- William Donaldson
- Chairman, Securities and Exchange Commission
- 450 Fifth Street, NW
- Washington, DC 20549
Dear Mr. Donaldson:
We, like you, have been reading the relentless corporate carping about your leadership at the Securities and Exchange Commission with a good degree of consternation. It amazes us that, despite the continued revelations of corporate malfeasance in underwatched and underregulated industries, we continue to hear the steady drumbeat of corporate complaints of “too much regulation.”
Mr. Donaldson, we want to thank you for doing some good work on behalf of consumers, investors, and citizens everywhere during a prolonged wave of corporate crime, fraud and abuse. We appreciate your willingness to stand up to greedy executives and push for well-considered reforms. We urge you to continue to stay strong in the face of the senseless whining coming from companies who could apparently not care less about the rights of consumers and investors. Please know that we are behind your efforts to begin to reign in the forces of hubris and avarice that have far too much sway in today’s corporate boardrooms. But we believe that there is even more work to do.
- On the issue of shareholder democracy, we urge you to stick with your original plan and require Walt Disney Co. to go ahead and open up its proxy ballot to a shareholder vote that would give minority shareholders more power in nominating candidates to the board of directors.
- We urge you to give all shareholders at all companies more rights to nominate directors, as you had once suggested before the cacophony of business opposition set in. Shareholders at least ought to have a few rights at the companies that they own. Opening up board elections to more shareholder involvements would actually allow shareholders to hold directors accountable for the corrupt cronyism and outlandish executive compensation mischief that goes on now at many companies, instead of subjecting shareholders to more Soviet-style board elections where they have no meaningful choices.
- We also urge you to make the strongest visible case to make sure that Congress does not interfere with FASB’s long overdue plan to require companies to record employee stock options as an expense. Unexpensed stock options remain a devious and misleading accounting trick that has allowed too many corporations to mislead investors.
- Finally, we urge you to resist calls for rolling back pieces of the Sarbanes-Oxley Act that some businesses find inconvenient. As the steady stream of corporate scandals demonstrates, this is not a time for rolling back corporate reform. This is a time for strengthening corporate reform
As we have noted in our recent book, The People’s Business: Controlling Corporations and Restoring Democracy, we must remember that all corporations owe their existence to their publicly-granted charter, and that in exchange for the privileges in that charter, all corporations have an obligation to operate in the public interest. And despite the many supercilious and arrogant arguments of corporate executives to the contrary, corporations have no rights to any profit at the expense of the public good. Corporations must be held accountable.
Mr. Donaldson, we know that regulatory determination is nourished by your leadership and the expansion of public support by the citizenry. We intend to help with the latter through public education and the efforts of our distinguished Corporate Reform Commission. It helps to have a rock of Gibraltar at the SEC’s helm for what is a once in a lifetime opportunity to benefit tens of millions of investors, pension holders, 401ks and workers.
Sincerely and on behalf of the entire Citizen Works Corporate Reform Commission,
- Ralph Nader, Founder, Citizen Works
- Lee Drutman, Communications Director, Citizen Works
- Heather Vargas, Assistant Director, Citizen Works
- Charlie Cray, Director, Center for Corporate Policy
- David Crowther, Professor of Corporate Social Responsibility, London Metropolitan University
- Jessie Dillard, Retzlaff Chair in Accounting, Portland State University School of Business
- Ralph Estes, Professor Emeritus of Accounting, American University
- Steven Filling, Professor of Information Systems and Management Control Systems at California State University, Stanislaus
- Paul Williams, Professor of Accounting, North Carolina State University
- Tony Tinker, Professor of Accountancy, Baruch College – City University of New York
- Linda Ruchala, Associated Professor of Accountancy, University of Nebraska-Lincoln
