File No. S7-19-03From: Sanger, Thomas C. [TSanger@sempra.com] Sent: Monday, December 22, 2003 6:58 PM To: 'rule-comments@sec.gov' Subject: File No. S7-19-03 I am writing as an individual who has had experience working with corporate boards of directors to oppose the proposed rule to open company proxy statements to shareholders for the purpose of nominating directors. This proposal is very likely to have unintended consequences that could prove hard to reverse. Among my concerns are the following: a.. Contested board seat elections will cause a large incremental increase in expenditures for proxy solicitations and will demand a similar increase in management time as well. These are resources that could be better spent increasing shareholder value. b.. The potential for contested elections could discourage otherwise qualified candidates from accepting invitations to serve on corporate boards. With the increased responsibilities and liabilities facing today's directors, who needs the added (and humiliating) prospect of being defeated in a board seat election contest? c.. Boardroom dynamics will change as non-board recommended candidates win seats. Existing directors understandably will assume such newly elected members arrive with their own agendas, possibly looking to promote the interests of the shareholder groups that nominated them. It could take several meetings (or more) before the other directors gain a sense of the newcomer's integrity and motivations. In the meantime, candid discussion would suffer. d.. Labor unions could be tempted to use the possibility of a shareholder nomination as an additional "chip" to bring to the bargaining table. Within this past year, we have seen many new regulations, including exchange listing requirements that call for board nominating committees to consist solely of independent directors, for boards to annually review their collective skills and experience and to evaluate their collective performance. Such requirements are intended to create boards that are more effective and more responsive to shareholders. What is the purpose of having independent nominating committees conduct such surveys, identify the value of adding a particular skill or ethnic viewpoint to the board mix, and spend the time and effort to recruit such an individual if this balance can be overturned in a contested election? I urge the commission to give the newly enacted requirements time to work before making further adjustments to board processes. Adopting the proposed shareholder access rule could easily lead to less effective boards. There is no compelling need at this time to enact this proposed rule. Thomas C. Sanger Phone: (619) 696-4644 Fax: (619) 696-4508