Company Name: United Technologies Corp.
Public Availability Date: 03-10-1987

INQUIRY LETTER 1

United Technologies Corp.
United Technologies Bldg.
Hartford, CT 06101
TELEPHONE(203) 728-7000

December 15, 1987

Ms. Cecilia D. Blye
Special Counsel
Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street
Washington, DC 20549

Re: United Technologies Corporation - Stockholder
Proposal for 1987 Annual Meeting Relating to
Stockholder Approval of Rights Plan

Dear Ms. Blye:

The management of United Technologies Corporation (the "Corporation") intends to omit from the Corporation's proxy materials for the 1987 Annual Meeting the stockholder proposal (the "Proposal") submitted by the College Retirement Equities Fund ("CREF") relating to the Common Stock Purchase Rights Plan previously adopted by the Board of Directors of the Corporation.

It is my opinion as Deputy General Counsel of the Corporation that the Proposal may properly be omitted from the Corporation's proxy materials for the reasons set forth below.

I. THE STOCKHOLDER RESOLUTION SUBMITTED BY CREF CONTAINS THREE SEPARATE PROPOSALS IN CONTRAVENTION OF RULE 14a-8(a)(4)

Rule 14a-8(a)(4) provides that a stockholder may submit no more than one proposal for inclusion in the issuer's proxy materials. On its face the Proposal submitted by CREF is not one proposal, but three:

RESOLVED that the stockholders request that the Board of Directors

(a) afford stockholders the right to vote for or against the poison pill at a meeting held as soon as practicable;

(b) rescind the poison pill, unless approved by the affirmative vote of a majority of shares of the Company entitled to vote at such meeting of stockholders; and

(c) refrain from adopting any similar plan without first obtaining stockholder consent. The proposals marked (a) and (b) appear to deal with the Rights dividend which was declared by the Board of Directors in December of 1985 and distributed to holders of the Corporation's Common Stock in January of 1986 (herein referred to as the "Rights" or the "Rights Plan"). Proposal (c), on the other hand, asks that the Board refrain from adopting "any similar plan" in the future without obtaining stockholder consent. Thus even if the proposals labeled (a) and (b) were viewed as a single proposal because they deal with the existing Rights Plan, there are clearly at least two proposals here, the first dealing with a specific Rights Plan adopted by the Board in 1985 and the second dealing with action which the Board might take in respect of "any similar plan" in the future.

In accordance with Rule 14a-8(a)(4), the Corporation, by sending CREF a copy of this letter, is affording CREF the opportunity to comply with such rule. The Corporation believes, however, that it may omit CREF's proposal for the additional reasons set forth below.

II. THE BOARD IS NOT ENTITLED TO UNILATERALLY RESCIND RIGHTS WHICH HAVE BEEN FULLY GRANTED TO ALL COMMON STOCKHOLDERS UNDER THE RIGHTS PLAN AND THEREFORE THE PROPOSAL TO RESCIND THE RIGHTS IS EXCLUDABLE UNDER RULE 14a-8(c)(2) AND RULE 14a-8(c)(6)

Rule 14a-8(c)(2) permits exclusion of any proposal which, if implemented, would require the issuer to violate state law. Rule 14a-8(c)(6) permits the exclusion of proposals that deal "with a matter beyond the issuer's power to effectuate." This latter ground, as interpreted by the staff, includes proposals that would require the Corporation to violate existing obligations.

The Proposal requests that the Board of Directors give the stockholders the opportunity to vote "for or against" a Rights dividend which was declared by the Board approximately twelve months ago. The Proposal further requests that the Board "rescind" the dividend unless the dividend is approved by the affirmative vote of a majority of shares of the Corporation's capital stock entitled to vote on the matter.

The dividend was declared by the Board of Directors on December 16, 1985. It consisted of one Right for each outstanding share of Common Stock, $5 par value, of the Corporation (the "Common Stock"). The Rights were registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 under a Registration Statement on Form 8-A filed with the Commission on December 23, 1985. The Rights dividend was subsequently distributed on January 6, 1986 to the Common Stock holders of record that date.

Each Right entitles the registered holder to purchase from the Corporation one share of Common Stock at an initial price of $150 per share, subject to certain anti-dilution adjustments. The terms of the Rights are set forth in a Rights Agreement dated as of December 16, 1985 between the Corporation and Morgan Guaranty Trust Company of New York, as Rights Agent. A summary of these terms is contained in a Summary of Rights to Purchase Common Stock, a copy of which is annexed hereto as Exhibit A. The Rights Agreement contains no provision authorizing the Board of Directors to rescind the Rights.

