Division of Corporation Finance
|Company||Proposal||Date of our
|Allied Waste Industries, Inc.||"The shareholders . . . urge the Board of Directors . . . to amend the by-laws to require that an independent director who has not served as the chief executive of the Company serve as Board Chair."||Mar. 21, 2005||We concurred in Allied Waste's view that it could exclude the proposal under rule 14a-8(i)(6). In doing so, our response noted that the proposal did not provide the board with an opportunity or mechanism to cure a violation of the independence standard requested in the proposal.|
|Merck & Co., Inc.||"The shareholders . . . request that the Board of Directors establish a policy of separating the roles of Board Chair and Chief Executive Officer (CEO) whenever possible, so that an independent director who has not served as an executive officer of the Company serves as Chair of the Board of Directors."||Dec. 29, 2004||We did not concur in Merck's view that it could exclude the proposal under rule 14a-8(i)(6). The proposal provided the board with an opportunity or mechanism to cure a violation of the independence standard requested in the proposal.|
|The Walt Disney Co.||"[T]he shareholders . . . urge the Board of Directors to amend the Corporate Governance Guidelines, and take what ever other actions are necessary to set as a company policy that the Chairman of the Board of Directors will always be an independent member of the Board of Directors, except in rare and explicitly spelled out, extraordinary circumstances."||Nov. 24, 2004||We did not concur in Disney's view that it could exclude the proposal under rule 14a-8(i)(6). The proposal provided the board with an opportunity or mechanism to cure a violation of the independence standard requested in the proposal.|
Rule 14a-8(i)(7) is another of the substantive bases for exclusion in rule 14a-8. It permits a company to exclude a proposal that deals with a matter relating to the company's ordinary business operations. The fact that a proposal relates to ordinary business matters does not conclusively establish that a company may exclude the proposal from its proxy materials. As the Commission stated in Exchange Act Release No. 40018, proposals that relate to ordinary business matters but that focus on "sufficiently significant social policy issues . . . would not be considered to be excludable, because the proposals would transcend the day-to-day business matters . . . ."
Each year, we are asked to analyze numerous proposals that make reference to environmental or public health issues. In determining whether the focus of these proposals is a significant social policy issue, we consider both the proposal and the supporting statement as a whole. To the extent that a proposal and supporting statement focus on the company engaging in an internal assessment of the risks or liabilities that the company faces as a result of its operations that may adversely affect the environment or the public's health, we concur with the company's view that there is a basis for it to exclude the proposal under rule 14a-8(i)(7) as relating to an evaluation of risk. To the extent that a proposal and supporting statement focus on the company minimizing or eliminating operations that may adversely affect the environment or the public's health, we do not concur with the company's view that there is a basis for it to exclude the proposal under rule 14a-8(i)(7). The following chart illustrates this distinction.
|Company||Proposal||Date of our
|Xcel Energy Inc.||"That the Board of Directors report . . . on (a) the economic risks associated with the Company's past, present, and future emissions of carbon dioxide, sulphur dioxide, nitrogen oxide and mercury emissions, and the public stance of the company regarding efforts to reduce these emissions and (b) the economic benefits of committing to a substantial reduction of those emissions related to its current business activities (i.e. potential improvement in competitiveness and profitability)."||Apr. 1, 2003||We concurred in Xcel's view that it could exclude the proposal under rule 14a-8(i)(7), as relating to an evaluation of risks and benefits.|
|Exxon Mobil Corp.||"[S]hareholders request . . . a report . . . on the potential environmental damage that would result from the company drilling for oil and gas in protected areas . . . ."||Mar. 18, 2005||We did not concur in ExxonMobil's view that it could exclude the proposal under rule 14a-8(i)(7).|
No. Rule 14a-8(l) is a self-executing provision of the rule that permits a company to exclude from its proxy statement a shareholder proponent's name, address, and number of voting securities held, as long as the company includes a statement that it will provide this information to shareholders promptly upon receiving an oral or written request.
A shareholder proponent is encouraged to submit a proposal or a response to a notice of defects by a means that allows him or her to determine when the proposal or response was received by the company, such as by facsimile. However, if the shareholder proponent transmits these materials by facsimile, the shareholder proponent should ensure that he or she has obtained the correct facsimile number for making such submissions. For example, if the shareholder proponent obtains the company's facsimile number from a third-party website, and the facsimile number is incorrect, the shareholder proponent's proposal may be subject to exclusion on the basis that the shareholder proponent failed to submit the proposal or response in a timely manner. As such, shareholder proponents should use the facsimile number for submitting proposals that the company disclosed in its most recent proxy statement. In those instances where the company does not disclose in its proxy statement a facsimile number for submitting proposals, we encourage shareholder proponents to contact the company to obtain the correct facsimile number for submitting proposals and responses to notices of defects.
Yes. As we indicated in question and answer G.7 of SLB No. 14 and question and answer F.3 of SLB No. 14B, a company should provide us with all relevant correspondence when submitting a no-action request. In this regard, we wish to reiterate that our process may be delayed unless the company provides with its no-action request:
Yes. As we indicated in question and answer B.15 of SLB No. 14, when a proposal is submitted by multiple shareholder proponents and the proposal is withdrawn, the company should include with its withdrawal letter documentation demonstrating that each shareholder proponent has agreed to withdraw the proposal. In this regard, if each shareholder proponent has designated a lead individual to act on its behalf, and the company is able to demonstrate that the individual is authorized to act on behalf of all of the shareholder proponents, the company need only provide a letter from that lead individual indicating that it is withdrawing the proposal on behalf of all of the shareholder proponents. You can find additional guidance regarding withdrawals of no-action requests in questions and answers B.14 and B.15 of SLB No. 14.
Yes. As we indicated in question and answer F.3 of SLB No. 14B, we may transmit our responses by facsimile during the highest volume periods of the rule 14a-8 season to ensure that companies and shareholder proponents are given timely responses. If we are unable to mail our response promptly, we will transmit our response by facsimile if the company requests such a transmission and provides facsimile numbers for both the company and the shareholder proponent. We will not transmit the response to the company by facsimile when we have a facsimile number for the company but not for the shareholder proponent.
We wish to reiterate that the practice of transmitting copies of our no-action responses by facsimile is a courtesy and is not required by Commission rules. In addition, we remind companies and shareholder proponents that commercial databases check the Commission's Public Reference Room routinely for new no-action responses issued by the Division and upload the responses to their systems. As a result, the company or the shareholder proponent often may find our response in the Public Reference Room or on a commercial database prior to their receipt of that response.
We hope that this bulletin, along with SLB No. 14, SLB No. 14A, and SLB No. 14B, helps you gain a better understanding of rule 14a-8, the no-action request process, and our views on some significant issues that arise commonly during our review of rule 14a-8 no-action requests. We believe that these bulletins contain information that will assist in the efficient operation of the rule 14a-8 process for both companies and shareholders.
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