From: EDWARD BELTRAM [edbeltram@msn.com] Sent: Wednesday, March 31, 2004 7:31 PM To: rule-comments@sec.gov Subject: Lucent Retirees Comments on File No. S7-19-03 Re: File No. S7-19-03 -- Security Holder Director Nominations Lucent Retirees Organization K.O. Raschke, President 231 Pinetuck Lane Winston-Salem, NC 27104 336-765-9765 March 29, 2004 Jonathan G. Katz Secretary U.S. Securities and Exchange Commission 450 Fifth Street, NW, Washington, DC 20549-0609 Re: File No. S7-19-03 Security Holder Director Nominations Dear Mr. Katz: I am writing to you on behalf of the Lucent Retirees Organization. The LRO is a non-profit organization created in January 2003 to addresses the interest of 127,000 retirees who were at one time employed by Western Electric, AT&T Network Systems, or Bell Labs, plus subsidiaries such as Teletype and Sandia. Most of our members are small shareholders in Lucent Technologies. We are highly interested in Lucent's welfare and we actively vote our shares. For example, the LRO's first venture into sponsoring a proxy resulted in it receiving 65 percent of the votes cast at the Lucent Annual Meeting on February 18, 2004. The purpose of this letter is to provide the LRO's comments on the SEC's proposal to require companies to include shareholder nominees for director in company proxy materials under certain circumstances. We believe that giving small shareholders a greater voice in the nomination of corporate directors would be one of the most important reforms to be adopted by the Commission. We generally support the Commission's proposal. However, we believe the proposed barriers and triggers are unnecessary and unreasonably discriminatory against the vast majority of American shareholders. We believe the Commission should modify the proposed rule to promote a better balance between the rights of shareholders and the concern that the annual election process be manageable and not overly costly. We believe that if a majority vote for a shareholder resolution proposing security holder nominations is maintained as a triggering event, then the ownership requirement for an access resolution should be consistent with the current Rule 14a-8 standards that apply to other governance resolutions. If a majority of shares are voted in favor of a shareholder access proposal, the size of the proponent's ownership position should be irrelevant. What matters most is whether the owners of the company vote to allow shareholder nominations and contested elections. If the Commission does adopt a higher ownership threshold for a binding proxy access resolution, it should certainly make it clear that management under Rule 14a-8 cannot omit non-binding, advisory resolutions. If a more restrictive ownership requirement is to apply to binding proxy access resolutions, then the Commission should clarify that non-binding, advisory resolutions cannot be excluded by management. The failure of a corporate board to implement a policy adopted by a majority vote of shareholders is the most clear-cut example of a failure in corporate accountability. This is particularly true because Rule 14a-8 greatly restricts the ability of company owners to express their views on corporate policy. We urge the Commission to lower the ownership requirement to nominate a single director candidate via proxy from 5 percent to no more than 1 percent of the shareholders. The requirement that shareholder nominees must be independent of nominating shareholders should be eliminated. A single standard of independence should apply to board candidates, whether they are nominated by management or by shareholders. In addition, shareholder nominees should receive equal space and position in the company's proxy materials, and management should not be allowed to expend corporate resources to campaign against shareholder nominees. In conclusion the LRO strongly endorses the adoption of the rule granting shareholders access to the nomination of directors through the proxy process. The Commission is to be commended for providing this opportunity for input in its decision making process. Sincerely, Copy to: The Honorable Richard Shelby, United States Senator The Honorable Michael Oxley, United States Representative