October 22, 1997
Jonathon G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Comments as requested by the SEC on File No. S7-25-97 Shareholder Proposal Amendments
The amendments proposed by the Securities and Exchange Commission as stated in the above referenced document should not be used in view of its flagrant violation or, if you will, neglect of the rights of shareholders both institutional and individual. Two major proposed changes to the current shareholder submission process is in my opinion not in the best interest of the shareholders of Americas companies.
The first is the modification of the C4 personal grievance exclusion, the provision whereas companies can exclude a proposal for basically any reason indicating a shareholders personal interest or grievance and the SEC will take "no view" basically concurring that it wont pursue the issue if they do. How is this an improvement toward shareholders rights? I believe this will do nothing but cease all shareholder proposals submitted by any shareholder if a company has any reason that could be considered a personal interest or personal grievance. If a shareholder should wish to continue the attempt to force the issue of submitting their resolution the shareholder would have to sue the company and expend personal resources to do so which would be impossible for a majority of shareholder proponents.
The second is the percentage of votes counted needed to resubmit a proposal after the first proxy season increased to six, fifteen and thirty percent the second, third and fourth submission year after year. Currently a shareholder needs three, six and then ten percent of the votes to resubmit. A motion to extend the time frame but increase as well the resubmission rates was made by Jon Lukomnik from NYCERS to a four year rule with a maximum of twenty five percent noting that it takes time for an issue to be accepted and understood by shareholders. This seemed to have been ignored even though it had a majority of support from those involved in assisting the SEC with the information gathering process. A slim number of proposals ever receive the thirty percentile by the third year and so almost all of shareholder concerns would be excludable from companies proxy statements. This would give way to allow companies to act on behalf of the managements own "personal interest" since there will be no accountability to the stockholder.
How can the SEC call itself the "Investors Advocate" and then turn its back on investors when they need it the most? Arthur Levitt himself has had a history of helping the little guy or the small shareholder. Has he sold out his interest for the courtship of big business? I am dismayed at the shameful way the shareholder proposal process has turned from one of a positively upward move to help smooth out the rough edges of submitting shareholder proposals to disenfranchising shareholders rights to accountability and the freedom of expressing their view to the management and other shareholders.