From: Coleman, Frank [colemanf@cbis-fsc.com]
Sent: Friday, June 13, 2003 11:34 AM
To: 'rule-comments@sec.gov'
Subject: File No. S7-10-03

June 13, 2003

Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549-0609

Re: 	File No. S7-10-03 -Release No. 34-47778

Dear Mr. Katz:

Christian Brothers Investment Services, Inc. (CBIS), a registered investment
adviser under the Investment Advisers Act of 1940, would like to submit
comments pursuant to the Commission's April 14, 2003 "Notice of Solicitation
of Public Views Regarding Possible Changes to Proxy Rules" (File No.
S7-10-03, Release No. 34-47778).

CBIS manages approximately $3 billion for Catholic organizations seeking to
combine faith and finance through the responsible stewardship of Catholic
assets. We are an active shareholder, working with companies on a number of
issues we believe are critical to the long-term value of the investments we
make on behalf of our clients.

CBIS believes that access to the proxy provides us with a critical way to
communicate the views and opinions of the shareholders we represent on a
very wide range of issues that affect the long-term interests of all
corporate shareholders and corporate stakeholders.

We therefore commend the Commission for undertaking a thorough review of
proxy rules and regulations to ensure that they best serve the interests of
investors while fostering sound corporate governance and transparent
business practices.

CBIS would like to point out that in many cases during the past 20 years, we
have raised issues that have been termed "special interest" issues. We
understand that our role in raising these issues is, in part, to demonstrate
their importance to a broader base of shareholders. However, we have also
raised these issues feeling very strongly that there has been a strong
business case for each, with the potential to impact the bottom line. 

In our first environmental resolutions in the late 1980's, we met
considerable opposition. Today, these resolutions are gaining more
broad-based institutional support. Yesterday's "special interest" issue of
executive compensation is today's groundswell of outrage by mainstream
investors. We believe that the SEC, in promulgating its rules, must leave
some room for unpopular issues to be raised. 

We would like to offer the following specific comments and suggestions to
the Commission:

Improved Shareholder Access to the Nominating Process
We believe that the board of directors and its nominating committee, as
shareholder representatives, are in the best position to select qualified,
independent nominees who will meet the needs of the company. However, the
current process, as it has been practiced, has not focused Boards on their
primary responsibility to protect the interests of shareholders.

The current process puts much of the responsibility on Board selection in
the hands of management. The Board, and even the nominating committee, are
dependent on management in the process of nominating and selecting Board
candidates. Shareholders exercise no real say in this process. We are not
even able to reject a candidate who we feel may not be best qualified to
serve.

We believe a process of Board nominations and selection must have the
following key principles:

§	It must be accountable to shareholders. If the intent of the SEC is
to have shareholders "select" nominees, then the process needs to provide a
mechanism for shareholders to make clear decisions about the qualifications
of a nominee. 

We have the following specific recommendations:

o	Change the nomination process to provide for specific proxy voting
options:  "for," "against," and "abstain." This will permit direct election
of individual directors versus the current "advisory" election process,
which only permits a "for" or a "withhold" vote.

o	In the proxy statement's nominee statement, disclose a nominee's
familial, professional, and financial relationship to the Company and its
executives. This will help shareholders better assess to enable an
assessment of a director's independence.

o	Require that nominees to the Board attend the annual meeting during
which the vote is held.

·	It must provide an opportunity for shareholders to nominate
candidates to the Board. Shareholders should be provided an opportunity to
nominate candidates who they feel meet the criteria for Board membership.
However, this should not overwhelm the process of Board nomination and
selection. We believe that a director nomination process more open to
shareholder input will create a mechanism for enforcing the nominating
committee's mandate to elect directors who represent the interests of
shareholders when there is a conflict between shareholders' interests and
the interests of the top management of the company. Indeed, such a process
may indirectly help to head off such conflicts, before they reach a point
that is injurious to shareholders.

We have the following specific recommendations:

o	Section (i)(8) of Rule 240.14a-8 should be revised or eliminated to
allow direct nomination of directors by shareholders. When a nominating
committee opposes a shareholder nomination, the committee would be
responsible for indicating why it did not accept the nomination.

o	The process should provide fair treatment to all shareholders,
including smaller shareholders. While frivolous nominations should be
discouraged, ownership requirements should not be set so high that ordinary
shareholders are prohibited from participating in the process. The
Commission should consider a level that would allow for the possibility that
small shareholders could nominate a member to the board, while requiring, at
a minimum, a base of support for the candidate broad enough so that only
serious candidates are likely to appear, such as requiring that the
nominating shareholder represent a certain percentage of ownership and/or a
minimum number of shareholders. We can support a range of 1-3% as being
appropriate to balance the various needs.

o	Steps should be taken to eliminate practices, such as expensive
campaigns, that can create undue advantages for especially well-financed
board candidates.

o	The nominating committee should retain its primary role for
selecting board members, and should set rules, within boundaries, for
shareholder nominations. When shareholders wish to select their own
nominee(s), the number of nominees and contested seats should be limited. In
the case of multiple shareholder nominations for a given board seat, the
committee would select among the candidates who would appear on the ballot.
An overall process should be designed so that a board that implements its
role responsibly would rarely face a shareholder nominee.

o	Strengthen the role of the nominating committee to insure that it
strikes the proper balance between the committee's need to select candidates
it believes can best contribute to the success of the enterprise, and the
need to truly permit shareholders to participate in the Board selection
process. The following are recommended steps to strengthen the role of the
nominating committee:

§	Require that all members are independent and have no ties to members
of management.
§ To avoid the committee's dependence on management's largesse, require that
the company provide independent access to the resources needed by the
committee to fulfill its mandate.
§ Require that the nominating committee develop specific written criteria
and qualifications for Board candidates.

o	The Commission should seek to prevent use of this process by
management, or groups affiliated with management, as a takeover device, by
creating the possibility of civil or criminal penalty for such an abuse and
by requiring a minimum period of time for holding the shares.

§	It must be transparent to shareholders and the public. The criteria
required for a Board position, and the full qualifications of each nominee
to fill a position, need to be disclosed. We have the following specific
recommendations:

o	Provide information related to the criteria and desirable
qualifications for Board position, and a summary of responsibilities and
qualifications needed for key committees.

o	Provide equal space for background information on each nominee in
the proxy to assist investors in making an informed choice.  All information
on the candidates should be presented in a consistent manner, with
shareholder nominee(s) clearly identified as such.

Thank you for the opportunity to provide these comments to the Commission
and for your attention to these comments. Please feel free to contact me, if
you need assistance or have additional questions.

Sincerely yours,


Francis G. Coleman
Executive Vice President