The foregoing represents all necessary action required to be taken by the Corporation under Delaware law, the law of the Corporation's state of incorporation, and its charter and by-laws to fully vest in the stockholders their rights to the Rights dividend. In Moran v. Household International, Inc., 500 A.2d 1346 (1985), the Delaware Supreme Court held that the adoption of a rights plan similar to that adopted by the Corporation was within the authority of the directors and a reasonable business decision to protect the defendant corporation from coercive acquisition techniques. Thus, the authority of the Board to declare and distribute the Rights dividend under Delaware law is clear. Having been properly declared and paid, it is the opinion of the undersigned that under Delaware law, the Board of Directors cannot thereafter unilaterally rescind such a dividend.

While there does not appear to be any authority directly on point in Delaware on the subject of rights dividends, ordinarily, once a cash dividend is declared, it cannot later be rescinded. See Selly v. Fleming Coal Co., 37 Del. 34, 180 A. 326 (Del. Super., 1935); Wilmington Trust Co. v. Wilmington Trust Co., 25 Del. Ch. 193, 15 A.2d 665 (Del. Ch., 1940). While there is some authority to the effect that stock dividends may be rescinded before the actual issuance of the stock (See Fletcher Cyclopedia Corporations (perm. ed.rev. vol. 1986) Section 5323.1, at p. 741, and the cases cited therein), in the case at hand the securities which were the object of the dividend, the Rights, were issued to the stockholders on the distribution date, approximately ten full months ago. No further corporate action was required to fully vest in the stockholders the right to these securities. As the Rights were distributed to the stockholders some time ago, and as their rights to these securities have become fully vested, the Board of Directors no longer has the authority under Delaware law to unilaterally rescind the Rights dividend, whether the holders of a majority of the shares of the Corporation's capital stock vote to "approve" the dividend or not.

III. THE PROPOSAL IS EXCLUDABLE UNDER RULE 14a-8(c)(3) AS IT IS SO VAGUE AND INDEFINITE THAT NEITHER THE STOCKHOLDERS VOTING UPON THE PROPOSAL NOR THE CORPORATION WOULD BE ABLE TO DETERMINE WITH ANY REASONABLE CERTAINTY EXACTLY WHAT ACTION OR MEASURES THE CORPORATION WOULD BE REQUIRED TO TAKE IN THE EVENT THE PROPOSAL WERE TO BE IMPLEMENTED

The stockholder resolution which CREF intends to present at the Corporation's annual meeting provides in part as follows: "RESOLVED that the stockholders request that the Board of Directors (a) afford stockholders the right to vote for or against the poison pill at a meeting held as soon as practicable;...". The resolution does not appear to be a vote on approval of the Rights dividend itself, but rather appears to be a referendum on whether the stockholders should be given the right to vote "for or against" the dividend at yet another stockholders meeting in the future. In any event, the resolution is ambiguous at best and management submits that the stockholders would be uncertain about what exactly they were voting upon.

The third proposal contained in the CREF resolution is a request that the Board of Directors refrain from adopting any "similar plan" without first obtaining "stockholder consent".

Again, this proposal is so vague and indefinite that neither the stockholders nor the Corporation would be able to determine exactly what action or measures the Corporation would be required to take in the event it was adopted by the stockholders. It is unclear what is meant by the words "similar plan". Does this mean any type of so-called "poison pill" plan, regardless of how such a plan is structured? Or is the proposal also meant to preclude other defensive responses to coercive acquisition techniques that can lawfully be adopted by the Board of Directors without a stockholder vote, such as stock buyback plans or the placement of shares with a blocking vote? The stockholder resolution only leaves management to guess at the answer to these questions. Furthermore, it is unclear what is meant by "stockholder consent". Is this to mean the affirmative vote of the holders of a majority of the shares entitled to vote on the matter? Again, management is left to guess at this answer. Therefore, it is the opinion of the undersigned that the resolution may be omitted from the Corporation's proxy materials under Rule 14a-8(c)(3).

