August 30, 2006
I strongly support the SEC's current (but contested) requirement that an independent director serve as chairman of the board of mutual funds. Based upon my 18 months experience serving in that capacity at two prominent funds, I believe the requirement serves both practical and symbolic purposes. The tone and spirit of the relationship between independent directors and the investment management company are altered -- slightly, but constructively. I detect a heightened sense of responsibility on the part of all independent directors, not solely the chairman. Our boards have dug more deeply into issues of distribution, administrative costs, and economies of scale during this 18-month period. Our management company has been very responsive in enhancing the directors' understanding of the complexity of these and other issues. Collegiality among all directors, interested and independent, has been retained.
Inevitably, there has been a learning curve for both independent directors and the management company. As we gain experience, remaining "rough spots" will be worked out, The added costs associated with having an independent chair are minimal
Should the SEC drop the independent chair requirement, I am hopeful that "best practice" in the industry will continue to suggest an independent chairman.