Business Roundtable Files Comments Urging SEC Not to Proceed with Director Election Rules; Commission's Rules Will Not Enhance Corporate Governance.

Business Editors

WASHINGTON--(BUSINESS WIRE)--Dec. 22, 2003

The Business Roundtable will today file comments urging the Securities and Exchange Commission not to proceed with its Proposed Election Contest Rules, citing concerns that the proposed rules exceed the Commission's authority, would initiate sweeping and harmful changes in corporate governance and fail to achieve the Commission's objective of improving the proxy process at unresponsive companies.

The Roundtable further commented that the SEC's Proposed Election Contest Rules will not enhance corporate governance, are rife with unintended consequences and go far beyond affecting the small number of unresponsive companies to impact most, if not all, U.S. public companies, regardless of their corporate governance practices or their responsiveness to shareholders.

"Good corporate governance is the cornerstone of investor trust and confidence," said Hank McKinnell, Chairman of the Roundtable and Chairman and CEO of Pfizer Inc. "Over the last year, through the Sarbanes-Oxley reforms and actions by the SEC and the stock exchanges, corporate America has made great strides in implementing dramatic new reforms. Among the most significant are greater communication and transparency of the nominating process for directors, greater independence of boards and entirely independent nominating committees."

"We must give these reforms time to be implemented before adding new requirements that may not serve the interests of all shareholders," McKinnell added.

According to the Roundtable, a key deficiency of the Proposed Election Contest Rules is the significant leverage the rules provide to special interest organizations intent on hijacking the director election process for the explicit purpose of gaining boardroom representation of their agendas. Such involvement by special interest groups in the director election process will likely lead to increased proxy contests resulting in divisive boards that have difficulty functioning as a team and jeopardizing effective board oversight.

In addition, the Roundtable's comments stated that the adoption of the Proposed Election Contest Rules is inappropriate given the significant recent corporate governance reforms that have been enacted in the past two years.

"Enormous progress is already being made," said John J. Castellani, President of the Business Roundtable. "Passage and implementation of the Sarbanes-Oxley Act, the revisions to the corporate governance listing standards of the New York Stock Exchange and NASDAQ Stock Market, Inc., and the adoption of stricter corporate governance standards by Roundtable member companies demonstrate the willingness of corporations to reform their practices and regain investor trust."

"The members of the Roundtable are committed to good corporate governance and believe that corporate boards and management must hold themselves to the highest standards of corporate governance," continued Castellani.

A July 2003 survey conducted by the Business Roundtable of its member companies further indicated that there have been real, positive changes in corporate boardrooms. Specifically:

-- Eight in 10 of the Roundtable companies reported that their

boards of directors are at least 75 percent independent, and

nine in 10 reported that at least two-thirds of their

directors are independent;

-- In the absence of a legal requirement, 55 percent of

Roundtable companies had (or will have by the end of 2003) an

Independent Chairman, Independent Lead Director or Presiding 

Outside Director; and

-- Two-thirds of companies reported that their nominating

committees had a process in place to communicate with

shareholders and respond to shareholder nominations of board

candidates.

Beginning in 1978, the Business Roundtable has had a long and distinguished involvement in corporate governance. In November, the Roundtable released its report on executive compensation entitled, Executive Compensation: Principles and Commentary; prior to that report the Roundtable issued its Principles of Corporate Governance in May 2002.

The Business Roundtable is an association of chief executive officers of leading corporations with a combined workforce of more than 10 million employees in the United States and $3.7 trillion in annual revenues. The chief executives are committed to advocating public policies that foster vigorous economic growth, a dynamic global economy, and a well-trained and productive U.S. workforce essential for future competitiveness