Hermes Pensions Management Limited

13 June 2003

M Dunn Esq
Deputy Director
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549

Dear Mr Dunn

Many thanks for the generous amount of time you and your team gave Corinna and me in Washington on Thursday.

There are three matters that I would wish to emphasise:

  1. The shareholder rights improvements you are contemplating are as important to international investors in American companies as they are to domestic investors. Institutional shareholders believe in delegating the running of public companies to boards of directors but require those directors to be accountable to the company's owners.

  2. The single most important right currently not available is for 5% of shareholders to simply and cheaply put a resolution to an annual meeting (or 10% to a special or extraordinary meeting) to remove one or more directors. A simple majority of votes cast should then mandate the change. A Board with good nominations procedures which include discussions with institutional shareholders will not have difficulty in successfully putting suitable candidates to the shareholders for election. Only where such procedures are inadequate will there be a need for shareholders to nominate their own candidates, which they should have the power to do. If shareholders had an easy and simple power to remove directors, this would over time transform directors' responses on all other shareowner issues, and reduce the need for time consuming and expensive proxy fights.

  3. There are many alternates to the current American system of shareholder rights in various countries of the world - some better, some worse than the American approach. There is a growing convergence of thought on these issues in the UK and Continental Europe. We would urge you to visit Europe to meet experts in these fields to discuss the relevance of our various approaches to the changes that are so clearly needed in the United States. Hermes would be happy to assist with introductions in advance of such a visit.

Yours sincerely

PETER BUTLER
Corporate Focus Director
Hermes Pensions Management Limited

Cc: Paul Dudek, Chief, Office of International Corporate Finance
Grace Lee, Special Counsel, Office of Chief Counsel
Lillian Cummins, Special Counsel, Office of Mergers and Acquisitions