January 19, 2006
In general I support the proposed rule changes for Internet access to proxy materials. The rules should in intent and practice allow a more democratic election of directors of public corporations.
Here are answers to several to the questions posed in the preamble to the proposed rule.
Q.1, p. 9 Yes, access to the Internet has become sufficiently widespread to make the proposed rules procedures viable, BUT provisions should be made for those shareholders who do not have Internet access or are not Internet savvy.
Q.1, p. 10 While most of the shares of a corporation are probably held by shareholders that can access lengthy documents via the Internet, provisions should be made in the final rules that allow all shareholders easy access to lengthy documents. Providing a means of downloading lengthy documents via the Internet should be required, but also viewing lengthy documents via websites should also be required. Many lengthy documents can be read directly using most web browsers. Sometimes very lengthy documents may need to be provided via several links on the website rather than all on one web page. Downloading should not be required to view the relevant lengthy documents.
Q.2, p. 10 All shareholders should not have to have broadband Internet connections to view any lengthy documents subject to these rules. Lengthy documents can technically be viewed with dial-up connections via websites (see answer to Q. 2 above)
Q.3, p. 10 Yes, persons wanting to distribute documents per the rules should be required to provide links to websites to download, free of charge, software to read such documents, HOWEVER, such software should not be so esoteric or pose such large requirements for shareholder computer resources to make such software impractical for shareholders.
Q.4, p. 10 Issuers should be required to provide sufficient bandwidth on whatever web site that the relevant documents are located to allow shareholders easy access to such documents. This means that shareholders should be able to access such documents within 10 minutes of the initial request.
Q.1, p. 12 Yes, the proposed Internet-based methods should be available to all shareholders.
Q.2, p. 12 Q.3, p. 12 and Q.1, p. 13 All issuers or persons wanting to issue proxy materials should be able to use the methods in this proposed rule.
Q.2, p. 13 While different shareholders have different capabilities of obtaining information for the Internet, all shareholders should have the SAME access. Any shareholder should be able to request a paper or e-mail copy in lieu of the Internet version.
Q.1, p. 16 The rules may need to be changed to prevent at least on gaming opportunity regarding the request for a paper copy of proxy materials. Some opponents in a proxy contest might request numerous paper copies in an attempt to increase the costs of the proxy contest. Some provisions should be made in the rules to prevent this possibility. For example, persons requesting a paper copy of such materials should be required to state that they cannot readily access the relevant documents via the Internet. If this is not true, such person would be subject to a substantial fine or liable for illegal tactics in the proxy contest.
Q.1, p. 17 Thirty days seems too short of a time to request a paper copy, obtain the copy and analyze it before the voting deadline. Perhaps the rules should state that proxy materials over 40 pages in length should be provide 60 days notice.
Q.2, p. 17 A toll-free number is a sufficient means to request a paper copy of the proxy materials, assuming that such a number is sufficiently staffed that a shareholder can request a copy within 10 minutes of the initial call.
Q.4, p. 17 If an issuer recommends that shareholders oppose a shareholder proposal, then any document supporting such proposal by the shareholder making the proposal should be included in this notice. NO, this notice should not be encumbered with requests for future delivery of such notices.
Q.1, p. 18 If anyone makes a recommendation about how to vote on any proposal, then the opposing party should have a similar right to offer a differing recommendation. One way to provide such balanced presentation is to require that opposing recommendations be identified by a web link and/or an toll-free number.
Q.4, p. 18 Yes, plain English should be required for notices under this rule.
Q.1, p. 19 No charge for paper copies of proxy materials should be allowed, but see the answer to Q.1, p. 16 for an additional provision to prevent potential gaming of this provision.
Q.2, p. 23 The provisions of discretionary broker voting should be disclosed in the paper notice sent to shareholders, specifically that the shareholder must provide voting instructions 10 days before the deadline or the broker will vote as he/she thinks proper. The notice should provide a web link to a plain language description of this provision.
Q.1, p. 24 The Internet proxy should be designed to minimize the cost of vote counting.
Q.4, p. 24 The paper notice should explain in plain language that only shareholders of record may vote shares and that beneficial holders must communicate their voting instructions in a timely manner. Dont complicate this process, just educate beneficial holders of the process to communicate voting instructions.
Q.1, p. 27 Proxy materials should not be restricted to the EDGAR site.
Q.2, p.27 Yes all proxy related materials should be posted on one web site or links off one web site. This web site should be designed so that readers can easily find the same materials provided in writing.
Q.2, p. 27 Yes Internet documents should be substantially identical to paper documents. Internet documents can be easily modified whereas paper documents are not easily modified. So method is needed to freeze the Internet documents so that multiple revised versions are not put on the web site.
Q.1, p. 28 Users should not have to pre-register before viewing documents on the proxy web site.
Q.1, p. 29 Each proxy season should not depend on the methods used in the proxy season. Shareholders should not have to opt in or opt out of using paper or not.
Q.1, p. 32 Yes shareholders should be responsible for making a timely request for paper documents and the author of these documents should specify the latest date to receive these requests in order to obtain the paper documents before the relevant deadline.
Q.2, p. 33 Paper documents should not have to be provided after the deadline. This could result in increased costs without a relevant benefit.
Q.2, p. 34 Do not specify how a issuer is to provide paper copies, just specify the penalties if such copies are not provided in a timely manner. Let each issuer decide how many copies to make and how to make more if necessary.
Q.1 p. 40, Yes intermediates should be required to handle notice and access requests just like current proxy requests.
Q.1, p. 43 No additional fees should be allowed over what is already allowed for distribution of proxy materials.
Q.1, p. 44 Persons different than the issuer should definitely be able to use the notice and access model. This is one of the major potential benefits of this method. It will hopefully allow shareholders more ready access to independent proposals regarding the company. Currently the company has an undue advantage in proxy issues.