Date:    1/5/98  6:05 PM
Subject: s7-25-97

     
Barbara Boxer
Member Senater Committee on Banking Housing & Urban  Affairs 
US Senate Washington DC 20510
     
Dear Senator Boxer,
     
            I am writing to voice my strong objection to the SEC's new 
            proposed rules (S7-25-97). If adopted, these rules will 
            significantly reduce the rights of American shareholders.
     
 Shareholder participation in corporate governance through the proxy 
 process has led to many important changes in corporate behavior that 
 have benefited both shareholders and the larger society.  The 
 widespread adoption of confidential voting and the declassification of 
 boards are just two of the corporate governance reforms arising from 
 the shareholder proposal process.  In addition, shareholder proposals 
 have wrought many changes in corporate policies with respect to 
 apartheid in South Africa, the environment, and the use of child labor 
 and prison labor.  Shareholder activity has led to the establishment 
 of clear standards for corporate environmental behavior, to the 
 McBride Principles, which address employment conditions in Northern 
 Ireland, and to increased managerial attention to issues related to 
 employment discrimination in the U.S.  Rule 14a-8 has been vital in 
 all this work.
     
 The SEC's role in overseeing this process has been crucial to the 
 success of the corporate governance system.  The Commission's 
 low-cost, efficient oversight of proxy voting in public companies has 
 prevented corporate managers from using the resources at their 
 disposal to frustrate shareholder rights through expensive, 
 time-consuming litigation.
     
            The process as it stands today is an important tool for 
            protecting my financial interests as a stock owner. It is 
            also an important marketplace mechanism for promoting 
            corporate accountability and corporate responsibility. 
            Shareholders have enormous financial interest in addressing 
            the diverse issues raised through the shareholder process. 
            When companies fail to address their governance, 
            environmental or social impact problems, shareholders 
            suffer. Corporate mismanagement of these issues can 
            seriously effect a company's reputation and bottom line. 
     
 In recent years the SEC has stepped away from its historic role of 
 safeguarding shareholders' ability to raise issues of broader concern.
  For example, the Cracker Barrel decision effectively prevents
 shareholders from raising employment discrimination issues such as 
 those present in the recent Texaco race discrimination settlement, or 
 sweatshop issues.  In response, Congress, in the National Securities 
 Markets Improvements Act of 1996, called upon the Commission to 
 improve shareholder access to proxy statements.  Instead of opening 
 the process, the Commission has crafted a package that moves in the 
 Arthur Levitt, SEC, page 2
     
 opposite direction by tying Cracker Barrel repeal to broader changes 
 in the rules that would close off shareholder access to the proxy.  We 
 believe the new proposed rule would greatly hinder, if not cripple, 
 the process of shareholder dialogue and participation that has been of 
 such benefit to society.
     
 Specifically, the Commission's proposals:
 x Allow a company to bar proposals without SEC review approval if the 
 company asserts that the shareholders' motives are "personal," forcing 
 shareholders to incur the expense and delay of a lawsuit to exercise 
 rights which are now efficiently protected by the Commission; x 
 Significantly raise the vote percentage necessary to resubmit a proposal 
 to levels which would have excluded many past shareholder efforts 
 addressing both corporate governance questions and corporate policies 
 involving significant social issues such as apartheid and employment 
 discrimination; x Allow companies to solicit proxies from shareholders 
 without giving those shareholders the right to vote for certain types of 
 shareholder proposals on their company proxy card, giving management an 
 unfair advantage when shareholders go to the expense of conducting their 
 own solicitation; and x Create a sales dollar value measure of 
 proposals' relevance that would potentially exclude proposals on issues 
 where the potential liability or the social issue at stake dwarfed the 
 sales impact of the issue.  
     
 These proposed changes to the proxy voting system in their current 
 form are unacceptable and contrary to the public interest.  The 
 corporate governance system must be one that all parties can live 
 with.  The proposed rule does not reach that minimal standard.  It is 
 a fundamental threat to shareholder participation in the proxy 
 process. 
     
  I applaud the SEC for reversing its Cracker Barrel Decision - but the 
  new SEC rules have retained and strengthened the anti-shareholder 
  policy of the original decision. Reverse Cracker Barrel, but don't let 
  the rest of the proposed rules go forward.  Either let the existing 
  rules stand or develop new rules that better protect shareholders. 
  American shareholders are counting on you to safeguard our rights. 
  Don't let these proposed rules be another set of regulations from 
  Washington that favor big business.
     
      Sincerely,
     
Sally Northcutt
1329 37th Ave
SF CA 94122