In addition to the vagueness and indefiniteness of the Proposal as discussed above, other statements contained in the Proposal and supporting statement are false and misleading. Taken as a whole, these misleading statements also warrant exclusion of the Proposal under Rule 14a-8(c)(3).

The first whereas clause in the Resolution states that the Rights Plan "would allow the Board to disapprove acquisition offers or substantial stock accumulations however beneficial they might be to stockholders". This statement seems to imply that the Board, in distributing the Rights dividend, had its own self interest in mind rather than that of the stockholders. In fact, the Rights Plan is intended to assist the Board in fulfilling its fiduciary duty to the stockholders by increasing its bargaining capacity in the face of a hostile take-over attempt and possibly providing time for it to seek superior bids. The Board is mindful of its fiduciary duty when faced with a tender offer, and will not be able to arbitrarily reject any offer "however beneficial" it might be to stockholders.

The second whereas clause in the Resolution states that the Rights Plan "works a major shift in corporate governance, depriving stockholders of their basic right as owners of the Company to decide for themselves whether to sell their shares in a tender offer". The fallacy of this contention was exposed by the Delaware Supreme Court in Household, wherein the court stated that "(t)here is little change in the governance structure as a result of the adoption of the Rights Plan." Household, 500 A.2d at 1354.

The second caption heading in CREF's supporting statement states that "(t)he poison pill acts effectively to prevent all unfriendly offers for the Company's shares, however beneficial to shareholders, thereby reducing the value of the Company's stock". The text under this caption heading similarly asserts that the Rights Plan indiscriminately deters and prevents all unfriendly bids. The Household court rejected as "fallacy" the contention that a similar rights plan at issue in that case would deter virtually all hostile offers. Household, 500 A.2d at 1354. Additional evidence refuting this assertion was also recently submitted to the staff in response to its Concept Release on Takeovers and Contests for Corporate Control (Rel. No.34-23486). In a letter to the Commission dated September 29, 1986, the firm of Wachtell, Lipton, Rosen & Katz mentioned sixteen companies that adopted Rights Plans and were subsequently acquired. Eight of these companies, the letter pointed out, were acquired by the initial, hostile bidder. Considering that the great majority of Rights Plans were adopted in the last nine months, the letter correctly points out that this evidence clearly rebuts claims that the existence of Rights Plans will render hostile tender offers obsolete. The bald assertion to the contrary in CREF's supporting statement is false and misleading.

IV. THE PROPOSAL RELATES TO SPECIFIC AMOUNTS OF DIVIDENDS AND THUS IS EXCLUDABLE UNDER RULE 14a-8(c)(13)

Rule 14a-8(c)(13) provides that an issuer may omit a proposal if it "relates to specific amounts of cash or stock dividends". As more fully discussed above, the Proposal requests the Board of Directors to rescind the specific Rights dividend declared by the Board of Directors on December 16, 1985, if the same is not subsequently approved by the stockholders. While the Rights dividend is not technically a "cash" dividend or a "stock" dividend, the staff has not construed the applicability of this rule in a strictly literal sense. For example, in Pan American World Airways, Inc., (Feb. 17, 1983), the staff granted a no-action position for the omission of a proposal which requested a reverse stock split. According to the staff, "(f)or the purpose of this rule, it is the Division's view that a stock split is synonymous with a stock dividend". Likewise, the Corporation submits that the staff should treat proposals relating to securities dividends other than stock dividends in the same manner as those relating to stock dividends. As the Proposal relates to the rescission of a specific security dividend, it is properly excludable under Rule 14a-8(c)(13).

Pursuant to Rule 14a-8(d), six copies of this letter, the stockholder proposal and the Summary of Rights are submitted herewith.

The Corporation respectfully requests your confirmation that the Division of Corporation Finance will not recommend to the Commission any action if the Corporation omits the Proposal from its proxy materials for the 1987 Annual Meeting. We are sending a copy of this letter to CREF to advise them of our intention to omit their proposal from such proxy materials, and to provide them with a statement of the reasons why management deems such omissions to be proper. In addition, as above noted, by copy of this letter we are also notifying CREF of its contravention of the one proposal limitation under Rule 14a-8(a)(4) and affording CREF the opportunity to comply with this rule.

Should you disagree with our conclusions set forth herein or should any additional information be desired in support of the Corporation's position, we would appreciate an opportunity to confer with you concerning these matters prior to the issuance of the staff's Rule 14a-8(d) response.

