To: Public File
From: Brian A. Stern
Counsel to Commissioner Glassman
Date: December 22, 2003
Re: File No. S7-19-03

On October 15, 2003, Commissioner Glassman and Brian Stern met with representatives of the Business Roundtable regarding the above-referenced matter. In attendance were: John Castellani; James Melican; Anthony Horan; Peggy Foran; Amy Goodman; and Patricia Engman.

They made the following general points:

  • Governance reforms have significantly increased the time and resources necessary to deal with governance issues, but companies and management are committed to implementing them. Companies have also become more responsive to shareholder concerns. The governance reforms have resulted in significant changes and should be given time to work.

  • The proposed one-percent threshold for submitting an "opt-in" proposal will be easily met at many companies.

  • The proposed five-percent threshold for submitting a nomination also will be easily met at many companies, and may be too low to serve as a significant triggering mechanism.

  • The 35-percent threshold for withhold voted currently results in company action in many cases - i.e., if 50-percent of shareholders disapprove of a director, many companies would already replace that nominee on the company's slate of directors or take other remedial actions. They noted that Institutional Shareholder Services (ISS) has its own independence criteria, and that if ISS determines a director is not independent that can result in significant withheld votes.

  • If a triggering event occurs, companies should have an opportunity to respond to shareholder concerns, and the proposed shareholder nomination process should not be triggered if the company cures the problems.

They indicated that they intended to provide detailed comments through the comment letter process.