The following comment on Letter Type L,
Letter Type L:
Dear Secretary Katz:
As an individual investor, I am writing regarding the proposed rule on shareholder proxy access and the ability of investors to better nominate candidates for corporate borads. I urge the SEC to support greater democracy in the corporate elections process.
I am concerned, however, with what I've seen in the proposed rule, and strongly believe the rule must go much further to provide investors with strengthened rights regarding the nomination process. Some of my concerns are:
1) The "triggers" included in the proposal create significant barriers for the shareholders to earn the right to place qualified candidates on the ballot. Even having direct access to the proxy without barriers seems a modest proposal. Because of the enormous effort and money required for a successful board nomination and election, few investors would use their rights to nominate unless they felt a Board and corporate executives were grossly mismanaging a corporation.
2) The process takes two years, which is too long for companies that suffer from intrtactable boards or those that have significant problems like national scandal, significant restatements of earnings, severe conflicts of interests, etc.
3) The ratio of shareholder nominated directors allowed is disproportionate and unfair. The shareholders can nominate only one director for boards of less and two for boards of nine to nineteen members. Since 50% of US companies have 8 or less members on their board and the other 50% have nine to nineteen members, shareholder nominated directors would likely be ineffective in any attempt to change the status quo.
Until corporate governance is strengthened to make directors more accountable to shareholders, we will continue having trouble regaining investors' confidence in amrkets and corporate management. Allowing the owners of companies to have an actual say in the membership of the corporate board is one of the best ways toward making board directors more accountable to long term investors. Thank you for the opportunity to offer my strong support for this proposal. I encourage the Commission to adopt final rules that are responsive to my concerns.