If you have any questions, please feel free to contact the undersigned at (203) 728-7800.

Very truly yours,

MRL:cm
Enclosures

cc: Mr. Peter C. Clapman
Senior Vice President and
Associate General Counsel
Teachers Insurance and Annuity Association
College Retirement Equities Fund
730 Third Ave.
New York, NY 10017

INQUIRY LETTER 2

Bankers Trust Company
P.O. Box 3343, Church Street Station
New York, New York 10008
TELEPHONE(201) 860-2220

James E.Roberts
Assistant Treasurer
Telephone: 201-860-2220

November 6, 1986

TO WHOM IT MAY CONCERN:

This is to inform you that College Retirement Equity Fund was the beneficial owner of 1,766,000 shares of UNITED TECHNOLOGIES CORP. Common Stock as of October 30, 1986. These shares were valued at $76,158,750.

Also, as custodian for this account we verify that CREF held at least $1,000 worth of this stock for over one year prior to 10/30/86 as well as currently.

These securities are held for this account at DTC, registered in the name of CEDE & Co.

If I can be of further assistance, do not hesitate to contact me on 860-2960.

Very truly yours,

JR:hmp

INQUIRY LETTER 3

Teachers Insurance and Annuity Association College Retirement Equities Fund
730 Third Avenue
New York, N.Y. 10017
TELEPHONE(212) 490-9000

Martin R. Lewis, Jr.
Vice President and Secretary
United Technologies Corporation
United Technologies Building
Hartford, Connecticut 06101

Dear Sir:

Please be advised that I, Peter C. Clapman, Senior Vice President and Associate General Counsel of COLLEGE RETIREMENT EQUITIES FUND, on behalf of

COLLEGE RETIREMENT EQUITIES FUND ("CREF")
730 Third Avenue
New York, New York 10017
Tel.No. (212) 916-4232

hereby submit the enclosed shareholder resolution to be presented at the next annual meeting of United Technologies Corporation. Richard Schlefer, Investment Officer, or another representative of CREF whose name will be timely submitted will be present to support the resolution.

CREF currently holds 1,766,000 shares of United Technologies Corporation which has a value of $73.3 million and has held shares valued at $1,000.00 of United Technologies Corporation for a period in excess of one year prior to the date of this submission.

Enclosed herewith are the following:

1. Shareholder proposal, and

2. Supporting Statement

Very truly yours,

Peter C. Clapman

cc: Securities & Exchange Commission

SHAREHOLDER RESOLUTION

WHEREAS, on December 16, 1985 the Company's Board of Directors adopted a Rights plan (of a type generally known as a "poison pill") which would allow the Board to disapprove acquisition offers or substantial stock accumulations however beneficial they might be to shareholders:

WHEREAS, the poison pill works a major shift in corporate governance, depriving shareholders of their basic right as owners of the Company to decide for themselves whether to sell their shares in a tender offer;

WHEREAS, the poison pill was adopted without shareholder consent;

RESOLVED that the shareholders request that the Board of Directors

(a) afford shareholders the right to vote for or against the poison pill at a meeting held as soon as practicable;

(b) rescind the poison pill, unless approved by the affirmative vote of a majority of shares of the Company entitled to vote at such meeting of shareholders; and

(c) refrain from adopting any similar plan without first obtaining shareholder consent.

(Supporting Statement)

This shareholder proposal is submitted by the College Retirement Equities Fund, a $25 billion pension fund with long-term investment objectives, and holdings in more than 1500 U.S. companies.

I. By adopting the poison pill without shareholder approval, the Board deprived shareholders of the right to evaluate and make decisions on offers for their shares.

Under basic principles of corporate governance, decisions affecting a corporation's existence should be made by shareholders. These decisions include shareholders' rights to decide when and on what terms to sell their shares. As the SEC has stated, shareholder rights plans which require that any tender offer obtain the approval of a target's board "frustrate the shareholder choice that Congress and the Commission have viewed as being in the shareholders' interest." By adopting the poison pill, the Board has effectively taken from shareholders the power to pass on all bids for the Company's shares, and has thus improperly taken from shareholders, without their consent, a fundamental right of share ownership.

II. The poison pill acts effectively to prevent all unfriendly offers for the Company's shares, however beneficial to shareholders, thereby reducing the value of the Company's stock.

