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Sent: Friday, June 30, 2006 2:21 PM
Subject: CA perspective on our rights to representation

CA has submitted a letter to the SEC opposing the recently reported Amalgamated request for full Commission review of the staff's determination that a shareholder proposal to remove directors could be excluded from the company's proxy statement.  Bringing focus to an issue that may benefit from this week-end's thoughts about our rights to proper representation, a copy of it is available for downloading from the Forum web site:
To discourage Commission review of the staff decision, CA argues both
  • (a) that the issue is not of sufficient importance for Commission review because shareholders remain otherwise free to present removal proposals according to the same procedures applicable to all other non-election proposals, and
  • (b) that the issue is of too much importance to be addressed without the full process of rule-making to consider what CA thinks "could have profound, far-reaching consequences for corporate governance of public companies." 
In the course of making the first argument, CA effectively concedes that there is no need to make removal proposals subject to the additional disclosure or procedural requirements applicable to proxy material relating to nominations for elections, which was the supposed regulatory purpose of treating removal proposals as relating to elections.
The real issue, according to CA, is whether shareholders should have the same rights in relation to removal proposals as are assured for other forms of proposals.  CA presents it clearly, as a single question of whether:
"...any stockholder, no matter how significant or insignificant its investment in an issuer, could force the issuer to include removal proposals in its proxy statement ... without the proponent having to commit any resources or make any significant effort to mount a proxy fight.  Whether one believes that corporate governance would be improved or harmed by such an outcome, it is clear that the current system would be profoundly changed."
Although some would argue that both the policy and legal issues have long been decided, the question of practical application -- to CA and more broadly to other public companies -- is certainly unresolved and requires our attention.  The question is now being presented to the SEC, but their regulatory response will be politically adaptive, sooner or later, to what the marketplace demands.  Ultimately, it's up to you to decide whether "any stockholder" should have the right to freely question the qualifications of those who claim to represent you.
             - GL

Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212/605-0335
Fax: 212/605-0325



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