New Hampshire Retirement System
WRITER'S DIRECT DIAL - 603-627-8149
June 12, 2003
VIA FEDERAL EXPRESS
Mr. Jonathan G. Katz, Secretary
RE: Request for Reform of Proxy Access Rules
Dear Mr. Katz:
On behalf of the New Hampshire Retirement System by the undersigned, its legal counsel, we urge the Securities and Exchange Commission to propose new proxy rules and regulations granting qualified shareowners greater proxy access to more readily nominate and elect candidates to the boards of directors of their companies.
The New Hampshire Retirement System is a trusteed governmental pension plan covering over 50,000 members-fire, police, teacher, state and local public employees-investing billions of dollars in publicly traded companies to fund member retirement. The future performance and economic sustainability of those companies in which the New Hampshire Retirement System is a long-term investor will have a profound effect on the retirement adequacy of its members and beneficiaries, as well as the tax liability of the citizens of the State of New Hampshire in guaranteeing those benefits.
At this point, it is unarguable that the trillions of dollars of shareowner losses in public companies over the last several years are directly attributable to the systemic collapse of corporate governance in the boardrooms of this nation's publicly traded companies. Good corporate governance is necessarily conditioned on competent, vigilant and ethical directors, loyal to the company and accountable to its owners. Most importantly, the directors must be independent of that management over which the board has a duty of oversight to ensure ethical and sustainable enterprise by the company in the long-term interests of its owners.
The only effective means for achieving this necessary state of affairs is to provide shareowners with a real voice in selecting those who represent them on company boards of directors. Reasonable, legally protected and enforceable access by long-term and substantial shareowners to proxy statements and ballots for nominating directors is critical to an independent, functioning board as the keystone to corporate governance. Without it, any prospect of lasting corporate governance is illusory. Without true corporate ownership worthy of the name, liberal capitalism will certainly fail.
Therefore, the New Hampshire Retirement System urges the Commission to establish a proxy access rule for shareowners conditioned upon a substantial standard of share ownership for a reasonable period of years. Additionally, shareholder nominated candidates should have a presence in the company's proxy materials (also at company expense) to the same degree as candidates nominated by the company's incumbency. Further in this connection, the Commission should substantially amend Rule 14a-8, permitting shareowners to propose amendments to company by-laws; and also provide a five (5%) percent safe harbor exemption to the filing requirements of Rule 13d-1, unless demonstrably for the purpose of seeking a change in control of the company and not for sole purpose of nominating independent candidates for director.
Again, the New Hampshire Retirement System urges the Commission to effect these proxy reforms through rule making, and greatly appreciates the opportunity to comment.
Cc: Edward J. Theobald, Chairman, Board of Trustees, NHRS