Local 400 Food Terminal Pension Fund
June 11, 2003
Mr. Jonathan G. Katz, Secretary
RE: FILE NO. S7-10-03
Dear Mr. Katz:
On behalf of the 1700 beneficiaries of Local 400 Food Terminal Pension Fund, I am writing to urge the Securities and Exchange Commission to adopt rules requiring corporations to list shareholder nominees in corporate proxy statement.
Investors have just come through an extraordinary market failure, with $7 trillion evaporating from the equity markets in three years. Accounting scandals at companies like Enron, WorldCom, Tyco and Healthsouth exposed widespread conflicts of interest and a shocking lack of corporate accountability to shareholders. We commend the SEC for responding with an unprecedented series of regulatory reforms to address the conflicts, but no amount of government regulation can ensure corporate accountability unless it includes rules that will allow shareholders a realistic opportunity to select directors who will represent their interests.
Shareholders ostensibly have the right to nominate and elect directors. But, under current practice, this is a right without any substance and shareholders have no meaningful way to hold directors accountable regardless of how poorly a company performs, how much they overpay the CEO, or how conflicted the auditors are that they retain. In fact, given the tremendous costs and obstacles of conducting a proxy flight, shareholders currently can do little more than rubberstamp candidates nominated by the directors themselves.
The SEC has the ability to restore genuine accountability to the boardroom by establishing the minimal basic procedure necessary to afford shareholders a real choice in corporate elections. Specifically, granting equal access to the proxy statement 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 statement for our director nominees.