From: James McRitchie [jm@corpgov.net] Sent: Thursday, October 10, 2002 12:31 AM To: rule-comments@sec.gov Cc: prvtr@bellatlantic.net; plgreen@worldnet.att.net Subject: Fwd: SEC Rulemaking Petition, File 4-465 Sorry, my previous e-mail contained a typo; please consider the version below to be my official comment on File 4-465. ----- Start Forwarded Message ----- From: "James McRitchie" To: rule-comments@sec.gov Subject: SEC Rulemaking Petition, File 4-465 Dear Secretary Katz, This is in support of SEC Rulemaking Petition, File 4-465. Although this rulemaking overlaps with the petition which Les Greenberg and I have already filed (File 4-463 at http://www.sec.gov/rules/petitions/petn4-463.htm) which includes more specific language, it also warrants attention. The request to disallow counting uninstructed shares ("broker votes") for any candidate and to ban the use of corporate funds for campaigning for any candidate certainly deserve attention, although these issues aren't as central as opening up the corporate proxy/ballot to shareholder nominated director candidates. As you know, currently, if shareholders don't vote their proxies within 10 days of the annual meeting, their brokers will vote for them…always in favor of management's recommendations. The Council of Institutional Investors has opposed the use of broker votes for anything except achieving a quorum for a shareholder meeting and has urged the SEC to prohibit broker voting without client instructions. When will the SEC listen? Its certainly time for this change. The current process, where shareholders coercively ratify incumbent nominees is plainly not an "election." Running an independent nominee or slate using the solicitation process is prohibitively expensive, except in the most unusual circumstances. Why should shareholders be required to run candidates by paying for an expensive solicitation, while current management uses our funds to tout their candidates on the company proxy? Until our corporations are more democratically run, we will be dealing mostly with symptoms that stem from granting CEOs nearly absolute power. Lord Acton wrote that "power tends to corrupt and absolute power corrupts absolutely." We've seen this in Enron, WorldCom and dozens of others where boards and government regulators filed to hold them in check. Entrenched managers and directors will much more efficiently improve corporate governance when they can be held accountable...voted out of office by shareholders. The idea of requiring a majority of "independent" directors is a half way measure. Historically, the chief executive serves as the chief recruiter for board vacancies. Board members can be "independent" and still owe their jobs to the CEO; that's not independence. Board members who are actually nominated and elected by shareholders will be accountable and will, in turn, hold the CEO accountable. I'd be happy to discuss these petitions with you, staff or the SEC or members of the Commission. Sincerely, James McRitchie, Editor CorpGov.Net 9295 Yorkship Court Elk Grove, CA 95758 916.691.9722 ----- End Forwarded Message -----