From: Marie Chen [marie@parnassus.com] Sent: Monday, May 19, 2003 4:58 PM To: rule-comments@sec.gov Subject: File No. S7-10-03 Jonathan G. Katz, Secretary Securities and Exchange Commission May 19, 2003 450 Fifth Street NW Washington, DC 20549-0609 Subject: rule-comments@sec.gov File No. S7-10-03 sent via e-mail Dear Mr. Katz: I am the President of Parnassus Investments, a firm that serves as investment adviser to four mutual funds with $800 million in assets and 50,000 shareholders. I am also President of the four Parnassus Funds. With regard to the issue of shareholders' nominating corporate directors, I am glad that the SEC is focusing on this issue. The current process is far too cumbersome and frustrates shareholders' role in electing corporate directors. It is also too expensive and takes too much effort to put candidates up for election. An SEC policy goal should make it as easy as possible for shareholders to nominate candidates for board seats. On the other hand, it's important not to make the process too easy so that shareholders with very little stock and very little vested interest in the company can make frivolous nominations of individuals with very little chance of being elected. As a shareholder advocate, here are my suggestions: (1) Shareholders with a substantial amount of stock, say $100,000 in value, that they have held for at least one year, could nominate directors using the company's proxy. (2) To prevent too many candidates from running for the board and confusing matters, at any one annual meeting, only two non-management candidates for each board seat could be nominated. If more than two non-management candidates are proposed for each seat, then only the top two candidates with the highest dollar amount of stock backing them would be nominated. (3) The company's proxy statement would have to carry biographies of the nominees and brief statements of policy. (4) The SEC would eliminate restrictions on shareholders' talking among each other and communicating about the proposed candidates. (5) To ensure that a majority would vote for each elected director, there could be an "instant run-off" provision that would allow shareholders to rank preferences among several candidates. (6) The SEC should consider making cumulative voting mandatory so that an important minority viewpoint could be heard on the board. Yours truly, Jerome L. Dodson, President Parnassus Investments