PPG Industries

November 26, 2002


Mr. Jonathan Katz
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Re: Release No. 33-8138, Comments on Proposed Item 309 of Regulations S-K and S-B and Related Changes ("Financial Expert") under Section 407 of the Sarbanes-Oxley Act of 2002, File No. S7-40-02

Dear Mr. Katz:

I am submitting the following comments on behalf of PPG Industries, Inc. ("PPG"), a Pennsylvania corporation and a New York Stock Exchange listed company, with sales of $8.2 billion in 2001, over 50,000 shareholders (including employees holding stock in PPG's Savings Plan), and a market capitalization of $8 billion.

PPG appreciates the opportunity to provide you with our views on a recent Securities and Exchange Commission ("Commission") proposal to implement provisions of the Sarbanes-Oxley Act of 2002 (the "S-O Act") relating to audit committee "financial experts".

PPG has the following comments on the Commission's proposed rules.

Definition of "financial expert" too narrow

First, the proposed definition for an audit committee "financial expert" is too narrow. The narrow definition under the proposed rule is not required under Section 407 of the S-O Act, and should be revised to allow the Board of Directors to consider other factors, similar to those allowed under current NYSE rules.

The S-O Act says the Commission should consider the factors listed in Section 407 in defining the term "financial expert", but does not require every "financial expert" to meet every factor in the S-O Act. The Commission should give the Board of Directors flexibility to determine whether the total experience of the Committee member qualifies them as a financial expert. This would follow the current NYSE requirements which were modeled on the recommendations of its Blue Ribbon Commission on Audit Committees.

At a minimum, the Commission could recognize that chief executive officers, with years of supervising the preparation of financial reports, would meet the requirement that a financial expert have experience in "preparing or auditing" financial statements. Not recognizing this CEO experience is clearly inconsistent with other parts of the S-O Act and the Commission's existing and proposed rules, because CEOs must certify public company financials under the Section 302 rules and Section 906 of the S-O Act, and are subject to significant penalties for wrongful certifications. The Commission has also proposed to include CEOs among those who must adhere to the Senior Financial Officers Code of Ethics under Section 406 of the S-O Act. It is inconsistent to require CEOs to adhere to a Senior Financial Officers Code of Ethics and certify the company's financial reports without also recognizing this experience as qualifying them as audit committee financial experts.

In addition, the Commission should make it clear that the requirement in the proposed rule that the financial expert have experience in "generally comparable" accounting issues does not mean that he or she must have experience in the same industry. To do so would conflict with current "interlocking directorate" antitrust requirements as well as with existing and proposed independence requirements.

Names of financial experts need not be disclosed

Second, the Commission should delete the requirement in the current proposal to name the financial expert(s) in an SEC report. This is not required by the S-O Act and would have several deleterious effects. First, despite the language in the Commission's release, there is no safe harbor in the proposed rule, and, as a practical matter, naming the financial expert(s) will make those persons potential litigation targets. This will discourage qualified persons from serving on audit committees. It will also tend to create a special "class" of Directors. This would be potentially divisive in committee and Board deliberations and could disrupt the collegial nature of the Board and its committees, which many experts believe increases Board effectiveness.

Provide a transition period

Finally, we believe the Commission should provide a transition period of at least one year, making the rule effective no earlier than for Forms 10-K filed for years ending after December 15, 2003. If the rule was effective for the 2003 proxy season, it would be very difficult for companies to recruit, nominate and elect qualifying "financial experts" within such a short timeframe. In addition, to avoid the possibility of confusing and conflicting requirements, the effective date of the "financial expert" disclosure requirements should be coordinated with the effective dates of the proposed NYSE listing standards for audit committee membership.

We appreciate your consideration of these comments.

Yours very truly,

Michael C. Hanzel