From: Tracy Burt [dragonflytc@hotmail.com]
Sent: Friday, June 13, 2003 2:34 AM
To: rule-comments@sec.gov
Subject: Support Shareholder's Right to Access the Proxy Ballot



June 9, 2003

Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549-0609

Re: S7-10-03 and SEC Release #34-47778

Dear Secretary Katz:

I submit the following comments in response to the Securities and Exchange 
Commissions solicitation of views concerning shareholder proxy access and 
the election of corporate directors (File Number S7-10-03).

I am encouraged by the Commission's efforts to revitalize discussions 
concerning shareholders' access to the proxy ballot, and feel that a review 
of existing rules concerning the election of directors is long overdue. The 
significant lack of shareholder access to the corporate proxy -- and the 
self-perpetuating board that results -- is an enormous obstacle to 
preventing corporate abuse and restoring investor confidence.

Entrenched managers and directors will only improve corporate governance, 
executive compensation rules, and stakeholder engagement when held 
accountable by investors, and can be voted out by shareowners for failure to 
act in their best interests. That is unlikely at present: theoretically, 
there could be a majority of shareholders that withhold their votes from a 
candidate, and still have that nominee elected to the board. The current 
process in no way resembles a true election. It is merely a rubberstamping 
exercise, with shareholders formally ratifying the Board-nominated slate. It 
is this lack of true executive oversight, a very dangerous conflict in 
governance structure, which has contributed to the corporate malfeasance of 
the last few years.

Access to the proxy is one of the most significant reforms the Commission 
could undertake to make boards more accountable for their actions. At 
present, investors need to strengthen the incentives for management to 
nominate directors that ask the tough questions of executives. That's 
precisely what was needed at Enron, Tyco, and WorldCom -- where there was a 
majority of independent directors.

Although state law permits investors to nominate and solicit votes for their 
own candidates, because of the high costs involved, it rarely happens. The 
few shareholders that do spend tens of thousands of dollars to submit an 
alternative slate for the Board usually don't take that step until concerns 
and liabilities have become unmanageable. By this time, it's too late 
because shareholder value has already begun to evaporate. And the process is 
always more beneficial to management than investors: Management uses 
shareholder assets to print, mail, and solicit votes for its nominees to the 
Board. Shareholders, meanwhile, end up spending about $2 per investor to run 
a competing candidate -- which means a separately mailed proxy, costly legal 
fees, and possibly millions of dollars for the entire process. Shareholders 
most often vote on candidates nominated by directors, and rarely with any 
choice: if there are eight board openings, then eight names typically appear 
on the proxy.
Greater shareholder access to the proxy better aligns the interests of 
investors with the interests of management; reaffirms that shareholders are 
the beneficial owners of companies; attempts to rebalance the special 
interests of top executives when they pervert the system of corporate 
governance and fiduciary trust; makes it possible for investors to have a 
more meaningful voice in the governance of corporate affairs; empowers 
directors to voice opinions and strategies contrary to "groupthink"; and 
eliminates the confusion of separate proxy ballots.

We recommend the Commission explore the following ideas to provide a more 
level playing field for investors, and more adequate opportunities for 
shareholders to both nominate candidates and to solicit support for them 
with fewer cost burdens and paperwork:

Eliminate section (i)(8) of Rule 240.14a-8, concerning criteria for proposal 
exclusions on the proxy related to board elections.
An investor or group of investors own at least 1% of shares (in aggregate) 
in the company, for at least one year, in order to nominate a candidate or 
candidates. [This standard should be no higher than 3% of shares.] A 
combination of a 1% threshold plus a minimum number of shareholders who are 
nominating the candidate should also warrant consideration.
Investors, singly or cumulatively, must nominate less than half of available 
positions for the Board. If more than half of the nominees are put forward 
by shareholders, those candidates with the largest aggregate share support 
behind them should make it to the ballot.
A complete ban on broker votes or uninstructed share voting. However, we 
support broker votes counting for a quorum, so that the business of the 
meeting may occur.
Directors should be elected annually. Shareholders should have the right to 
voice their support or concerns regarding board performance on an annual 
basis.
Cumulative voting should be used in the election of directors.
All nominees should disclose material familial, professional, and financial 
relationships to the company and its executives in the nominee statement on 
the proxy.
The "for" and "withhold" options on the proxy card should be eliminated, and 
replaced with standard proxy voting options like those for resolutions: 
"for," "against," and "abstain."
All nominees should be provided equal space with a reasonable number of 
words to provide background information, a supporting statement, relevant 
experience, and material relationships to the company. A picture should also 
be included. The company must present candidates --management's and 
shareholders' -- in the same consistent manner, length, font, style, etc. 
Management should not segregate its list of nominees from that of investor 
nominees, but should note clearly that they are board nominated candidates.
All corporate directors should attend the annual shareholders' meeting. 
Failure to do so should be reported in the proxy, along with attendance at 
Board and committee meetings

This is an opportunity for the SEC to put meaning back into the term "board 
independence."

Sincerely,

Tracy Burt
55 Dolores St #4
San Francisco, CA 94103

For power to be truly great it must remain inwardly united with the 
fundamental principles of right and justice.
--wu wei, I Ching Wisdom

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