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February 2, 2000

Mr. Jonathan Katz
Securities & Exchange Commission
450 Fifth Street NW
Washington, DC 20549

Re: Comments on Release Nos. 33-7767, 34-42102, IC-24124 (File No. S7-26-99)


Dear Mr. Katz:

As, arguably, the "head of a household" whose members maintain six brokerage accounts (three of them IRAs) and where four household members also maintain "registered shareholder" and "employee shareholder" accounts in a variety of U.S. stocks...and also as a consultant to publicly-held companies who specializes in ways to reduce the costs of communicating with investors, while maintaining or improving the overall quality of such communications, I wish to offer a few comments and recommendations on the "Householding Release."

I strongly urge the Commission to allow issuers to "household" Annual Reports, proxy and information statements and proxy cards/voting instruction cards without obtaining the prior consent of household members, as long as 30 days notice of the "intent to household" is given.

I also urge the Commission to specify that the notice of the intent to household can accompany the householded materials themselves, as long as the following conditions are met:

  • that the notice of the intent to household is prominently displayed - either in the chairman's or corporate secretary's letter giving notice of the meeting or corporate action, or on the "turnaround document" that allows shareholders to take the action(s) called for

  • that such notices (a) prominently display the issuer's undertaking to "promptly furnish hard copies of the materials being householded to any and all household members who request them" and (b) prominently display a speedy way (by e-mail or via a toll-free telephone number) for household members to make such requests

    Because it is impossible to determine who is the head of any household, and because the "titular head" may not always own the same stocks as other family members...and because of practical limitations on what enclosing equipment can and cannot do, issuers should be allowed to address householded materials to any member of a household.

  • Issuers should be free to enclose all the proxy or voting instruction forms in a single envelope if their technology permits, but as we, and other commentators pointed out earlier, most issuers will be able to save very significant amounts by householding the Annual Reports and Proxy statements, even if the forms themselves must be mailed individually.

    Because issuers and their service providers need some lead-time to implement any household program - and because more than half of all Annual Meeting materials will be mailed in March and April - I urgently request the Commission to take action in February.

    In support of these recommendations I would cite the following facts:

  • Issuers have a very strong self-interest in wanting to assure that their materials are received promptly - and by all shareholders - so that the requested actions (whether a vote at an annual or special meeting or to exchange or tender securities in a "reorg action") are taken promptly.

  • The consequences of delayed action (possible lack of a quorum, shareholder complaints and ill-will, or worse, allegations that investors have been disenfranchised) are such that no issuer and no financial service provider would institute a household procedure that would run the risk of disenfranchising investors.

  • All rational investors hate to see issuers waste stockholder money by sending multiple copies of Annual Reports, proxy and other informational materials to the same household.

  • Aside from the large sums of money that are very visibly wasted, many investors (including all the members of my own household) are concerned about the negative environmental impact of the millions and millions of copies of such materials that end up in landfills, literally within days of their receipt.

  • Based on the investor demographics of hundreds of publicly-traded companies whose ownership records I have reviewed, almost every issuer can save at least 10% of their printing and mailing costs with the householding procedure outlined above. Issuers with "household names" can save as much as 60% of such costs. By extrapolating from these numbers - and depending on whether one uses the average cost or the incremental cost of printed matter - I estimate the savings to U.S. issuers to be somewhere between $200 million and $400 million annually.

    Frankly, I believe that every issuer could adopt the procedures outlined above without SEC rulemaking, under the commonsense principle of "no harm, no foul." But issuers, quite understandably, do not wish to fall afoul of the letter of SEC rulemaking proposals, even when the consequences seem to be nil.

    Accordingly, I strongly urge the Commission to amend its proposed "housekeeping rules" as suggested above, and to do so this month.

    Because timing is so critical here - and because I understand the staff may still be studying the need to have the rules track the "prospectus delivery rules" - I would suggest that the householding procedures involving proxies and "corporate actions" could be proposed in time for this season as "pilot program" rules. This would allow issuers (and the SEC) to test the assumptions, the technologies and the vendor capabilities that are available and will enable many issuers to realize very significant dollar savings this year.

    Thank you very much for your attention to the householding issue and please feel free to contact me if there are other questions I might answer.

    Very truly yours,

    Carl T. Hagberg
    Chairman & Chief Executive Officer