From: Harry Morton [hmorton@chartermi.net]
Sent: Friday, October 24, 2003 12:07 PM
To: rule-comments@sec.gov
Subject: S7-19-03: 

Subject: Rule Number: S7-19-03


Mr. William Donaldson                                                                                                                                                                           October 24, 2003
Chairman 
United States Securities and Exchange Commission
450 5th Street, N.W. 
Washington, D.C. 20549

Dear Chairman Donaldson: 

I am an individual investor writing to you regarding the proposed rule on proxy 
access that the Commission will be issuing soon. I am gratified that, under your 
leadership, the Commission has recognized the importance of addressing this issue 
now. But I am also very concerned about what we have heard about the specifics of 
the proposed rule. The proposed rule should, for the first time, allow long-term 
investors to nominate directors and have those nominees placed on the proxy 
materials that public corporations send out to all stockholders. The new rule must 
provide a mechanism that shareholders can use to place board nominees on the proxy 
ballot each time there is an election of directors. Only then can shareholders 
hold individual directors and the board as a whole accountable for their actions.

Unfortunately, the SEC proposal appears to only go part of the way. Under the 
proposed rules, shareholders only get to nominate directors in cases where in the 
proceeding year a majority of shareholders voted to open up the elections are a 
substantial number of shareholders withheld their votes for the current directors. 
These are high hurdles indeed for shareholder democracy. These rules imposed 
virtually insurmountable barriers to forcing a contested election, required too 
much time to actually get to the contest and imposed onerous and one-sided 
requirements that their nominees be independent. This proposal had created a false 
impression of reform, The proposal provides a series of barriers and restraints 
to common stock holder.

For more than a decade, shareholders have been calling on the SEC for new rules 
that strengthen their rights to fair corporate elections. It's time for the SEC 
to heed that call, In the absence of meaningful reforms, shareholders are still 
forced to wage costly proxy battles to nominate candidates for corporate boards, 
but management is allowed to campaign for its slate of candidates at company 
expense. In the wake of the corporate scandals of the past couple of years, it is 
time to enact a shareholders' bill of rights.

The principle is clear. Shareholders are the owners. If we, as representatives of 
shareholders, wish to nominate candidates for director on the company proxy card, 
we should have that right. It is not reasonable or fair that incumbent boards have 
unlimited access to the corporate treasury, while owners bear costs of hundreds of 
thousands of dollars, if not millions, to contest the choices of failed boards. As 
an individual investor I would use proxy access not to seek corporate control, but 
rather to help reform companies that have failed to live up to their obligations to 
their owners. Under current rules, however, the cost of intervention by means of 
shareholder nominations is prohibitively expensive. 

I demand that the SEC really bring democracy to corporate board elections by removing 
the trigger events from the shareholder democracy proposal. Allowing the owners of 
the companies - the shareholders - to have an actual say in the membership of the 
corporate board of directors is one of the best ways to curb many of the insider 
excesses that have been taking place in corporate America.

Sincerely 

Harry L Morton