From: Bobby.Aziz@Broadwing.com
Sent: Monday, March 22, 2004 5:38 PM
To: rule-comments@sec.gov
Subject: (s7-19-03) WSJ article on possible rule changes for electing
directors

I read the article in todays WSJ about consideration of rules changes to the 
election of directors.  I understand it is desired to be cautious but find the 
caution to error on the side of doing little.

The article "Democracy Looks For an Opening -- In the Boardroom (SEC Plan to 
Boost the Role Of Investors in Elections Draws Ire of Companies) was by 
DEBORAH SOLOMON and JOANN S. LUBLIN, Staff Reporters of THE WALL STREET 
JOURNAL March 22, 2004; Page A1. Be the company small or large, stellar or 
suspect -- all boards could use a couple of directors nominated directly by 
shareholders.  Conditions on SEC proposed rule changes allowing shareholders 
to nominate company directors, truth be told, smacks of teeth chattering fear 
on the part of the SEC.  I would have thought in light of good companies going 
bad with no notice, shareholders bilked out of billions by management 
controlled boards that nearly nonexistent "owner/shareholder" rights warrant 
strengthening.  No wonder Warren Buffet likes to buy whole companies -- buying 
shares doesn't impart any control, and owning through mutual funds provides 
zero oversight.   I like the rule change but placing too many conditions on 
how shareholders can submit a director for nonination and the putting the 
percentatge above 2% seems like it is maintaining the status quo for
all practical purposes. The WSJ quoted Mr. Goldschmid, and could have done so 
incorrectly, but if true, for Mr. Goldschmid to say the plan is aimed at 
"companies that aren't working well," and that "This is the way for 
shareholders to help turn those companies around." is just silly.  It would 
seem to frame Mr. Goldschmid's posture on the matter as preferring that 
shareholders are required to be blindsided by mismanagement first and only 
then should shareholders be allowed to get involved.  All board membership 
should be in play.  Conditions on nominating directors is a mistake -- tell 
former WorldCom, Enron and a whole host of other company shareholders that 
they should have waited before they could nominate directors.  Some infusion 
of competition instead of the steady diet of chummy appointments is just
what the SEC should prescribe.  And the worry that "special interests" will 
gain control of companies is alarmist like and irrational.  The biggest 
special interest is still the CEO, they will still control the boards.  And 
will still be coddled and insulated because they'll still control the majority 
of board seats.  The incestuous pool of dire ctors is what helps breed 
malfeasance.   

The SEC should not for a minute worry that a broader selection of directors 
would create companies that are managed more poorly.   Real broadening of the 
pool of directors that can be appointed by stock holders can only be a good 
thing.   To conclude the opposite is illogical hogwash. 

What is the worst thing that could happen?  Possibly CEOs feeling more board 
pressure and taken to task on issues they are not governing well?  Frankly 
giving shareholders greater control of who sits on boards could improve 
governance.  Corporate responsibility is languashing, and increasing the 
ability of shareholders to broaden the pool of directors is not a bad thing.  
The directorship pool is too stagnant and shallow, controlled by too few.  Why 
not put some power in the hands that own.  

And maybe some rules that mutual funds should nominate directors from the 
ranks of its shareholders would be in order too.  After all mutual funds 
aren't being governed that well either.

My fear is that you're agency still clings to maintaining the status quo.  I 
hope I'm wrong.


Bobby Aziz
Austin, Texas

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