Subject: Comment Letter Date: 10/31/97 10:19 AM Billy L. McDaniel USWA 7378 Hwy. 405 Maceo KY 42355 BMcD7378@aol.com Re: File No. S7-25-97 Dear Mr. Katz: I am writing to object to the Securities and Exchange Commission's proposed amendments to rules on shareholder proposals. The Commission's proposals create many obstacles to shareholders bringing proposals. They will foster costly litigation in place of cost-effective and time-proven regulatory mechanisms. These changes are contrary to the expressed views of Congress in the National Securities Markets Improvement Act of 1996, encouraging the Securities and Exchange Commission to investigate enhancing shareholders' ability to submit resolutions "relating to corporate practices and social issues." The proposals are objectionable for a number of reasons. The "personal grievance" exception. The proposed rule would allow companies to bar proposals without SEC review because the companies assert the shareholders' motives are "personal." Proponents will be forced to sue in federal court, a process that for many is prohibitively expensive and time consuming. The practical effect of this proposal would be to cripple the current shareholder proposal process. Resubmission thresholds. The proposed rule would raise the vote percentage necessary to resubmit a proposal in subsequent years to levels which would have excluded most past shareholder efforts addressing both corporate governance questions and corporate policies involving significant social issues. Had the proposed standard been in effect in years past, virtually none of the corporate resolutions dealing with excessive executive compensation would have been considered. Discretionary voting by management. The proposed rule would allow companies to solicit proxies from shareholders without giving those shareholders the right to vote for certain types of shareholder proposals on their company proxy card. It was just this type of one-sided, management dominated proxy process that led to the adoption of the current rules in the first place. Relevance exception. The proposed rule would create a sales dollar value measure of proposals' relevance that would potentially exclude proposals on issues where the potential liability or the social issue at stake dwarfed the sales impact of the issue. Taken together, the proposed SEC rules disenfranchise shareholders. They eliminate the voice of the smaller shareholder on the corporate proxy ballot and at annual shareholder meetings. While I applaud the SEC for reversing the Cracker Barrel decision, which barred shareholder resolutions having anything to do with a company's workforce, the proposed rule renders the reversal meaningless by retaining and strengthening anti-shareholder measures. Sincerely, Submit