Although the Board suggests the poison pill is to be used only to deter certain bids for the Company's shares, in fact the poison pill indiscriminately deters and prevents all unfriendly bids, however advantageous to shareholders. A company whose management reserves a unilateral right effectively to defeat all bids for a company's shares has diminished appeal to prospective bidders and investors alike, creating the likelihood of a depressed market price for the shares.

Since the poison pill may have a significant negative effect on the value of the Company's stock, shareholders should have the opportunity to decide for themselves if they want management to "protect" them from third party tender offers. If management declines to submit the poison pill to a vote, shareholders may justifiably conclude that management and the Board are not acting in the interests of shareholders on this important matter.

INQUIRY LETTER 4

DEBEVOISE & PLIMPTON
875 THIRD AVENUE
NEW YORK, N.Y. 10022
TELEPHONE(212) 909-6000

January 07, 1987

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Attention: William E. Morley, Esq.
Chief Counsel, Division of
Corporation Finance

CREF Shareholder Proposal
United Technologies Corporation

Dear Sir:

On behalf of College Retirement Equities Fund ("CREF"), we are responding in opposition to the request by United Technologies Corporation (the "Company") for a no-action position regarding its proposed exclusion of CREF's shareholder proposal from the Company's 1987 proxy statement. The CREF proposal requests that the Board of Directors afford shareholders the right to vote for or against a Shareholder Rights Plan of the "poison pill" variety (hereinafter referred to sometimes as "the Plan" and sometimes as the "poison pill") adopted by the Company without shareholder consent, rescind the Plan unless it is approved by a majority of the shares, and refrain from adopting any similar plan without shareholder consent.

Preliminary Statement

On December 16, 1985, without the consent of shareholders, the Company's Board of Directors adopted a Shareholder Rights Plan of a type known generally as a "poison pill". This type of plan, ironically in light of its title, is widely recognized to (a) convey no immediate economic value to shareholders; (b) convey "Rights" the exercise of which will never occur if the Plan achieves its purpose; and (c) deprive shareholders of their fundamental right to sell their shares at advantageous prices to potential bidders by deterring virtually all tender offers. To attempt to remedy this usurpation of shareholder rights, CREF submitted a shareholder proposal to the Company which requests that the Board give shareholders an opportunity to vote on the poison pill. Now, the Company which requests the Board give shareholders an opportunity to vote on the poison pill. Now, the Company seeks to block a significant shareholder from even the use of the Commission's Shareholder Proposal Rule to put this matter to the Company's shareholders. In its letter to the Staff of December 15, 1986, the Company advances many arguments all of which are utterly without merit.

I. Rule 14a-8(a)(4)

The Company first argues that CREF has made more than a single proposal which is thus excludable under Rule 14a-8(a)(4). The Staff has consistently declined to view several elements of a proposal which deal with the same subject matter as separate proposals. See, e.g., General Dynamics Corp., SEC No-Action Letter (Mar. 1984) (Proposal requesting that (a) a procedure be adopted making the issuer's voting process secret; (b) no shareholder proxies or ballots that identify shareholders be made available for examination by the Corporation or its shareholders; and (c) the policies adopted be published in the Corporation's proxy ballot, constitutes single proposal); Occidental Petroleum Corp., SEC No-Action Letter (Mar. 16, 1978) (proposal calling for (a) adoption of policy; (b) amendment of by-law; and

(c) voting of shares held by issuer in other corporations, constitutes a single proposal).

CREF's proposal requests that the Board take three steps to accomplish a single result -- providing shareholders an opportunity to vote on a poison pill, or similar device, before it is swallowed by the Company. The three steps are interrelated. There would be no point in requesting a vote (step 1), if CREF did not specify the action which the Board should take pursuant to the vote (step 2). In addition, without step 3, the Board could easily defeat the purpose of CREF's resolution by adopting a new pill without shareholder consent.

II. Rules 14a-8(c)(2) and (c)(6)

The Company next contends that CREF's proposal may be excluded under Rule 14a-8(c)(2) and (c)(6), which respectively provide for the exclusion of shareholder proposals that are illegal and those that are beyond the issuer's power to effect. This contention is advanced by deliberately misinterpreting CREF's proposal to make it beyond the Company's power to effect and then asserting that it can be excluded on this basis. Thus, while CREF asks the directors to rescind the Plan, the Company claims that this is really a request of the Board to "rescind the dividend".

