Securities Exchange Act of 1934 - Rule 14a-8(i)(3) and 14a-8(l)
Putnam Premier Income Trust
Dear Mr. Raine:
In a letter dated January 31, 2006, you notified the staff of the Securities and Exchange Commission that the Putnam Premier Income Trust ("the Fund") proposes to omit from its proxy materials for its 2006 annual meeting a shareholder proposal ("the Proposal") submitted by Mr. Frank H. Goodson (the "Proponent").1 The Proposal provides:
Proposal Submitted by a Shareholder to reduce the Board of Trustees by one third (Life time savings to shareholders of Putnam Funds Is Approx: $922,000)
You request our assurance that we would not recommend enforcement action if the Fund omits the Proposal in reliance on Rules 14a-8(i)(6) and (3) under the Securities Exchange Act of 1934 (the "1934 Act").
You argue that the Fund may exclude the Proposal under the provision of Rule 14a-8(i)(6) which permits the omission of a proposal if the company would lack the power or authority to implement the proposal. You argue that the Proposal seeks a vote on the lifetime savings to shareholders of Putnam which you claim is an economic prediction that cannot be effected through a vote of shareholders. You note, however, that the Proposal would be appropriate for shareholder action if it did not include the reference to cost savings.
We cannot assure you that we would not recommend enforcement action if the Fund excludes the Proposal in reliance upon Rule 14a-8(i)(6). We believe the clear import of the Proposal is to reduce the Board of Trustees, notwithstanding the reference to savings resulting from the reduction. We therefore are unable to concur with your view that the Fund may exclude the Proposal under Rule 14a-8(i)(6).
You assert that because the Proposal is misleading, the Fund may omit it pursuant to Rule 14a-8(i)(3). This rule allows a company to exclude a proposal that violates any of the Commission's proxy rules, including Rule 14a-9 under the 1934 Act, which prohibits materially false and misleading statements in proxy soliciting materials. You argue that the parenthetical cost savings is factually incorrect and/or misleading as the Proponent has provided no basis to support his calculation.
We note that the Fund will have an opportunity to include in its proxy statement arguments reflecting its own point of view regarding savings, if any, resulting from a reduction in the Board of Trustees. See Rule 14a-8(m)(1); Staff Legal Bulletin 14B (companies should address objections to unsupported factual assertions in their statements of opposition). Therefore, we are unable to concur with your view that the Fund may omit the Proposal under Rule 14a-8(i)(3).
Attached is a description of the informal procedures the Division follows in responding to shareholder proposals. If you have any questions or comments regarding this matter, please contact the undersigned at (202) 551-6941.
Linda B. Stirling
cc: Frank H. Goodson
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