October 1, 2007
Re: Proposed Rules S7-16-07 and S7-17-07
Dear Commissioner Cox and Secretary Morris,
I have been recently informed of Proposed Rules S7-16-07 and S7-17-07 and hereby submit comments to address amending certain provisions of the Securities Exchange Act of 1934 governing shareholder proposals related to director elections and shareholder resolution processes.
I very much appreciate the opportunity to share with the Commission the perspective of an individual shareholder with holdings in both private and publicly-traded companies. I believe the best interests of shareholders are served by voting proxies in a way that maximizes long-term shareholder value. Shareholders have the discretion to make the best decision given the individual facts and circumstances of each issue.
I oppose Proposed Rules S7-16-07 and S7-17-07, which would deny shareholders the ability to use the shareholder proposal rule to communicate with other shareholders regarding access to the company proxy statement and the election of directors. Non-binding resolutions protect corporations from being forced to implement popular but economically unfeasible proposals. Corporations should not be allowed to opt out of this process using state law, corporate bylaws or bylaw amendments. Allowing companies to opt out of the shareholder resolution process will only give unresponsive companies the power to do so and would create different standards and unfair practices amongst companies.
The proposed rules undermine efforts by investors to seek protection of their interests and investments by taking away their rights to express concerns regarding the nomination of directors and would pose a major setback to shareholders' stock ownership rights and communication with management. As an investor, I believe that environmental, social and corporate governance issues can affect the performance of management and investment portfolios. The rights of investors to nominate board members using the proxy process and to file shareholder proposals are critical investor protection tools and have brought visibility to important business risks that can have a profound impact on the company – creating win-win agreements. Any rule limiting shareholder resolution rights would take away the ability for shareholders to vote against management on proposals where they perceive a conflict may exist between management and shareholder interests, such as those that may be overly protective of management or diminish shareholder rights.
Shareholders have a history of being protected by the SEC under Rule 14a-8. Shareholders have proxy and resolution processes to be active owners and incorporate environmental, social and corporate governance issues into their own ownership policies and practices such as participating in the development of policy, regulation and standard setting with long-term considerations. The concepts set forth in Proposed Rule S7-16-07 and S7-17-07 would ultimately have little benefit to shareholders.
I urge you to protect the democracy shareholders have in order to create checks and balances and to not make any changes to shareholders' rights to file non-binding resolutions.
Sincerely,
Cheryl Ho