U.S. Chamber Urges SEC to Reject Bad Advice

WASHINGTON, D.C. – The United States Chamber of Commerce urged the Securities and Exchange Commission (SEC) to reject self-serving calls for corporate board reforms by unions and public pension funds, and reiterated its call for the SEC to abandon a proposal that would give certain minority shareholders access to corporate proxy materials in order to nominate their own board candidates.

"The SEC should reject bad regulations that would allow unions and narrow-interest groups to put special interests ahead of shareholder interests in the board room," said David Hirschmann, Chamber senior vice president. "If the Commission proceeds with this proposal, we will challenge it in court."

The Securities and Exchange Commission proposed a new rule in December 2003 that would require the inclusion of shareholder nominees for election as director in companies' proxy material under certain circumstances. The Chamber has testified that the SEC does not have the authority to regulate proxy materials, which are subject to state law requirements, in a letter to the Commission late last year.

Giving some shareholders access to company proxies would be costly and disruptive and would weaken the functioning of strong independent boards to the detriment of all shareholders, by breeding misdirection and dissention, according to the Chamber.

"Special-interest directors are not independent and will weaken corporate boards, which have a fiduciary responsibility to all shareholders," said Hirschmann. "We share the Commission's goal of good corporate governance and independent corporate boards, but this proposal is not good governance and will have unintended consequences that will stifle business innovation, decrease productivity and inhibit economic growth."

The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector and region.

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