The meaning of "rescind" as applied to the poison pill is perfectly clear. Webster's Dictionary defines "rescind" as "cancel", "repeal" or "do away with". As plainly stated in the Plan, the Board may legally achieve this result by simply ordering redemption of the Rights at $.10 per share, whereupon the Rights automatically terminate, and with the payment of the redemption price the Plan comes to an end.

Although we are convinced that CREF's use of the word "rescind" is appropriate and does not require the Board to take action which is either illegal or impossible, to avoid any possible ambiguity CREF is prepared to add the language "(by redeeming the Rights)," after the words "rescind the poison pill" in section (b) of the proposal.

Such a revision would be appropriate under the Commission's long-held position that minor changes to a timely submitted proposal made by the proponent after the timeliness deadline has passed, such as revisions which "bring "XADthe proposal"XBD into accord with the requirements of the applicable state law", are permissible. See Adoption of Amendment Relating to Proposals by Security Holders, Exchange Act Release No. 12999 (Nov. 22, 1976). In fact, the Staff has, on innumerable occasions, permitted proponents to revise their proposals to eliminate any possibility that the action called for violates state law, and it has stated that proposals which can be so revised are not excludable by the issuer. See e.g., American Information Technologies Corporation, SEC No-Action Letter (Dec. 13, 1985); Mapco, Inc., SEC No-Action Letter (Mar. 16, 1983); Citicorp, SEC No-Action Letter, "XAD1978 Transfer Binder"XBD Fed. Sec. L. Rep. (CCH) "XD081,520 (Feb. 23, 1978). CREF's proposed revision would not substantively affect the proposal; the proposal as originally drafted, and as we are prepared to revise it, seeks one result, doing away with the Company's poison pill unless approved by majority vote. Since CREF's suggested amendment would cure any possible defect in the proposal, the Company cannot rely on either paragraph (c)(2) or (c)(6) as a basis for exclusion.

III. Rule 14a-8(c)(3)

A. Vague and Indefinite

The Company next argues that the proposal is vague and indefinite and thus excludable under Rule 14a-8(c)(3). The Company has a substantial burden to overcome before it can omit a proposal pursuant to paragraph (c)(3). See Occidental Petroleum Corp., SEC No-Action Letter, (March 30, 1981). The Company must establish that the proposal is "so vague and indefinite that the Shareholders voting upon the proposal would not be able to determine with any reasonable certainty exactly what actions or measures the Company would take in the event the proposal was implemented."

Central Maine Power Co. (Green), SEC No-Action Letter, (Mar. 13, 1981); Litton Industries, SEC No-Action Letter, (Sept. 12, 1977); E.I. du Pont de Nemours & Co., SEC No-Action Letter, (Feb. 8, 1977).

The very fact that the Company argues strenuously against the proposal on substantive grounds belies the contention that the proposal is somewhat vague and indefinite. To the contrary, the proposal sets forth, in a straightforward manner, the particular action which it requests the Board to take. there is no risk that the action which the Company would ultimately take pursuant to the proposal would "be quite different from the type of action envisioned by the shareholders at the time their votes were cast." Orion Research Inc., SEC No-Action Letter, (July 15, 1983). Accordingly, CREF's proposal stands in sharp contrast to the proposals which the Commission has found to be too vague and indefinite. See, e.g., United States Steel Corp., SEC No-Action Letter, (Feb. 14, 1978) (proposal requesting that the Company's directors take steps to "modernize the composition of the Board" and to "adopt an organization policy for representative democracy in the nomination of future directors"); E.I. du Pont de Nemours & Co. Inc., SEC No-Action Letter, (Feb. 8, 1977) (proposal requesting that the Company's directors "recognize the importance of freedom of speech to the integrity of the academic process").

In support of its argument that CREF's proposal is too indefinite, the Company argues that CREF's resolution does not clearly describe the subject on which the shareholders are to vote. CREF's proposal, however, explicitly states in section (a) that the shareholders should be given an opportunity to vote "for or against the poison pill." No further detail or clarification is required.

The Company also contends that it is uncertain as to what is meant by the words "similar plan" in section (c) of the proposal. Read in the context of the rest of the proposal, the meaning of these words is clear. The proposal explicitly states that it is directed at Stockholder Rights Plans of a type generally known as "poison pills" and refers to the poison pills throughout.

