CONFIRMATION OF CHRISTOPHER COX

CHAIRMAN

SECURITIES & EXCHANGE COMMISSION

Questions for the Nominee Relating to Commission responsibilities pursuant to Section 14a(8)
 

Former Chairman Harvey Pitt said: “Shareholders should have more freedom to vote on the firm’s business matters” and undertook to “improve corporate democracy.” Chairman Donaldson has had other priorities. I am interested in the views of nominee Cox about this important area of SEC responsibility and will frame questions directly.

1.    A recent Commission study stated: “Some of the proposals we are not adopting share a common theme: to reduce the Commission’s and its staff’s role in the process and to provide shareholders and companies with a greater opportunity to decide for themselves which proposals are sufficiently important and relevant to the company’s business to justify inclusion in its proxy materials” (emphasis added) Release 34 -40018 (1997).

Would you explain your views as to the proper role of government in what is essentially a private matter between two contractual related parties?

Do you believe that the Commission should reduce, continue as at present, or expand its role in “monitoring” shareholder proposals?

2.    This same Commission study went on: “While we have tried to provide the most fair, predictable, and efficient system possible, these rules, even as amended, will continue to require us to make difficult judgments about interpretations of proposals, the motives of those submitting them, and the policies to which they relate. We will continue to explore ways to improve the process as opportunities present themselves.”

Clearly, the Commission understands the difficulties of being a censor? Why is it in the public interest for it to continue to do so?

What are your views on the following specific practices?

a.              If the Commission requires a corporation to include a resolution one year, can the filer (assuming that a percentage threshold of shareholder support is achieved) rely on the Commission to require inclusion of the same resolution the next year?

b.              If the Commission decides to exclude a proposal for a specific reason, does it have a consistent practice of permitting the filer timely to make changes appropriate to complying with Commission policy so that the resolution can appear in that year’s proxy?

3.  Under what circumstances does the nominee consider it appropriate for the Commission to decide to exclude proposals that are purely “precatory”?

What is the justification in refusing to permit owners to advise managements on any subject? (emphasis added)

What public policy legitimates denying an owner the opportunity to make his wishes known to his agent? (emphasis added)

4.  The Commission’s powers under Section 14a(8) can be administered so as to be akin to those of a “censor”. Does the nominee approve of the practice where under  Commission staff is the ultimate arbiter of what resolutions are required to be included in and which can be excluded from the proxy? Is there, and, if not, should there be a procedure whereby filers can appeal staff decisions within a time frame adequate for possible inclusion in the current proxy? Does the nominee approve a practice where under the staff administers policy(i) by relying on its own prior opinions {without consideration of other material}; and (ii) through the absence of any appeal mechanism other than to the staff itself?

5.  Should there not exist some procedure to permit timely appeal to the Commission, itself, or - if time demands on Commissioners are too great - to an independent body designated by the Commission.

6.  In view of the power - which, as a practical matter is currently unreviewable - of the staff with respect to the includability of shareholder resolutions, is the nominee satisfied with existing procedures for reviewing allegations of staff misconduct?