From: Paul.Saueracker@Mineralstech.com Sent: Monday, December 22, 2003 10:58 AM To: rule-comments@sec.gov Subject: File No. S7-19-03 December 22, 2003 By E-Mail: rule-comments@sec.gov. Jonathan G. Katz Secretary U.S. Securities and Exchange Commission 450 Fifth Street NW Washington, DC 20549-0609 Re: File No. S7-19-03 Dear Mr. Katz: I am Chairman of the Board and Chief Executive Officer of Minerals Technologies Inc., a NYSE-listed Delaware corporation with a market capitalization of about $1.2 billion. Since its initial public offering in 1992, Minerals Technologies has been both an advocate and a practitioner of transparent disclosure, open and frank shareholder communication, and good corporate governance practices. I welcome the opportunity to provide comments on the Commission's pending proposal to require that, in certain circumstances, companies include shareholder nominees for director in proxy solicitations distributed by the company. While there have been well-publicized cases of management irresponsibility, incompetence and even self-dealing within a few large public companies, we do not think this represents a breakdown in the proxy process or any inability of long-term shareholders to communicate with management. We are opposed to the proposed shareholder access rules on several grounds. First and foremost, the proposed rules go far beyond the Commission's stated intent of targeting a small number of unresponsive companies, and will impact many U.S. public companies regardless of their corporate governance practices or their responsiveness to shareholders. The "triggers" in the proposed rule ? a more than 35% "withhold" vote for one of the company's director nominees, or a majority vote for a "direct access" shareholder proposal, in a previous year -- are overbroad and have no obvious relationship to weaknesses in the ability of the shareholders to influence the board. Any benefit that the rules might bring about by disciplining the behavior of unresponsive boards would be more than outweighed by the harm they would cause to the many companies which are attentive and responsive to their shareholders' concerns. Second, as the Congress, the Commission and the New York Stock Exchange have recognized, identification and recruitment of potential directors is best done by an independent governance committee. The natural incentive as well as the fiduciary duty of the members of that committee is to carry out their responsibility with an eye to the best interests of the corporation as a whole, and not to the interests of any other third party. By contrast, shareholders making nominations under the proposed rules will have no fiduciary duty to the corporation as a whole, and can be expected to choose candidates which represent vested interests not aligned with those of the corporation. The result will unavoidably be a balkanized board in which directors are inclined to represent constituencies rather than the corporation as a whole. An additional, more practical objection is that the proposed rules would forbid the proxy card itself from presenting the option to vote for a slate of directors as a group, a situation which is certain to lead to confusion. Investors will be confronted with proxies listing all director candidates individually, leading inevitably to substantial amounts of overvoting. There is no clear answer to the question of how such overvotes would be treated. Finally, we also strongly believe that the corporate governance reforms already adopted by Congress, the Commission and the Self-Regulatory Organizations should be allowed to settle into operation, and that all parties should have the benefit of a shakedown period including at least one annual meeting season under the many other rules which are new this year, before adding a further layer of procedural complexity to the process. If the SEC nevertheless concludes that changes in the director election process are necessary, then we believe it the current proposal should be substantially rethought, revised to target it in a more focussed way on the harms it is intended to address, and subjected to another round of public comment. Thank you very kindly for your consideration of these views. If you would like to discuss these comments or any other issue, please do not hesitate to contact me at 212-878-1922. Very truly yours, Paul R. Saueracker ********************************************************************** This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error please notify the system manager. This footnote also confirms that this email message has been swept by MIMEsweeper for the presence of computer viruses. www.mimesweeper.com **********************************************************************