California Labor Federation
June 9, 2003
Mr. Jonathan G. Katz
Re: File No. S7-10-03
Dear Mr. Katz:
On behalf of the Federation's 1200 unions and the nearly 2 million union members they represent, I am writing to urge the Securities and Exchange Commission to adopt rules allowing shareholder nominees to appear in the corporate proxy statement.
As shareholders through our pension funds and our union treasuries, we are very concerned about the accountability of corporate directors. We have high standards for corporate behavior, standards that have not been met in high profile cases like Enron, World Com and Tyco. These standards are met routinely by unionized companies under collective bargaining agreements. As union leaders, we know that these failings undermine the profitability of the company, the value of the company to shareholders and the viability of the company with respect to its workers. Corporate Boards of Directors are directly responsible for corporate behavior.
The ultimate responsibility for corporate behavior rests with shareholders who have the power to nominate and vote for corporate directors. But without a change in the existing corporate election process, shareholders have no meaningful voice. Under current rules, shareholders cannot put forward their own candidates. If shareholders can only vote "no" on a director nominated by other directors, then it is impossible to defeat a slate or an individual director candidate who is unqualified to serve.
The SEC can restore accountability to the boardroom by establishing democratic corporate elections. Specifically, granting equal access to the proxy will not only allow shareholders to nominate directors who we trust to independently represent our interests, it will also encourage incumbent directors to be more responsive to our concerns. Therefore, I urge the SEC to use its current review of the rules governing director nominations and elections to give shareholders access to the proxy for our director nominees.
cc: Mike Garland, AFL-CIO Office of Investment firstname.lastname@example.org