December 22, 2003
Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549-0609
Re: File No. S7-19-03
Dear Mr. Katz:
As an independent director and the Chairperson of the Nominating and Governance Committee of Sprint Corporation, I appreciate this opportunity to provide my comments on the Securities and Exchange Commission ("SEC") proposal to require companies to include shareholder nominees for director in company proxy materials under certain circumstances.
Our Nominating and Corporate Governance Committee was formed in the summer of 2002 to focus on how we can enhance our existing policies and procedures. Since then we have been continuously designing and implementing a comprehensive set of corporate governance initiatives. The many significant enhancements to Sprint's existing corporate governance policies and practices that have been implemented in 2002 and 2003 have all been unanimously approved by the board. This evidences the whole-hearted support of the full board for ensuring that Sprint is among the leaders in the best practices of governance in corporate America. Indeed, the board views this committee's work to be on-going, and we will continue to study other governance concepts and not hesitate to institute further enhancements in our governance if warranted.
I agree with Congress, the SEC and the securities markets that corporate boards and management must hold themselves to the highest standards of corporate governance. However, I am concerned that requiring companies to include shareholder nominees in their proxy materials is not good corporate governance and, in fact, will enhance special interest groups' access to boardrooms. In addition, the election of shareholder-nominated candidates could create factions on the board, leading to dissension and delay and jeopardizing the board's ability to function effectively.
I also am concerned that permitting shareholders to place nominees in company proxy materials would undercut the role of the board and the Nominating and Governance Committee in the important process of nominating director candidates. This is inconsistent with New York Stock Exchange ("NYSE") listing standards, which strengthen the role and independence of boards of directors and board nominating committees. Moreover, bypassing the nominating committee, which must be composed solely of independent directors under the NYSE listing standards, would diminish board accountability to shareholders. Finally, the proposed rules could turn director elections into proxy contests, substantially disrupting corporate affairs, causing significant costs to the company and all of its shareholders, and dissuading from board service well-qualified individuals who do not want to routinely stand for election in a contested situation.
If the inclusion of shareholder nominees in company proxy materials is to be required, I agree with the SEC's goal of limiting it to a small number of companies who have not been responsive to their shareholders. It should not apply to companies such as Sprint that are responsive to the proxy process. I believe the SEC should allow the corporate governance reforms adopted by Congress, the SEC and the securities markets to be fully implemented before proceeding with additional regulation. With the increased independence of boards of directors, the strengthened role and independence of nominating committees and the enhanced disclosure regarding shareholder-director communications, I believe that the issues that led to calls for shareholder access will be addressed.
Thank you for considering my concerns about the proposed rules. If you would like to discuss these comments or any other issue, please do not hesitate to contact me through the office of Sprint's General Counsel at 913-794-1440.
Linda Koch Lorimer
Nominating and Governance Committee