From: Katharine Colgan
SEC Chairman Christopher Cox
Dear SEC Chairman Cox,
PERSONAL COMMENT: BREACH OF DIRECTOR DUTIES I endorse the message below. In addition, I find it difficult to believe that approving excessive executive compensation, while obviously violating shareholders' rights to fair returns on their investments, does not also inherently breach directors' duties of independence, care, and loyalty to their corporations.
Given the constraints on shareholder remedies, whether personal or derivative, and the expense and difficulty of using them, it appears that a new SEC rule is (1) shareholders' only real protection from unlawful diversion of their rightful dividends and (2) corporations' only real protection from what are, at the least, imprudent asset management and unlawful use of corporate funds for private gain.
No one, no one, is worth that much money to any corporation.
END PERSONAL COMMENT
Mutual funds are an increasingly important savings vehicle for tens of millions of working Americans like me. We are the owners of these funds and we bear the risks if they are dominated by self-interested insiders. We look to the Securities and Exchange Commission (SEC) to protect us. I am writing to express my strong support for the proposed rule requiring that mutual fund boards have an independent chairperson and at least 75 percent independent directors. These rules were among the most important reforms adopted by the SEC in the wake of the mutual fund trading and sales abuse scandals.
A recent study by AFSCME and The Corporate Library found mutual funds provide a rubber stamp for excessive management pay, supporting more than three-quarters of all management pay proposals. Ninety percent of institutional investors think the current system overpays executives. We need independent directors to stand up to the excesses of the money managers.
The Investment Company Act requires that mutual funds be managed in the interests of their shareholders. Requiring independent directors and chairpersons will help ensure this safeguard for the small investor, to make sure the little person gets a fair shake.