TO: Jonathan G. Katz
FROM: Gary Findlay
SUBJECT: File No. S7-10-03
DATE: May 9, 2003

As the SEC deliberates possible changes to the proxy rules and other potential shareholder protections, I would encourage them to keep one overarching principle in mind - specifically, the success (or failure) of a capitalist society will ultimately depend on aligning the interests of shareholders and corporate managers. In my view, this alignment will probably only be achievable through a combination of incentives and disincentives.

Left to their own devices, managers have shown no lack of imagination in arriving at incentives (legal and otherwise) to assure that their self-interests are well protected, while the interests of the shareholders have gone wanting. At the top of the interest alignment pyramid is the mechanism for determining who is ultimately in charge of corporate policy. The proxy process, as we know it today, has failed shareholders miserably in terms of aligning interests.

It is my hope that the SEC will address this issue fairly and expeditiously. If the playing field does not end up being completely level, it would be nice if it were tilted in favor of the shareholders for a change. In addition, I believe the disincentives related to wrongdoing must be significantly strengthened. After all, if white-collar crime did not pay, there would not be so much of it.

As you weigh the pros and cons of the numerous proposals that are likely to come before you over the next few months, please subject each to the following acid test: "What will it do with respect to aligning the interests of management with the interests of the shareholders?"