Company Name: Reebok Int'l. Ltd.
Public Availability Date: 03-16-1992
[INQUIRY LETTER 1]
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
TELEPHONE(617) 951-7000 January 16, 1992 Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Omission of Shareholder Proposal from Proxy Material of Reebok International
Ltd. Pursuant to Rule 14a-8 Ladies and Gentlemen: This letter is being submitted on behalf of Reebok International Ltd. (the
"Company"), pursuant to Rule 14a-8(d) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The Company intends to omit from its proxy
statement and form of proxy (collectively, the "1992 Proxy Materials") for the
Company's 1992 Annual Meeting of Shareholders a proposal (the "Proposal") and
supporting statement submitted by Ms. Elizabeth Holtzman, as advisor and trustee
of the New York City Employees' Retirement System (the "Proponent"), pursuant to
paragraphs (c)(7) and (c)(10) of Exchange Act Rule 14a-8. Enclosed herewith are
six copies of the Proposal and five additional copies of this letter setting
forth the reasons the Company considers omission of the Proposal to be
appropriate. The Company requests concurrence by the Staff of the Division of
Corporate Finance that it will not recommend any enforcement action against the
Company if the Company omits the Proposal. By copy of this letter, the Company
hereby notifies the Proponent of its intention to omit the Proposal from its
1992 Proxy Materials. The Proposal requests that Company "establish an independent Compensation
Committee to evaluate and establish executive compensation. The Committee shall
be composed solely of independent directors and shall have access to outside
advice, such as, but not restricted to, compensation consultants." The term
"independent director" is defined in the Proposal as one who: "(1) has not been employed by the Company or an affiliate in an executive
capacity within the last five years; (2) is not a member of a company that is
one of this company's paid advisors or consultants; (3) is not employed by a
significant customer or supplier; (4) does not have a personal services contract
with the company; (5) is not employed by a tax-exempt organization that receives
significant contributions from the company; (6) is not a relative of the
management of the company; (7) has not had any business relationship that would
be required to be disclosed under Regulations S-K. Also, to the extent possible
within the standards stated above, no individual shall serve on the Committee in
the year preceding the expiration of that individual's term as a director." Rule 14a-8(c)(10) Rule 14a-8(c)(10) provides that a shareholder proposal may be omitted from a
company's proxy materials if it "has been rendered moot." The Proposal has been
rendered moot because the Company has a Compensation and Nominating Committee,
which is made up solely of independent directors. The Company's policy requires
all members of the Compensation and Nominating Committee to be independent and
disinterested. The Company has formally adopted its policy regarding the
independence of the directors on the Compensation and Nominating Committee in
the following resolution: "RESOLVED: that the policy of the Board of Directors requiring that the
Compensation and Nominating Committee be comprised solely of directors who are
independent of management and free from any relationship that, in the opinion of
the Board of Directors, would interfere with the exercise of independent
judgment as a Committee member and who are disinterested persons as defined in
Rule 16b-3 under the Securities Exchange Act, as amended, be and hereby is
formalized and ratified by this resolution." The test for whether a shareholder proposal may be omitted pursuant to Rule
14a-8(c)(10) is whether the Company has "substantially implemented" the action
requested by the proponent. See Exchange Act Release No. 20091 (August 16,
1983). The Company has substantially implemented the Proposal by having a
Compensation and Nominating Committee that is comprised of independent
directors, a fact that even the Proponent acknowledges. (See attached letter
from Office of the Comptroller of the City of New York dated January 8, 1992).
