, or bylaw amendments passed shareowners.
Substituting electronic petitions or chat rooms for resolutions or increasing the percentage vote required for resubmission in subsequent years are two other areas where I am strongly opposed to changing the current regulations.
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. I urge you to keep the current rules in place.
Nonbinding shareholder resolutions have proven effective in holding companies accountable to their shareowners. I ask that the Commission safeguard and expand, not undermine, their use.
I am also strongly opposed to the proposed changes in File S7-17-07 that impose unreasonably high thresholds for nomination of directors by shareowners. The current restrictions already make it almost impossible for shareowners to put a candidate forward. I would rather see the Commission promulgate regulations that allowed elections of multiple candidates from multiple constituencies for the same director seat, with relatively easy access by shareholders. This would promote the democratic process rather than further damage it as the current proposal does.
Thank you for the opportunity to comment on Files S7-6-07 and S7-17-07.
Sincerely, Benjamin Lovell