The Home Depot, Inc.
December 19, 2003
Mr. Jonathan G. Katz
Re: File No. S7-19-03
Dear Mr. Katz:
I am the Executive Vice President, Secretary and General Counsel of The Home Depot, Inc., a Delaware corporation with approximately $60 billion in annual revenues and 315,000 associates. I appreciate the opportunity to provide comments on the Securities and Exchange Commission ("SEC") proposal to require publicly traded companies to include security holder nominees for director in their proxy statements under certain circumstances.
The Home Depot has a longstanding commitment to strong corporate governance practices, having elected a lead director almost six years ago, created a Disclosure Committee tasked with ensuring that the Company's disclosures to its stockholders and the investment community are accurate and complete, instituted a Corporate Compliance Council to regularly review the Company's compliance policies and monitor its compliance performance, and adopted new independence standards for Board members, which meet or exceed the standards adopted by the New York Stock Exchange. The Company also supports both the Sarbanes-Oxley Act of 2002 and the SEC's efforts to implement the Act, as well as the recently adopted New York Stock Exchange and NASDAQ corporate governance listing standards, all of which we believe will encourage more responsive and transparent corporate governance practices.
While we support efforts to ensure that corporate boards and management hold themselves to the highest standards of corporate governance, we believe that requiring companies to include security holder nominees for directors in their proxy statements will not result in better corporate governance. Rather, we believe that the SEC's proposed rules, if adopted, will unnecessarily complicate the proxy process, give special interest groups and institutional shareholders who do not have a duty to represent and act in the best interest of all stakeholders access to the boardroom, and disrupt the open and honest communications that form the foundation for effective board dynamics. We also believe that the effect of the SEC's proposed rules will go far beyond the SEC's stated intent of targeting unresponsive companies and that almost all U.S. public companies will be negatively impacted by the additional cost and complexity of the proxy process, the need to negotiate with and appease special interest groups and certain institutional shareholders under the threats of "open access" proposals and votes withheld from certain directors, and the increasing difficulty of finding and retaining experienced and actively involved board members given the specter of more frequent election contests.
We believe that the SEC should allow the corporate governance reforms already adopted by Congress, the SEC, the New York Stock Exchange and NASDAQ to be fully implemented before proceeding with additional regulation. We believe that many of the changes already adopted will strengthen the independence and procedures of nominating committees once they are fully implemented throughout all U.S. public companies, thereby eliminating the need for additional regulation relating to security holder access. Nevertheless, if the SEC concludes that changes in the director nomination and election process are still necessary, we strongly support revising the proposed rules to better target unresponsive companies.
Thank you for considering these comments. If you would like to discuss these views further, please do not hesitate to contact me at (770) 433-8211.
cc: Robert L. Nardelli, CEO