The only distinction between the Proposal at issue and the Company's policy is
in the specific details of the definition of "independent." The definition
adopted by the Company is based on the standard of independence set forth in the
New York Stock Exchange Listed Company Manual pertaining to its requirement of
an independent audit committee (New York Stock Exchange Listed Company Manual,
para. 303.00), and the definition of a "disinterested person" set forth in Rule
16b-3 under the Exchange Act. The shared objective of both of these definitions
is to encourage the exercise of independent judgment. Similarly, the definition
of independence in the Company's policy and the Proposal share a similar
objective and differ only in details and not in any substantial respect. The Commission has frequently stated that a shareholder proposal requesting the
formation of a Committee may be omitted from a company's proxy materials when
the company already has in existence a committee with similar functions or has
established one pursuant to the shareholder's request. In Valley National
Corporation (available January 18, 1991), the Staff of the Commission concurred
in the exclusion of a proposal that requested the company to establish a
nominating committee to be chaired by an outside director when the company,
after receiving such request, appointed a Nominating Committee with six outside
directors, one of whom was the chairman, and one inside director. See also Kysor
Industrial Corporation (available February 28, 1990) (proposal to establish
independent committee to develop proposals to recapitalize and solicit offers to
acquire company excludable because company had substantially implemented
proposal by creating a strategic planning committee); E.I. duPont de Nemours and
Company (available February 12, 1990) (proposal to establish committee on
environmental and occupational health safety excludable because Company had
already established a committee that substantially implemented proposal);
Woolworth Corporation (available April 11, 1987) (proposal to establish pet
advisory committee rendered moot where company established pet advisory board
prior to receiving proposal). For the foregoing reasons, the proposal may be
properly excluded from the Company's 1992 Proxy Materials under Rule
14a-8(c)(10). Rule 14a-8(c)(7) The Proposal may also be excluded under Rule 14a-8(c)(7), which permits omission
of a shareholder proposal if it "deals with a matter relating to the conduct of
the ordinary business operations of the registrant." In August 1983, the
Commission adopted an interpretive position pursuant to which it determined that
in evaluating whether a proposal requesting an issuer to prepare a special
report to shareholders, or form a special committee, was excludable under Rule
14a-8(c)(7), the Staff of the Commission would consider whether the subject
matter of the report or committee involved the ordinary business operations of
the Company. See Exchange Act Release No. 20091 (August 16, 1983). Thus the
Proposal at issue here may be properly excluded if the subject of the Committee
involves a matter relating to the ordinary business operations of the Company. In determining whether a proposal concerns the "ordinary" business operations of
the Company, the Staff of the Commission distinguishes between "ordinary
business" and matters concerning general "policy." The conceptual difference
between these categories largely turns on the focus of the proposal. See, for
example, The Nicholas Fund, Inc. (available April 29, 1987) (proposal regarding
investment in South Africa a matter of policy and not excludable) and Pacific Telesis Group (available February 2, 1990) (proposal regarding child care
assistance excludable as a ordinary business matter of employee relations). The Staff of the Commission has long considered matters relating to executive
and employee compensation to be within the ordinary business operations of a
company and, therefore, excludable. See General Electric Company (available
January 31, 1990) (proposal regarding incentive compensation excludable because
it concerns employee compensation); Newport Pharmaceuticals International
Incorporated (available August 10, 1984) (proposal regarding formation of
special committee to investigate the compensation of management personnel
excludable as a matter relating to the conduct of the Company's ordinary
business); Scott Paper Company (available December 27, 1989) (proposal requiring
that director compensation be in the form of Company common stock excludable
because it deals with a matter relating to the conduct of the Company's ordinary
business); American Telephone & Telegraph Company (available December 8, 1988)
(proposal to impose a cap on the amount of compensation and benefits paid by the
company properly excludable). The composition of an existing Compensation and Nominating Committee, which the
Proponent clearly ties to the setting of compensation, must also be viewed as a
matter relating to the conduct of the Company's ordinary business. This is
particularly so here, where the only distinction between the Proposal and the
Company's policy is the nominal difference in the definition of independent. The
determination of the contours of such a policy definition is certainly a matter
that is both within the discretion of the Board of Directors and related to the
ordinary business operations of the Company. As such, it is properly excludable
under Rule 14a-8(c)(7). On the Company's behalf, we respectfully request that the Staff of the
Commission expedite its review of the matters described herein and provide its
concurrence that no enforcement action will be recommended if the Company omits
the Proposal. Please acknowledge receipt of this letter by stamping the enclosed copy of this
letter and return it in the envelope provided. Should you have any questions
concerning the foregoing, please contact the undersigned or Ralphine N. O'Rourke
of this office. Thank you for your attention to this matter. Very truly yours, David B. Walek RRN/sfd:RRNLTSEC.RU
[INQUIRY LETTER 2]
THE CITY OF NEW YORK
1 CENTRE STREET
NEW YORK, N.Y. 10007-2341
TELEPHONE(212) 669-3500 Mr. John E. Beard
Clerk
Reebok International Ltd.
