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January 2, 2004 BY E-MAIL Jonathan G. Katz
Re: File No. S7-19-03 Dear Mr. Katz: I am the Corporate Secretary and Compliance Officer for CIGNA Corporation, a Delaware corporation with $19B in annual revenues and $82B in assets under management. As someone who has been involved in corporate governance since 1986 including serving as the Chairman of the American Society of Corporate Secretaries (2001-2002), I appreciate this opportunity to comment on the Securities and Exchange Commission ("SEC") proposal requiring companies to include shareholder nominees for directors in company proxy materials. I agree with Congress, the SEC and the securities markets that corporate boards and management must hold themselves to the highest standards of corporate governance. However, I am concerned that complicating the director election process by requiring companies to include shareholder nominees in their proxy materials is not good corporate governance. In fact, it will enhance special interest groups' access to boardrooms. Additionally, the election of shareholder nominated candidates could create factions in the board, jeopardizing the board's ability to function effectively. I also am concerned that permitting shareholders to place nominees in company proxy materials would undercut the role of the board and its nominating committee in the important process of nominating director candidates. Bypassing the nominating committee, which must be composed solely of independent directors under the NYSE listing standards, would diminish board accountability to shareholders. Finally, the proposed rules could turn director elections into proxy contests, substantially disrupting corporate affairs, causing significant costs to the company and all of its shareholders, and dissuading from board service well-qualified individuals who do not want to routinely stand for election in a contested situation. If the inclusion of shareholder nominees in company proxy materials is to be required, I agree with the SEC's goal of limiting it to a small number of companies who have not been responsive to their shareholders. However, I believe the SEC should allow the corporate governance reforms adopted by Congress, the SEC and the securities markets to be fully implemented before proceeding with additional regulation. With the increased independence of boards of directors, the strengthened role and independence of nominating committees and the enhancement of shareholder-director communications, I believe that the issues that led to calls for shareholder access will be addressed. Thank you for considering these concerns about the proposed rules. If you would like to discuss these comments or any other issue, please do not hesitate to contact me at 215-761-6031.
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