KERR-McGEE CORPORATION
|
| Gregory F. Pilcher
Senior Vice President, General Counsel and Corporate Secretary |
Writer's Direct No.
(405) 270-2868 Fax (405) 270-3649 E-mail: gpilcher@kmg.com |
December 22, 2003
By E-Mail
Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549-0609
Re: File No. S7-19-03
Dear Mr. Katz:
I appreciate this opportunity to provide on behalf of Kerr-McGee Corporation 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.
We agree with the Congress, the SEC and the stock exchanges that good corporate governance is critical to the continued vitality of our securities markets. At Kerr-McGee, we long have had a substantial majority of independent directors serving on our Board, and took steps to implement the recent changes in the New York Stock Exchange listing standards even before they were finally promulgated. Regarding nominating committees in particular, we support the actions by the New York Stock Exchange to bolster the independence and effectiveness of nominating committees and by the SEC to enhance disclosures regarding the functioning of such committees.
We believe, however, that the proposal regarding shareholder nominees is a step backward. The proposal undercuts nominating committees, which are uniquely situated to determine the variety of skills and backgrounds that are necessary for a particular company's board and are best able to maintain the diversity of viewpoints that is a mark of a good board. Indeed, contested elections likely will result in constituency boards. This would run counter to recent regulatory and legislative initiatives, which have focused on ensuring that directors are independent and accountable to all shareholders.
Further, we believe the proposal will result in turning director elections into proxy contests. This could substantially disrupt corporate affairs, dissuade well-qualified individuals who do not want to stand for election in a contested situation from considering or continuing board service, and increase costs to companies and their shareholders. We believe it would be far better to permit the recent legislative, regulatory, and stock exchange initiatives to work before considering the current proposal. The increased independence of boards of directors, the strengthened role and independence of nominating committees and the enhancement of shareholder-director communications likely will adequately address the issues that led to calls for changes in the director election process.
Thank you for considering my concerns about the proposed rules.
Very truly yours,