Monday, February 26, 2007

Letter to SEC Chairman Christopher Cox on Proposed Shareholder Access Rule

Americans for the Preservation of Liberty joined 28 other national public policy organizations in sending a letter to Securities and Exchange Commission Chairman Christopher Cox regarding a proposed new shareholder access rule.

The letter explains the issue pretty well. If you agree, please consider sending a letter of your own to Chairman Cox to the address listed on the letter.
Coalition Letter to SEC Chairman Christopher Cox on Proposed Shareholder Access Rule

February 7, 2007

The Honorable Christopher Cox
Chairman, Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549

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
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
Grassroot 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