January 1, 2006
January 1, 2006
VIA SEC WEBSITE
Securities and Exchange Commission
Washington, D.C. 20549
Re: Comments to Proposed Release No. 34-52926 (File No. S7-10-05) Internet Availability of Proxy Statements
Ladies and Gentlemen:
The proposed rules, as outlined in the above-mentioned release, would especially provide small to medium-sized public companies with a very cost-effective approach in furnishing proxy materials to shareholders through the internet. Given the comprehensive utilization of web based content in nearly every aspect of commerce, and the general ease of accessibility, now is clearly the right time to adopt such rules.
Requiring shareholders to affirmatively opt-out by requesting a paper copy version of the proxy statement ensures that no shareholder will be left behind when it comes to making important corporate decisions such as the election of corporate directors, the ratification of auditors and the various management / shareholder proposals that occasionally require shareholder approval.
For McDATA Corporation, a medium-sized public company that inherited a very large shareholder base due to a spin-off from a significantly larger company, this proposal will (a) save money in terms of printing and mailing costs and (b) provide a more timely and informed dissemination of information. A shareholder could review the proxy statement online, and then could simply double click the appropriate vote website to immediately cast his or her ballot.
Resources typically used to print and mail hundreds of thousands of proxy statements and annual report information (for McDATA, in some years amounting up to 600,000 copies), can instead be used for product development and other value creation activities that would benefit shareholders.
As previously commented upon by William K. Sjostrom, Jr., Asst. Professor, Salmon P. Chase College of Law, Northern Kentucky University, on December 15, 2005, merger proxy statements should not necessarily be excluded from the proposed rules. As Mr. Sjostrom suggests, and I agree, a better approach may be allow for merger proxy statements if they fall within a certain maximum number of pages.
For the reasons set forth above, I am in support of the proposed rules being implemented immediately without the need for a transition period. This is a postive step forward for both shareholders and public companies.
Thomas O. McGimpsey
Executive Vice President and
Chief Legal Officer
380 Interlocken Crescent
Broomfield, CO 80021