100 Technology Center Drive
Stoughton, MA 02072 Dear Mr. Beard: I am the investment adviser and a trustee of the New York City Employees'
Retirement System ("NYCERS"). The NYCERS' board of trustees has authorized me to
inform you of our intention to offer the enclosed proposal for the consideration
and approval of stockholders at your next annual meeting. Presently, Reebok International does not have an independent compensation
committee. Instead, the vice chairperson of the board of directors of the
company serves on the compensation and nominating committee. We believe that a
compensation committee, comprised solely of independent directors, is essential
to achieve our mutual goal of improving the company's long-term performance. I therefore offer the enclosed initiative for shareholders to consider and
approve at your next annual meeting. It is submitted to you in accordance with
Rule 14a-8 of the Securities Exchange Act of 1934 and I ask that it be included
in your proxy statement. A letter from Citibank is enclosed certifying our fund's ownership, for over a
year, of shares of common stock in your company. The fund intends to continue to
hold at least $1,000 worth of these securities through the date of your annual
meeting. I would be happy to discuss this initiative with you. Should you decide to
endorse its provisions as corporate policy, the fund will ask that the proposal
be withdrawn from consideration at the annual meeting. Sincerely, Elizabeth Holtzman
Comptroller EH:EW:ma
Enclosures CREATION OF AN INDEPENDENT COMPENSATION COMMITTEE SHAREHOLDER PROPOSAL WHEREAS, the board of directors is meant to be an independent body elected by
shareholders and charged by law and shareholders with the duty, authority and
responsibility to formulate and direct corporate policies, and WHEREAS, this company has provided that the board may designate from among its
members one or more committees, each of which, to the extent allowed, shall have
certain designated authority, and WHEREAS, we believe that there must be a link between corporate performance and
executive compensation, and that it is important that our company's executive
compensation structure become more closely tied to performance, and WHEREAS, we believe that directors independent of management are best qualified
to act in the interests of shareholders and can take steps necessary to evaluate
management performance, establish executive compensation and establish a better
relationship between company performance and executive pay, NOW THEREFORE BE IT RESOLVED, that the shareholders request the company establish an independent
Compensation Committee to evaluate and establish executive compensation. The
Committee shall be composed solely of independent directors and shall have
access to outside advice, such as, but not restricted to, compensation
consultants. For these purposes, an independent director is one who: (1) has not been
employed by the Company or an affiliate in an executive capacity within the last
five years; (2) is not a member of a company that is one of this company's paid
advisors or consultants; (3) is not employed by a significant customer or
supplier; (4) does not have a personal services contract with the company; (5)
is not employed by a tax-exempt organization that receives significant
contributions from the company; (6) is not a relative of the management of the
company; (7) has not had any business relationship that would be required to be
disclosed under Regulation S-K. Also, to the extent possible within the
standards stated above, no individual shall serve on the Committee in the year
preceding the expiration of that individual's term as a director. STATEMENT OF SUPPORT As long term shareholders we are concerned about our company's prospects for
profitable growth. This proposal is intended to address the issue of pay vs.
performance and to provide shareholders with an independent committee which will
represent their interests. We urge you to vote FOR this proposal. EW/ma
[INQUIRY LETTER 3]
Citibank, N.A.
111 Wall Street
New York, NY 10043 Re: New York City Employees' Retirement System To Whom It May Concern: This is to advise you that the New York City Employees' Retirement System held
166,928 shares of Reebok International Ltd Common continuously for over one year
in the name of Cede and Company. Lawrence T. O'Fee
Assistant Vice President 1-nyc
[INQUIRY LETTER 4]
Reebok International Ltd.
100 Technology Center Dr.
Stoughton, MA 02072 U.S.A.
