Calvert Group, Ltd.

September 15, 2003

Via electronic delivery:

Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609

Re: File No. S7-14-03

Dear Secretary Katz,

On behalf of Calvert Group, Ltd. ("Calvert"),1 America's largest family of socially responsible mutual funds, I am writing in response to the Securities and Exchange Commission's solicitation of views (SEC proposed rule S7-14-03) regarding nominating committee functions and communications between security holders and boards of directors.

Although Calvert fully supports those comments already submitted by the Social Investment Forum, of which it is a member, Calvert is submitting its own set of comments, as follow-up to its June 12, 2003 correspondence in which it urged the SEC to take the very steps that it is currently taking under this Rule Proposal ... to adopt new rules to provide for better access to the proxy for purposes of nominating independent directors and improve shareholder communications with directors. Please allow me to provide some context then, for our recommendations.

Calvert believes that healthy corporations are characterized by sound corporate governance and overall corporate social responsibility. The well-governed socially responsible company meets high standards of corporate ethics and operates in the best interests not only of shareholders but of other stakeholders - employees, customers, communities and the environment. In our view, companies that combine good governance and corporate social responsibility avoid unnecessary financial risk and are better positioned for long-term success.

In the past two years, we have seen a series of governance failures that can be laid directly at the doors of directors - who have the duty to represent the interests of shareholders. Scores of directors failed to discharge these duties, and millions of shareholders have been harmed as a result.

Against this backdrop, we believe now is an appropriate time to re-examine the rules governing nominating committee disclosures and communications. The current regime has been in place for 25 years. Yet, the net result has been boilerplate generalities at best, and little or no meaningful disclosure. Indeed, Calvert researches over 3,000 companies annually, and it is rare that we receive prompt, complete information from companies or their directors in response to our queries. This year we filed nine shareholder resolutions with companies seeking greater gender and racial diversify on those companies' boards - primarily because our prior efforts to engage those companies in dialogue prior to filing were wholly unsuccessful.

We believe that every company should have, and disclose, relevant information describing the qualifications for boards of directors, and that those statements should include a description of minimum qualifications for directors as well as standards for director independence and diversity. Moreover, these disclosures should apply to all director candidates, whether identified by company management or by shareholders.

We believe in particular that diversity is a critical attribute to a well functioning board and an essential measure of good governance. In an increasingly complex global market place, the ability to draw on a wide range of viewpoints, backgrounds, skills, experience and expertise internally increases the likelihood of making the right decisions. We believe board diversity that includes race, gender, culture, thought and geography helps to ensure that different perspectives are brought to bear on issues while enhancing the likelihood that proposed solutions will be nuanced and comprehensive.

We also believe that it is critical that board diversity - including diversity of race and gender - be addressed in companies' nominating committee charters and procedures. In this connection, Calvert has drafted and issued Model Charter Language for corporate nominating and governance committees focused on attaining diversity in corporate boardrooms. The document builds on and complements recent corporate reforms by providing companies with the means to formalize their commitment to an independent and inclusive board. A copy of the Model Nominating Committee Charter Language is available on the Calvert web site (

We additionally support and strongly recommend a number of other key disclosures and process clarifications. Specifically, companies should be required to describe, either in the proxy or in some other required financial filing, the following:

  • The manner in which shareowners can communicate with the Board.

  • Which Board members are responsible for stakeholder or shareholder communication.

  • The procedures by which shareholder and stakeholder communications can be forwarded to the appropriate corporate executives and departments.

  • Whether and how management filters shareholder communications with the Board.

  • Policies for how individual/small shareholders can communicate with the Board, if that policy differs from institutional investor communication policies.

  • The presence or absence of a nominating committee, and its members.

  • All relationships that the members of nominating committees have with the company, outside of board service.

  • The nominating committee charter, including procedures for identifying and evaluating the qualifications, racial and gender diversity, and independence of all potential nominees; or, if the company has no nominating committee charter, a disclosure to that effect.

  • Description of the minimum qualifications for director candidates, including experience, expertise, education, representation, race, and gender.

  • Description of the nominating committee's process for identifying and evaluating all candidates for director positions, including those nominated by shareholders.

I would welcome the opportunity to discuss these recommendations further with you. Please feel free to contact me at your convenience.

Thank you for your consideration.


/s/ Barbara J. Krumsiek

Barbara J. Krumsiek
President and CEO
Calvert Group, Ltd.

1 Calvert Group, Ltd. is a financial services firm specializing in tax-free and responsible investing by sponsoring a family of open-end, registered investment companies, with approximately $9 billion in assets under management for more than 300,000 shareholders.