December 22, 2003
Jonathan G. Katz
RE: File No. S7-19-03
Dear Mr. Katz:
Cleco Corporation appreciates the opportunity to comment on the Securities and Exchange Commission's (SEC) proposals to give security holder-nominated director candidates access to company proxy statements under certain circumstances. Cleco Corporation is a regional energy services company headquartered in Pineville, Louisiana. Cleco operates a regulated electric utility company that serves about 260,000 customers in Louisiana and a wholesale energy business that operates 2,100 megawatts of generating capacity.
Cleco Corporation advocates good corporate governance. However, for the reasons given below, Cleco Corporation strongly requests the SEC reject the proposed rules on security holder director nominations.
The Sarbanes-Oxley Act of 2002 (Act) and the recently approved corporate governance standards of the New York Stock Exchange (NYSE) require what many companies had previously practiced as stewards of good corporate governance. Even so, the Act and the new standards of the NYSE have brought about sweeping changes to the corporate governance landscape and the operations of many boards. The SEC should allow the corporate governance reforms already incorporated in the Act and the NYSE standards to be fully implemented before promulgating additional major changes to corporate governance.
The proposed rules will, in all likelihood, primarily be used by special interest groups which will have an agenda unlike that of the shareholder group as a whole. Currently, directors have a fiduciary duty to all shareholders. Special interest directors will serve with a primary belief that they represent and are accountable to their special interest group only. The best long-term interests of the overall shareholder base will not be served by the actions of these special interest directors.
Perhaps some corporations have not been responsive to shareholder proposals. Cleco Corporation already has a process incorporated in its corporate bylaws that allows security holder director nominations. If the SEC believes that changes in the director election process are necessary, then Cleco urges the SEC to substantially revise the proposed rules to better target the rules towards the non-responsive companies.
Thank you for considering these comments about the proposed rules. If you would like to discuss these comments or have questions, please do not hesitate to contact me.
/s/ R. O'Neal Chadwick, Jr.
R. O'Neal Chadwick, Jr.