|Carl T. Hagberg
Carl T. Hagberg and Associates
6 South Lakeview Drive
Jackson, NJ 08527
June 11, 2003
The Securities and Exchange Commission
Re: File No. 57-10-03
Ladies and gentlemen:
Thank you for soliciting public comments on the proxy-proposal process. I am pleased to submit the following, on behalf of my family - who are recipients of, and sometimes even "consumers" of numerous sets of proxy materials each year - and on my own behalf, as a long-time participant in the proxy distribution, voting, tabulating and reporting processes - and as a "consumer of proxy materials" myself:
REGARDING THE NOMINATION OF DIRECTORS: If the primary goal of "good corporate governance" is to assure there is "good stewardship" of investor-owned companies and that "the goals of management are properly aligned with those of the stockholders"...we can think of no governance mechanism that could possibly be more effective than the ability to "throw the bums out," should there be any - and replace them with folks whose agendas are indeed so aligned. And what better way could there possibly be to keep directors focused on their real job than to have a system where automatic job-renewal would no longer be guaranteed? But clearly, the current proxy rules make it extremely difficult - and inordinately, and unnecessarily expensive besides - for shareholders (the real owners of the company) to make directors "run for their money," much less to replace them, and thus, should be amended:
REGARDING CONTESTS FOR CORPORATE CONTROL: Every student of economics, of markets, and of human behaviors will agree that if the goal of an investor-owned company is to maximize the value of the enterprise for the benefit of its owners (rather than to entrench and to feather the nests of managers first and foremost)...there must be "reasonably open markets" for corporate control. While there's been much debate, and quite a lot of shareholder activism on the subject of "staggered boards" and "poison pills" (and where, it also should be noted, most real-world "contests for corporate control" are governed primarily by state laws) ...it seems self evident that the strongest and most effective mechanism available to shareholders who are dissatisfied with their return-on-investment is to replace some or all of the corporate "stewards." This, in our view, is yet another extremely compelling reason to be sure that SEC rules and regulations allow the nominating and proxy-voting systems to be "open" to share-owners if a meaningful number of them feel that a "change of control" is required to maximize shareholder value.
REGARDING SHAREHOLDER PROPOSALS: The key question to ask here is "What is the `meaningful amount' of share ownership and/or shareowner support that ought to be required in order to submit - and to resubmit - a proposal for consideration or to offer-up one or more nominees to the board?"
REGARDING DISCLOSURE AND OTHER REQUIREMENTS THAT MIGHT BE IMPOSED ON WOULD-BE PROPONENTS AND 93SOLICITORS OF PROXIES94: We believe that investors need to know the identities, professional backgrounds and 93agendas94 of any individuals or groups that wish to submit nominees or proposals for consideration by shareholders at large. We also believe that 93registration94 with the SEC of such information when there is an intent to solicit proxies serves a very valuable public purpose. But because we believe that freedom of speech and the right to associate freely and act in concert with like-minded citizens are among our most basic and precious rights, we don't see the need for an elaborate regulatory scheme, as long as proponents act peaceably, make no fraudulent representations or omissions of material facts and show 93reasonable94 levels of support for the submission of their proposals, so as not to waste corporate assets and the time and patience of their fellow investors.
REGARDING THE 93TEN-DAY RULE94: We believe it is very important to note that a very large number of publicly-traded companies (somewhere between 28% and 40% of all companies that hold shareholder meetings in any given year) would not have a quorum for the transaction of business at the meeting without the ten-day vote; clear evidence, we would say, that a majority of shareholders of those companies were either totally content with incumbent management or, at the least, totally apathetic with respect to the 93governance issues94 up for a vote85and thus, hardly a matter for concern. But clearly, if and when a shareholder or shareholder group properly proposes one or more board nominees or shareholder proposals, the ten-day-rule should not apply85nor should the shares of absentees be counted for quorum purposes in our view.
REGARDING THE COSTS ASSOCIATED WITH SHAREHOLDER PROPOSALS AND NOMINATIONS TO THE BOARD: In past reviews of the shareholder-proposal process, much ado was made about the costs to issuers of printing, distributing, rebutting85 and tabulating votes on shareholder proposals. We would simply note that issuers would likely spend far less on printing and rebutting than they do now, if reasonable submission thresholds are established. And, thanks to modern technologies, it costs no more to 93scan94 and tabulate votes on 15 proposals (or to let shareholders themselves do the 93data-entry work94 as they do when they vote by phone or internet) than it does to tabulate one proposal (at least at ADP, where most of the tabulating is done these days).
Thank you again for the opportunity to comment on these issues and, as always, I will be happy to discuss any of these points in more detail with members of the SEC staff.