TELEPHONE(617) 341-7371 Mr. Eric Wollman
Office of the Comptroller
City of New York
1 Centre Street
New York, NY 10007-2341 Dear Mr. Wollman: This letter is in response to the letter from Elizabeth Holtzman to John Beard,
Clerk of Reebok International Ltd., dated November 25, 1991 in which Ms.
Holtzman indicated that the New York City Employees' Retirement System ("NYCERS")
intends to offer a proposal for consideration at our next annual shareholders'
meeting concerning an independent Compensation Committee. As I indicated to you over the telephone on December 13, 1991, the individual
referred to in Ms. Holtzman's letter has resigned from his position as a
Director of Reebok and is consequently no longer on the Compensation and
Nominating Committee. The Committee is now comprised of only two persons, those
individuals being Richard Lesser and Geoffrey Nunes, both of whom are
unquestionably independent directors. Enclosed in this connection is a copy of
our proxy statement for the 1991 annual meeting. As a matter of corporate policy, all members of the Committee must be
independent directors and disinterested directors as that term is used in
Section 16b-3 of the Securities Exchange Act. Inside directors, meaning
directors who are part of the Company's management team or who are otherwise
employed by the Company, are not eligible for the Compensation and Nominating
Committee. In view of the Company's policy, I believe that the initiative proposed by
Elizabeth Holtzman on behalf of NYCERS is unnecessary and request that it be
withdrawn. I look forward to hearing from you further on this matter. Sincerely, John B. Douglas III JBD:dw
Enclosure
[INQUIRY LETTER 5]
THE CITY OF NEW YORK
MUNICIPAL BUILDING
NEW YORK, N.Y. 10007
TELEPHONE(212) 689-3500 Mr. John B. Douglas III
Vice President and General Counsel
Reebok International Ltd.
100 Technology Center Drive
Stoughton, MA 02072 Dear Mr. Douglas: Thank you for your letter. We have reviewed your statement regarding the composition of the Compensation
and Nominating Committee. While we agree that the Committee is presently
comprised of independent directors, it is clear from your letter that your
definition of disinterested directors does not conform to the standard we
provide in our shareholder proposal. Accordingly, we believe it is appropriate for Reebok International to adopt a
policy regarding the Compensation Committee in a manner detailed in our
resolution. Our resolution is more restrictive and does not rely on Section
16b-3 of the Securities Exchange Act. Therefore, we will not withdraw the resolution and ask that it be presented at
the 1992 annual meeting of Reebok International shareholders. Sincerely, Eric Wollman
Administrative Manager EW/ma
[INQUIRY LETTER 6]
THE CITY OF NEW YORK
MUNICIPAL BUILDING
NEW YORK, N.Y. 10007-2341
TELEPHONE(212) 669-7778 February 10, 1992 Via Fax & Mail William E. Morley, Esq.
Chief Counsel
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Reebok International Ltd. -- New York City Employees' Retirement System
Shareholder Proposal Dear Mr. Morley: I am writing on behalf of the New York City Employees' Retirement System
("NYCERS"), in response to the letter from David B. Walek of the law firm of
Ropes & Gray, counsel to Reebok International Ltd. ("Reebok" or "the Company")
to the Securities and Exchange Commission ("SEC") dated January 16, 1992,
requesting the omission of the NYCERS' shareholder proposal from Reebok's proxy
materials for its 1992 Annual Meeting. The shareholder proposal asks Reebok to
establish an independent Compensation Committee to evaluate and establish
executive compensation, to be composed solely of independent directors with
access to outside advice, such as compensation consultants. Reebok believes that
the proposal may be omitted under Rule 14a-8(c)(10) and (c)(7). As Deputy
Counsel to the New York City Comptroller, it is my opinion that the Company may
not omit the proposal because it has not been rendered moot and does not relate
to a matter of "ordinary business." The Proposal is Not Moot and May not Be Omitted Under Rule 14a-8(c)(10) Reebok argues that the NYCERS proposal has been "rendered moot" by the Company,
because "the Company has a Compensation and Nominating Committee, which is made
up solely of independent directors." Mr. Walek states in his January 16 letter
to you that "the Company has formally adopted its policy regarding the
independence of the directors on the Compensation and Nominating Committee" in a
resolution, but does not state when the resolution was adopted, if it was
adopted by the Board of Directors, or if it is contained in a by-law. Mr.
