February 4, 2002

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20547

Re: File No. SR-NYSE-2001-53

As a 40-year student of, and a frequent "commenter" on the proxy distribution, voting and tabulation processes; and as someone who has served as an Independent Inspector of Election at well over 300 annual and special meetings of shareholders (and who continues to do so) and as an individual investor in approximately 70 US and foreign companies, I wish to offer comments and suggestions on the above- captioned release.

Although the modest rollback of proxy distribution fees that is proposed by the NYSE is better than no relief, and must of course be approved at this time, given its release in the "eleventh-hour" before the Spring 2002 proxy season, the economic "rationale" that underlies the NYSE's new guidelines is seriously deficient in a number or respects:

  1. It fails to benchmark the proposed reimbursement guidelines against market-based rates for essentially identical services, such as imprinting, enclosing, mailing and mechanical tabulation. All of these, it should be noted, are essentially commodity-like services, highly sensitive to economies of scale and widely available elsewhere at rates, as numerous commenters have pointed out over the years, that are still significantly lower than those that are being proposed.

  2. It establishes a definition of "Large" and "Small issuers" that is totally arbitrary, and that bears no real relationship to the point at which economies of scale come into play in the enclosing and mailing businesses.

  3. It fails to address the very significant amounts that the current provider is taking into income indirectly, by unilaterally laying claim to and retaining one-half of the savings in postage that arise from routine bar-coding and sorting procedures.

  4. It fails to address the need for a "sunset provision" regarding the so-called "incentive fees" for eliminating mailings. Here, it should be noted, most of the work involved is done once - or done automatically, with computer programs. Further, the brokers, banks and other custodians who currently share in these incentive fees, reap significant benefits themselves from combined and/or eliminated mailings of paper materials to their customers.

  5. It cites a letter from The Association of Publicly Traded Companies, asserting that "the Pilot Program provided a $235 million reduction in costs in 2001 from mail suppressions" - an assertion that I believe was not, nor will it prove to be, supported by hard economic facts.

Accordingly, to properly fulfill their mandate ("to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information...and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market...and, in general, to protect the public interest,") both the SEC and the NYSE must, in my opinion, gear-up to do a more thorough, a more rigorous and a more forward-looking review of the entire process than has been done to date. Specifically:

I am enclosing as Exhibit I a letter I wrote to the NYSE on this subject in 1996, outlining a very simple way to open the system to competition while, at the same time, greatly improving the integrity and the auditability of the proxy voting, tabulating and reporting processes.

As always, I will be happy to expand on these comments in detail and to answer any questions the staff may have.

Respectfully submitted,

Carl T. Hagberg