Finally, the Company contends that the meaning of the words "stockholder consent" in section (c) of the proposal is unclear. Again, from the context in which these words appear, there is no doubt that the words refer to an affirmative vote of the holders of a majority of the shares entitled to vote on the matter as set forth in Section (b). In light of the word limitation of Rule 14a-8, it was reasonable for CREF to state that "shareholder consent" is required, rather than to repeat the detailed voting requirements set forth in section (b). See Baltimore Gas and Electric Co., SEC No-Action Letter, (Jan. 26, 1983).

B. Misleading

The Company also tries to affix a false and misleading label to certain of CREF's statements, arguing that the statements are thus excludable under Rule 14a-8(c)(3).

First, the Company objects to CREF's contention that the poison pill "would allow the Board to disapprove acquisition offers or substantial stock accumulations however beneficial they might be to shareholders." The Company argues that this statement implies that the Board had its own self interest in mind, rather than that of the stockholders, when it adopted the poison pill plan. CREF's statement refers only to the fact that the Board could disapprove offers that are beneficial to the shareholders. CREF does not comment on the Board's actual intention in adopting the Plan. If the Company believes that the CREF's contention raises an improper inference or implication, it can effectively dispel such inference or implication in its statement in opposition to the proposal. See American Telephone and Telegraph Co., SEC No-Action Letter, (Dec. 23, 1983).

The Company also suggests that CREF's contention that the Board may disapprove offers beneficial to shareholders is untrue since directors have a fiduciary duty to act in the best interests of shareholders. This is a non sequitur. Although the Company's directors are bound to act as fiduciaries, the elasticity of the business judgment rule, as interpreted by the courts, makes CREF's contention supportable. Moreover, there is nothing in the Plan itself which prevents the directors from breaching their fiduciary duty.

Next, the Company takes issue with CREF's contention that the poison pill results in a "major" shift in corporate governance. There is ample support for the view that poison pills deprive shareholders of an opportunity to consider hostile tender offers by forcing acquirers to first obtain the target board's approval. "XADB"XBDy giving the board a `plenary negotiation role' on behalf of the shareholders", see Amicus Curiae Brief for the Securities Exchange Commission, at 29, Moran v. Household International, Inc., 500 A.2d 1346 (Del. 1985) (No. 37) (hereinafter referred to as the "SEC Brief"), the poison pill allows the Board to intrude into the shareholders' decision-making process. See, id., at 3, 12 & 29; Office of the Chief Economist of the Securities and Exchange Commission, The Effects of Poison Pills on the Wealth of Target Shareholders, 1 & 38-39 (1986) (hereinafter referred to as "SEC Study") Such an effect would seem to be appropriately characterized as a "major" shift in corporate governance. But in any event the statement does not purport to be more than an opinion and if necessary CREF is willing to revise the statement to make this point crystal clear.

The Company also takes issue with CREF over its statement that "The poison pill acts effectively to prevent all unfriendly offers for the Company's shares, however beneficial to shareholders, thereby reducing the value of the Company's stock." CREF is willing to revise this assertion to read "The poison pill acts effectively to deter virtually all unfriendly offers for the Company's shares, however beneficial to shareholders, thereby reducing the value of the Company's stock." The revised statement is supported by ample authority, including findings by the SEC. See SEC Brief, supra., at 3, 12 & 29; SEC Study, supra., at 6 (stating that "poison pills deter any (rational) acquirer"). Corresponding revisions would be made to other language in Part II, which as so revised would read as shown in the attachment to this letter.

Although a few tender offers have succeeded with companies who have adopted the poison pill, the existence of these few successful offers does not make CREF's revised statement untrue. There are numerous instances where the poison pill has prevented hostile tender offers from proceeding. See SEC Brief, supra., at 12 & 29. In addition, the existence of the poison pill deters some potential acquirers from making an offer at all. See SEC Study, supra., at 6. If the Company disagrees with CREF's revised statement, it is free to argue a contrary position in its proxy statement. It is not free, however, under Rule 14a-8 to deny CREF a shareholder voice on the matter.

