December 5, 2002
Hon Mr. Pitt,
I've read your comments recently where you stated that you were surprised that CEOs of several companies had violated their trust and demonstrated a complete lack of integrity. Your comments and reputation for integrity lead me to believe that we both pre-judge people to be good, unless proven otherwise. I was certainly guilty of that "sin" when I was an Air Force unit commander. I hope you were just as shocked as I was to learn that many "pillars of the community" are turning out to be worse than common thieves. Worse, because a common thief only takes a few items that can be replaced by insurance. A few corporate thieves have completely wiped out the retirement accounts of countless hard-working Americans.
The growing number of scandals hit home this week, as my wife's retirement account was wiped out. The CEO of a former conservative, dividend-paying public power company pushed through the divestiture of all energy assets to re-emerge as a telecom. He made sure that he structured the change so that he and his executive team were rewarded to the tune of more than $6 million in cash during a quarter when the company experienced an operating loss that depleted half of their remaining current assets. This was approved by his hand-picked board of directors and was in addition to his more-than-adequate salary and stock options and in spite of the fact that he drove the stock price from $65 to 69 cents a share. I can't help but believe that the "independent" board of directors, like many others, is nothing more than a sham--they exist to rubber stamp the CEOs recommendations. I know that we've never been able to nominate a candidate for the board and we've never had more than one candidate on the ballot (nominated by the existing board) since we purchased the stock in 1994.
It's time that the SEC stop allowing public corporations to conduct their board of director elections as they were a communist politburo. SEC Rule 14a-(8)(i)(8) specifically allows public corporations to exclude director nominations from shareholders.
Mr. Pitt, I'm not a radical, a "Green", a liberal, or even a Democrat. I highly respect our President, and I know that he is carrying a tremendous load. However, I'm beginning to wonder if he or you are up to the job of cleaning up the mess left over by corporate executive malfeasance. Arresting the WorldCom CFO was a good start, but it was only a small (and feeble) beginning. I don't desire blood in the streets, but I sure would like to see the SEC force public corporation boards of directors to work for their shareholders, not the "good old boys". Rescinding Rule 14a-(8)(i)(8) would be a good start.Thank you, Shailesh Gami