Luke R. Corbett
December 8, 2003
Jonathan G. Katz
Re: File No. S7-19-03
Dear Mr. Katz:
I am the Chairman and CEO of Kerr-McGee Corporation, a Delaware corporation with assets of about $10 billion. I appreciate this opportunity to provide comments on the Securities and Exchange Commission ("SEC") proposal to require companies to include shareholder nominees for director in company proxy materials under certain circumstances.
Kerr-McGee believes in, and long has been a supporter of, good governance practices. We implemented the newly promulgated New York Stock Exchange corporate governance listing standards before they were finally issued. This includes having fully independent audit, compensation and nominating committees; specifying committee responsibilities in written committee charters; and updating our existing company code of ethics.
We believe, however, that complicating the director election process by requiring companies to include shareholder nominees in their proxy materials is not good corporate governance and, in fact, will enhance special interest groups' access to boardrooms. Indeed, directors have a duty to nominate persons that they believe will serve the best interests of all shareholders. Shareholders, while free to nominate candidates and wage contests for their election, do not have a similar fiduciary duty. Encouraging annual contests within the confines of an issuer's proxy statement waged by shareholders who are under no duty to advance the best interests of all shareholders is unwise and likely will result in constituency boards that are not accountable to all shareholders. Furthermore, the proposed rules go far beyond the SEC's stated intent of targeting a small number of unresponsive companies and will impact many U.S. public companies - regardless of their corporate governance practices or their responsiveness to shareholders.
We believe the SEC should allow the corporate governance reforms already adopted by Congress, the SEC and the securities markets to be fully implemented before proceeding with additional regulation. Changes already being implemented that will increase the independence of boards of directors, strengthen the role and independence of nominating committees and enhance shareholder-director communications obviate the need for additional regulation related to shareholder access. If the SEC nevertheless concludes that changes in the director election process are necessary, then we believe it is necessary to substantially revise the proposed rules to better target them to non-responsive companies.
Thank you for considering these concerns about the proposed rules. If you would like to discuss these comments or any other issue, please do no hesitate to contact me at 405-270-3865.