Founder, The Corporate Monitoring Project
268 Bush Street #3934
San Francisco, CA 94104, USA
Voice/Fax: (415) 680-1521
August 13, 2003
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609
RE: File No. S7-14-03 (Proposed Rule: Disclosure Regarding Nominating Committee Functions and Communications between Security Holders and Boards of Directors)
Dear Mr. Katz:
I am concerned that this proposed rule lacks substance, and may cause more substantial and worthwhile rules not to be passed.
Boards can easily proclaim that they consider all director nominees equally, whether put forward by the board or by shareowners. But because evaluating candidates is so subjective, boards will always be able to claim that their proposed candidates happen to be superior to the shareowners' proposed candidates, as a reason for not nominating the latter.
Likewise boards can easily proclaim that all shareowners are free to communicate with them, and that they seriously consider all such communication. They can always claim that any particular shareowner proposal lacks merit.
A common argument against proposed rules is that some recently passed rules need more time to be implemented, understood, and digested by the financial community. Thus passing an insubstantial rule (like S7-14-03) might end up causing a more worthwhile rule to be postponed, perhaps indefinitely.
As for what rule may be more worthwhile, please see my comments on possible changes to proxy rules at www.sec.gov/rules/other/s71003/corporatemp061103.htm.