IV. Rule 14a-8(c)(13)

Finally, the Company argues that CREF's proposal relates to a specific security dividend and is thus excludable under Rule 14a-8(c)(13). Here again the effort fails. Paragraph (c)(13) is intended only to apply to shareholder proposals which ask for specific amounts of dividends. Its purpose is to prevent shareholders from being overburdened with a multitude of conflicting dividend proposals. See Proposals by Security Holders, Exchange Act Release No. 12598 (July 20, 1976). CREF's proposal does not call for the type of action that paragraph (c)(13) was intended to exclude; a request to rescind the Company's poison pill plan does not, as the Company itself acknowledges, relate to a specific amount of "cash" or "stock" dividends. Accordingly, the Company may not rely on paragraph (c)(13) as a basis for omitting CREF's proposal.

For the foregoing reasons, CREF urges the Commission Staff to decline to provide the no-action relief sought by United Technologies Corporation. In addition to the undersigned, Bevis Longstreth (212 909-6651) and Randi S. Ingerman (212 909-6613) are familiar with this matter. We stand ready to provide any further information you may wish.

Very truly yours,

Eric D. Roiter

Attachment
cc: Cecilia D. Blye, Esq.

Revision of Section II
of the Supporting Statement

II. The poison pill acts effectively to "XADprevent"XBD deter virtually all unfriendly offers for the Company's shares, however beneficial to shareholders, thereby reducing the value of the Company's stock.

Although the Board suggests the poison pill is to be used only to deter certain bids for the Company's shares, in fact the poison pill indiscriminately deters "XADand prevents"XBD virtually all unfriendly bids, however advantageous to shareholders. A company whose management reserves a unilateral right effectively to "XADdefeat all"XBD deter virtually all hostile bids for the company's shares has diminished appeal to prospective bidders and investors alike, creating the likelihood of a depressed market price for the shares. (Bracketed language deleted, underlined language added.)

STAFF REPLY LETTER

RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE

Re: United Technologies Corporation (the "Company")
Incoming letter dated December 15, 1986

The proposal relates to obtaining a shareholder vote on, and rescinding, the Company's Stockholder Rights Plan, and prohibiting the adoption of a similar plan without shareholder approval.

There appears to be some basis for your opinion that the proposal, as currently worded, may be omitted from the Company's proxy material under paragraphs (c)(2) and (c)(6) of Rule 14a-8. Counsel for the proponent, however, has indicated the proponent's willingness to revise the proposal to add "by redeeming the Rights" after the words "rescind the poison pill" in subparagraph (b) of the "resolved" clause. Assuming that the proponent promptly revises the proposal in the manner indicated, we do not believe that the Company may rely on either Rule 14a-8(c)(2) or Rule 14a-8(c)(6) as a basis for omitting the proposal from its proxy material.

This Division does not concur in your opinion as to the applicability of Rules 14a-8(a)(4) and (c)(13) to the proposal. Accordingly, we do not believe that the Company may rely on those provisions as a basis for omitting the proposal.

This Division does not concur in your opinion that the proposal and supporting statement may be omitted in their entirety from the Company's proxy material pursuant to Rule 14a-8(c)(3). There appears, however, to be some basis for your view that certain portions of the proposal and supporting statement may be excludable under Rule 14a-8(c)(3) unless promptly revised. Our views with respect to this matter are set forth below:

1. There appears to be some basis for your opinion that the second "whereas" clause may be omitted under Rule 14a-8(c)(3), unless it is cast as an opinion of the proponent. Accordingly, unless that clause is promptly amended to indicate that it is the opinion of the proponent, this Division will not recommend any enforcement action to the Commission if the second "whereas" clause is omitted from the Company's proxy material.

2. There appears to be some basis for your opinion that the underlined heading and the first paragraph of Part II of the supporting statement, as currently worded, may be omitted under Rule 14a-8(c)(3) because they indicate that one effect of the stockholder rights plan is to prevent or deter all unfriendly offers or bids for the Company's stock. We note that the proponent's counsel has expressed the willingness to amend the heading and the paragraph to replace the references to prevention of all unfriendly offers or bids with references to deterrence of virtually all unfriendly offers or bids; however, we are unable to conclude that such a change would be sufficient to permit inclusion of the material in the Company's proxy statement. Accordingly, unless the heading for, and the first paragraph of, Part II of the supporting statement are promptly amended to reduce the stated level of the deterrent effect of the stockholder rights plan and to indicate that they express the opinion of the proponent, this Division will not recommend any action to the Commission if those portions of the supporting statement for the proposal are omitted from the Company's proxy material.

Sincerely,

Cecilia D. Blye
Special Counsel