September 29, 2007
To: Securities and Exchange Commission
From: Hugh Meyer
Re: File No. S7-16-07; S7-17-07
To Whom It May Concern:
I am writing today to address the proposals S7-16-07 and S7-17-07 regarding shareholder proposals, electronic shareholder communications via proxy contests. Both proposals appear to diminish the rights of shareholders to take part in a significant process within corporations. The non-binding shareholder proposal process is essential to all investors, especially individuals and pension funds. I strongly oppose both proposals S7-17-07; S7-16-07 to eliminate the shareholder resolution process or make it more difficult to sponsor resolutions. I also oppose any step to preclude investors from the nomination of directors. The passage of this resolution could cause serious problems between investors and corporations and forever shake the confidence of the investment world at large.
The foundations of our capital markets and corporations began with the concept of the stakeholder. Individual investors are given the opportunity to participate in the growth of American business as owners. As owners, investors need to be able to voice their concerns on matters which directly affect the future of the corporation- this is accomplished through management meetings, and the ability to nominate directors to the board. Shareholder resolutions are an essential to investors in order to ask corporations to divulge of business risks as well as the future use of capital. These resolutions have successfully shaped the future of successful businesses to create additional value to their shareholders. At the Caterpillar 2007 annual meeting of stockholders, the advocacy group Jewish Voice for Peace, introduced a shareholder resolution to prohibit the company from profiting from Palestinian home demolitions. This is the fourth consecutive year that this resolution was produced. The resolution gained the support of shareholders owning hundreds of millions in Caterpillar shares, including CalPERS, the largest pension fund in the world. (JVP)
Corporate governance has become one of the most controversial issues in the capital markets today. The scandals at Enron, WorldCom and Tyco destroyed hundreds of millions in shareholder value and moreover ruined the lives of thousands of employees. While Sarbanes-Oxley may have mitigated this issue, the passage of either SEC resolution as said forth may hamper the progress made with policing corporations. Corporate governance enables firms to operate in a proficient and responsible manner-this provides for accountability to the shareholders. Shareholder resolutions help support strong corporate governance to further business operations. These proposals seek to end this component of checks and balances on corporate directors and executives. The use of proxy’s via the internet will unquestionably dampen the confidence of all investors and could potentially cause increased market volatility.
I believe that the SEC must look at alternatives to S7-16-07, while eliminating S7-17-07 altogether. The requirement that a shareholder own 5% of a company’s shares in order to file a resolution to nominate a director should be modified. While the Commission has several responsibilities including issuing new rules and amending existing rules, a primary goal is to protect the interests of both the individual investor as well as the institutional investors. The 5% requirement will not guard the interests of the individual shareholders. The Commission should look to decrease this percentage to best serve all shareholders. Moreover, Chairman Cox must remember the significance of shareholder resolutions to the success and legitimacy of American business.
In my opinion, due to the reasons stated above, the Commission should eliminate both resolutions and seek out a new resolution to best serve all shareholders.
Sincerely,
Hugh A. Meyer