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Coalition Letter to SEC Chairman Christopher Cox on Proposed Shareholder Access Rule

Regulatory Comments and Testimony

Title

Coalition Letter to SEC Chairman Christopher Cox on Proposed Shareholder Access Rule

Dear Chairman Cox,

In American Federation of State, County, and Municipal Employees Pension Plan v. AIG, the Second Circuit Court of Appeals asked the Securities and Exchange Commission to clarify its rules for the exclusion of shareholder proposals related to an election.  In the process of clarifying the commission’s rules, we urge you to reject any measure that would allow shareholders to nominate their own directors in company proxy materials.

Forcing companies to let certain investors nominate directors on company proxies would let special interests gain seats on corporate boards and/or use the threat of director nomination to push through agendas that advance their own political interests but destroy shareholder value.

Through pension funds, labor unions and other anti-market interest groups have significant stakes in major corporations as well as entrepreneurial new firms.  A shareholder access rule would allow them and other activists to achieve through the board nomination process what they have been unable to accomplish through the political process. 

Unions would use this leverage to win card check and neutrality agreements, allowing them to unionize companies without secret ballot elections.  They could also put pressure not only on the companies they have stakes in but also their partners and suppliers.

The implications go far beyond unions.  Everything on the anti-market political wish list from Kyoto-like carbon restrictions, to auto emissions standards, to prescription drug price controls, to animal rights activism, to interfering with defense contractors to advance foreign policy objectives would be possible. 

These initiatives, whatever their merits, belong in the political arena, not in corporate boardrooms where the focus should be on maximizing shareholder value.

Dissident shareholders can and do mount proxy fights to challenge company-nominated slates of directors, but they do so by distributing their own proxy materials at their own expense.  This helps to encourage nominations of directors dedicated to improving the bottom line for all shareholders, rather than promoting the interests of a specific group.

The listing standards for both NASDAQ and the NYSE already require that boards be composed of a majority of independent directors, who themselves comprise the search committee for new directors.

For these reasons we urge you to stand up to the special interest pressure pushing for shareholder access and allow existing state laws to govern director nomination and election.

Sincerely,

Gary Palmer

President

Alabama Policy Institute

 

Patricia Callahan

President

American Association of Small Property Owners

 

Lori Roman

Executive Director

American Legislative Exchange Council

 

Ryan Ellis

Executive Director

Alliance for Worker Freedom

 

Daniel Clifton

Executive Director

American Shareholders Association

 

David Keene

Chairman

American Conservative Union

 

Mark Chmura

Executive Director

Americans for the Preservation of Liberty

 

Tim Phillips

President

Americans for Prosperity

 

Grover Norquist

President

Americans for Tax Reform

 

Andrew F. Quinlan

President

Center for Freedom and Prosperity

 

 

Jim Backlin

Vice President for Legislative Affairs

Christian Coalition of America

 

Terrence Scanlon President

Capital Research Center

 

Chuck Muth

President

Citizen Outreach Project

 

Tom Schatz

President

Council for Citizens Against Government Waste

 

John Berlau

Director, Center for Entrepreneurship

Competitive Enterprise Institute

 

Fred Smith

President

Competitive Enterprise Institute

 

Jim Boulet

Executive Director

English First

 

Paul Weyrich

Chairman and CEO

Free Congress Foundation

 

Steve Milloy

Investment Adviser

Free Enterprise Action Fund

 

Walt Harvey

Director, Property Rights Coalition

Grassroot Institute of Hawaii

 

Richard  Rowland

PresidentGrassroot Institute of Hawaii

 

Tom Giovanetti

President

Institute for Policy Innovation

 

Don Racheter

Moderator

Iowa Wednesday Group

 

William Fine

Executive Director

National Alliance for Worker and Employer Rights

 

Amy Ridenour

President

National Center for Public Policy Research

 

Lewis Uhler

President

National Tax Limitation Committee

 

Stephen Mosher

President

Population Research Institute

 

William Greene

President

RightMarch.com

 

Charles Baird

Director

The Smith Center at California State University

 

 

cc:  Commissioner Paul Atkins

       Commissioner Roel Campos

       Commissioner Kathleen Casey

       Commissioner Annette Nazareth