Subject: Stockholder Proposals Date: 10/7/97 File No. S7-25-97 to: To: rule-commentsw@sec. gov To: Chairman Arthur Levitt Securities and Exchange Commission Judiciary Plaza 450 5th Street, NW, Washington, DC 20549 -------------------------------------------------- Chairman Arthur Levitt Securities and Exchange Commission Judiciary Plaza 450 5th Street, NW, Washington, DC 20549 I. INITIAL COMMENTS II. DEMOGRAPHICS OF ADDRESSEE III. POSITION ON ISSUES IV. RESPONSE TO REQUESTS FOR COMMENTS V. CONCLUSION I. INITIAL COMMENTS In a business environment where large investors draw a commanding amount of attention in a speculative-driven market, the small investor must be permitted an opportunity to express their valid concerns through stockholder proposals. I strongly agree with commissioner Wallace in that what makes our economy strong and corporations successful is valid shareholder debate over matters of concern. Cosmetically the new Q and A format will foster good communications. The streamlining of administrative rules will be good as long as revised rules are clearly stated. The elimination of failed proposals is a fair concession given the loss of company time and resource in discussing the proposal the first time. The proposed use of the 3% override and other amendments related to the override is too large a sacrifice and will eliminate the voice of a majority of small investors. Generally, the small investor lacks the resources to combat boards reluctant to address their concerns. The commission is the avenue that I look toward to preserve the rights of the small investor. The 3% override provision will not protect the small investors ability to express valid company concerns. I expect, as a small investor who has submitted proposals in the past, that it is wrong to assert that the shareholders of companies will successfully use the override several times each year. Even if the 3% override is used, it will be insignificant compared to the elimination of the voice of the small investor and the ultimate associated economic loss. II. DEMOGRAPHICS OF ADDRESSEE Age: 35 Occupation: Certified Public Accountant Investor Status: Traditionally an investor in certificates of deposit; recently a small investor in banks which have converted from a mutual to a stockform of business. Stockholder's Proposals Submitted: Six to a Company in 1996 Result: The one proposal included in the proxy: For - 900,000 (Approximate); against - 3,600,000 (Approximate); the other proposal introduced on the floor was voted down by the discretionary votes. III. POSITIONS ON ISSUES - SHOULD BE ADDRESSED INDEPENDENTLY POSITION PROPOSAL 1) FOR 1) Recasting the rules in a Q and A format. 2) FOR 2) Including any proposals addressing employment related policies. 3) FOR 3) Restrictions on resubmission of failed proposals. 4) AGAINST 4) 3% "OVERRIDE" mechanism and the related removal of restrictions on proxy solicitations. 5) FOR 5) The commission making private letter rulings on tough calls. 6) FOR 6) Instruction on how to present proposals outside rule 14A-8. SUGGESTION: If board has > 10 proposals; non-board approved proposals go to stockholders with a separate cover letter; If > 3% shareholder vote for, then the proposal if resubmitted next year is presented with other board approved proposals (with no distinction between board approved and not approved). IV. RESPONSE TO REQUESTS FOR COMMENTS 1) Inquiry: Is $10 million threshold too low (regarding relevance)? Answer: No, (I would favor a .5% threshold) 2) Inquiry: Should we eliminate "Bright Line" approaches? Answer: I do not know enough about "Bright Line" approaches but from the considerable amount of attention that was given to the "Cracker Barrel Position", I would favor going back to a case-by-case approach. 3) Inquiry: If you do not support the 3% override, what alternative do you suggest? Answer: Retain existing rules with other suggested modifications and see if stockholder proposals change significantly (which I believe they will not). 4) Inquiry: Submission regarding stockholder proposals, is their submission in 120 calendar days before the company first mailed its proxies appropriate? Answer: The deadline for submission of proxies should be 120 days and the companies should be required to make their shareholder list available at that point in time. 5) Inquiry: Given a 3% override mechanism - should an exemption from the proxy rules in rule 14A-2 be permitted? Answer: No, any "Group" whether considering a proxy fight or otherwise should be required to file a schedule 13D or 13G. 6) Inquiry: Should companies in the instance of receiving a proposal to be discussed on the floor be required to notify all shareholders when proposals are submitted after 120 day deadline? Answer: Yes, as all shareholders need to be distinctly notified to the fact that discussion may occur on the floor and discretionary votes may be exercised without the knowledge of the matters discussed. 7) Inquiry: Should the required ownership of $1,000 be indexed to $2,000? Answer: No, as you are indexing a number which was probably arbitrarily picked in the first place. A $1,000 investment is significant to me. 8) Inquiry: Should 14A-8(E) be eliminated where there is a mechanism to obtain staff review of statement in opposition? Answer: No, I would have utilized 14A-8(E) in the past if I knew how to make contact with the commission. This may be why only a handful of shareholders may have used this section before. 9) Inquiry: Should rule 14A-8(E) be eliminated where proponents can no longer challenge a company's statement in opposition to a proposal? Answer: No, and I am concerned that too many long standing provisions with significant shareholder rights are being eliminated in a packaged-approach type concession. V. CONCLUSION The present safeguards in place with rule 14A-8 have somewhat effectively served our capital market. Given the changing business environment, the user friendly approach taken by the commission is definitely needed. I have concerns that small community development is being hampered by business development of larger capital markets. Hopefully, with the possible creation of a 3% override and elimination of provisions such as section 14A-8(E) we are not creating paper towers. Arthur R. Mixon P. O. Box 9729 New Iberia, La 70562-9729 (318) 367-9204