December 22, 2003
Securities and Exchange Commission
Attention: Jonathan G. Katz, Secretary
Re: File No. S7-19-03
The following comments are submitted on behalf of the directors and officers of Questar Corporation ("Questar" or "the Company"). Questar is a publicly held corporation with headquarters in Salt Lake City, Utah, whose primary lines of business involve the production, transportation and distribution of natural gas. The Company is listed on the New York Stock Exchange and has a market capitalization of approximately $2.8 billion.
We oppose the Commission's proposed rules defining circumstances under which an issuer would be required to grant proxy access to shareholder nominees for election as corporate directors. We oppose these rules even though Questar has been generally free from proxy fights and shareholder proposals.
Within the last 18 months, Questar has complied with the letter and the spirit of the provisions included in the Sarbanes Oxley Act of 2002, rules adopted by the Commission, and listing requirements adopted by the Exchange. The Company has revised the membership of the Governance/Nominating Committee, revised charters for it and other Board Committees, published corporate governance principles, and established formal and informal disclosure and certification procedures.
We oppose the Commission's proposed rules for the following reasons:
1. Representation of Interests. Questar's Board includes 12 directors, with 9 independent directors. The independent directors are truly diverse, united only by their willingness to commit thoughtful time and energy to Board deliberations, their business acumen, and their reputation for integrity. They are not "special friends" of Questar's primary leaders and have no agendas.
Questar's Governance/Nominating Committee has published its willingness to consider candidates suggested by shareholders and is committed to evaluating their qualifications using the same published criteria used for all candidates. We believe that most shareholder nominees, however, will inevitably represent the special interest agendas of the shareholders that nominated them rather than the interests of all shareholders. Directors should represent all shareholders, not special interests.
Within the past three months, several possible candidates for service on Questar's Board have declined to be evaluated. They cited lack of time to fulfill their responsibilities as directors. The Company believes that it will become even more difficult to find attractive nominees who have the necessary experience and acumen if there is any chance that their nomination may be contested.
2. Wait and See. Questar and other public companies have all been required to make changes in their formal procedures to comply with mandates adopted by the Commission, the Exchange, and NASDAQ. There is no question that the bar has been raised for directors, given legal and regulatory changes, adverse publicity, and increased concerns about liability. Questar recommends that the Commission allow time for the impact of this change to be realized before imposing additional and unproven requirements on issuers.
3. Thoughtful Appraisal. The Commission's proposed rules have resulted in sometime shrill responses from public companies that oppose them for being unnecessary and expensive and from public employee and union pension funds that oppose them for being too restrictive. Questar does not believe that the virtual unanimity of opposition should result in a Commission conclusion that the proposed rules reflect a middle group that can be accepted. The Company encourages the Commission to extend the time frame for considering the proposed rules and the underlying rationale supporting them.