From: David Yoffie [dyoffie@hbs.edu] Sent: Monday, December 15, 2003 6:28 PM To: rule-comments@sec.gov Subject: File No. S7-19-03, Security Holder Director Nominations Professor David B. Yoffie Harvard Business School Boston, MA 02163 December 15, 2003 BY E-MAIL, rule-comments@sec.gov Jonathan G. Katz Secretary U.S. Securities and Exchange Commission 450 Fifth Street NW Washington, DC 20549-0609 Re: File No. S7-19-03, Security Holder Director Nominations Dear Mr. Katz: As a Director at Intel Corporation and Charles Schwab Corporation I appreciate this opportunity to provide my comments on the Securities and Exchange Commission ("SEC") proposal to require companies to include shareholder nominees for director in company proxy materials under certain circumstances. 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 and, in fact, will enhance special interest groups' access to boardrooms. In addition, the election of shareholder-nominated candidates could create factions on the board, leading to dissension and delay and jeopardizing the board's ability to function effectively for the benefit of all shareholders. I am also 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. This is inconsistent with NASDAQ and New York Stock Exchange listing standards, which strengthen the role and independence of boards of directors and board nominating committees. Moreover, bypassing the nominating committee, which must be composed solely of independent directors under the applicable listing standards, would diminish board accountability to shareholders. Finally, the proposed rules could turn director elections every year 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. 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 my 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 617-495-6363. Sincerely, David B. Yoffie Director, Intel Corporation Director, Charles Schwab Corporation