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.


Gary Palmer


Alabama Policy Institute


Patricia Callahan


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


American Conservative Union


Mark Chmura

Executive Director

Americans for the Preservation of Liberty


Tim Phillips


Americans for Prosperity


Grover Norquist


Americans for Tax Reform


Andrew F. Quinlan


Center for Freedom and Prosperity



Jim Backlin

Vice President for Legislative Affairs

Christian Coalition of America


Terrence Scanlon President

Capital Research Center


Chuck Muth


Citizen Outreach Project


Tom Schatz


Council for Citizens Against Government Waste


John Berlau

Director, Center for Entrepreneurship

Competitive Enterprise Institute


Fred Smith


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


Institute for Policy Innovation


Don Racheter


Iowa Wednesday Group


William Fine

Executive Director

National Alliance for Worker and Employer Rights


Amy Ridenour


National Center for Public Policy Research


Lewis Uhler


National Tax Limitation Committee


Stephen Mosher


Population Research Institute


William Greene



Charles Baird


The Smith Center at California State University



cc:  Commissioner Paul Atkins

       Commissioner Roel Campos

       Commissioner Kathleen Casey

       Commissioner Annette Nazareth