From: Redlin, Brad [Bradr@cfra.org]
Sent: Friday, September 12, 2003 10:54 AM
To: rule-comments@sec.gov
Subject: Proposed Rule #S7-14-03

To: rule-comments@sec.gov

Re: File No. S7-14-03

September 12, 2003

Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549-0609

COMMENT ON SEC-PROPOSED RULE: NOMINATING COMMITTEE DISCLOSURES & 
COMMUNICATIONS BETWEEN SHAREOWNERS AND CORPORATE DIRECTORS

Dear Mr. Katz,

I submit the following comments regarding Nominating Committee policies and 
disclosures for Board nominations, and greater vehicles for shareholders to 
communicate directly with Board members (SEC-proposed rule S7-14-03). This 
is a thoughtful step in strengthening Directors' accountability and obligation 
to shareholders, but a step I hope will lead to an even more robust proposal 
regarding investor access to the corporate proxy statement.

Investor-proposed nominees are rarely given consideration by management during 
the nominations process. Shareowners therefore rely on expensive and time-
consuming proxy contests to bring attention to their candidates, who often lose 
in contested elections because management spends shareholder assets to oppose 
such investor nominees. While greater disclosure of the criteria and processes 
for nominating Board candidates will be quite useful to investors, it may be 
difficult for the SEC to eliminate boilerplate disclosures. The SEC should also 
not mistake the tide of letters in support of greater disclosure and communication 
channels with board members as a sign that shareholder access to the proxy for 
Board nominations is not needed by shareowners, for it is the crucial missing 
link in Board accountability and strong governance at most corporations.
 
Nominating Committee Disclosures 

I fully support the recommendations that Nominating Committees disclose when they 
receive nominations from security holders, as well as the procedures for nominating 
candidates for the Board. I also support detailed disclosures regarding the 
qualifications of, and criteria for, Board candidates, including those suggested 
by investors. 
 
I also strongly recommend additional disclosures regarding how the Nominating 
Committee takes the issue of Board diversity into account when considering 
candidates for the proxy ballot, and a description of how each candidate meets 
independence requirements outlined by the stock exchange listing reforms. A number 
of companies already disclose their commitment to Board diversity in their 
nominating charters, and diverse shareholder representation is a factor highlighted 
by TIAA-CREF in its guidelines on Corporate Governance. I further support transparency 
of the nominators behind candidates for the Board, including those proposed by 
management, Directors, shareholders, and Board search firms. This information is 
quite useful to investors in determining conflicts of interest and the measure 
of independence Board candidates have from management, other Directors, and the 
company itself.

Shareholder Communications with Board Members

In my experience, Board members rarely respond to communications from shareowners. 
Calls, letters and emails are often routed through Investor Relations or corporate 
executives, who often decide to filter such correspondence. Such procedures do not 
uphold the basic premise that Board members directly represent shareholders. The 
channel of communication between security holders and Boards should be quite clear, 
and easily accessible--not buried 20 pages into a corporate web site. Just as the 
revised NYSE listing standards proposed direct channels for communicating with 
Audit Committees, should there be a problem, investors should have direct access 
-- via emails, phone numbers, faxes, and addresses -- to the Board members 
representing them, to discuss issues appropriate of Board attention.
 
I further support Boards reporting back to investors a summary of shareholder-
Director communications, actions taken in response to shareholder concerns, and 
if the Board did not respond to particular communications, which executives did 
and why. 
 
Additional Recommendations

I would also like to see a summary report in the proxy statement of Director 
attendance at annual meetings, to know which Board members are forgoing their 
duty of representing shareholders and addressing their questions at such events. 
 
Recommendations under proposed rule S7-14-03 should also apply to small companies 
and mutual fund companies, as enhanced disclosure would be of great value to all 
types of investors around these processes.

The proposed disclosures, while paving critical improvements to the transparency 
of corporate elections, are not enough to restore lost confidence in U.S. equity 
markets. It will be the combination of greater transparency and greater investor 
access to the proxy for Board nominations that will strengthen shareholder 
democracy, and Board accountability with it.

Sincerely,

Brad Redlin
1020 ½ 4th ST, #207
Sioux City, IA 51101