Walek's letter was the first time that we have heard of a formal Company policy
on this issue. The December 20, 1991 letter from John B. Douglas III, Vice
President & General Counsel of the Company to Mr. Eric Wollman of my office
states that "as a matter of corporate policy, all members of the Compensation
and Nominating Committee must be independent directors and disinterested
directors as that term is used in Section 16b-3 of the Securities Exchange Act,"
but Mr. Douglas nowhere indicates that the "corporate policy" has been adopted
formally. Even assuming that the resolution has been adopted by the Company, it does not
render the NYCERS proposal moot, since the Company's existing "policy" provides
merely that: the Compensation and Nominating Committee be comprised solely of directors who
are independent of management and free from any relationship that, in the
opinion of the Board of Directors, would interfere with the exercise of
independent judgment as a Committee member and who are disinterested persons as
defined in Rule 16b-3 under the Securities Exchange Act, as amended. The only criteria for being "independent" under the Reebok policy are that the
directors be "free from any relationship that, in the opinion of the Board of
Directors, would interfere with the exercise of independent judgment as a
Committee member" and "disinterested persons as defined in Rule 16b-3 under the
Securities Exchange Act." (emphasis added). Obviously, the Reebok policy has not
"substantially implemented" the NYCERS proposal, since leaving the judgment of
"independence" to the "opinion of the Board of Directors" is precisely what our
proposal seeks to avoid. In addition, the definition of "disinterested persons" in Rule 16b-3 of the
Securities Exchange Act is not as restrictive as the definition contained in the
NYCERS proposal. As you know, Section 16(b) is designed to prevent insiders from
unfairly using confidential information to profit from short-term trading in an
issuer's securities. The section applies to every person who beneficially owns,
directly or indirectly, more than 10 per cent of any class of equity security
which is registered under Section 12 of the Exchange Act, or who is a director
or officer of the issuer of any such security. Section 16(b) provides that any
profit realized by such insiders from any purchase and sale, or any sale and
purchase, of any equity security of such issuer within any period of less than
six months shall inure to and be recoverable by the issuer. It further provides
the Commission with the authority to exempt by rule any transaction not
comprehended within that Rule 16b-3 was adopted by the Commission pursuant to that authority in order to
exempt certain acquisitions of securities from the consequences of Section
16(b). The recent amendments to Rule 16b-3 clarified the Commission's intention
to retain the shareholder approval requirement for amendments to employee
benefit plans intended to comply with Rule 16b-3. Release No. 34-29131 (April
26, 1991). In order to comply with these amendments, a plan must have
"disinterested administration", by "disinterested persons." Rule 16b-3 defines
"disinterested person" as: a director who is not, during the one year prior to service as an administrator
of a plan, or during such service, granted or awarded equity securities pursuant
to the plan or any other plan of the issuer or any of its affiliates... with
certain exceptions Clearly Rule 16b-3 and its definition of "disinterested person" was designed to
do something completely different from what is intended by the NYCERS
resolution. The purpose of Rule 16b-3 is to exempt short swing trading
transactions from short swing trading liability if the transactions are as a
result of participation in an employee plan. Since the purpose of the section is
to ensure there has been no misuse of inside information, the plan must be
administered by "disinterested persons", so that those persons won't benefit
from the transactions. Rule 16b-3 is in no way intended to insure that an
independent director has considered a compensation package as a whole. In addition, the 16b-3 definition only means that the persons voting on the
allocations under the employee benefit plan were not eligible to be awarded
equity securities pursuant to the plan during the one year prior to service as
an administrator or during the year of such service. These persons can still
rotate as administrators, and still may be participants in the company's plan,
although they may not currently be management employees. If they are
disinterested persons for purposes of Rule 16b-3, they have no fiduciary duty to
the shareholders in establishing the level of participation of officers of the
company's plan, and thus are not accountable to the shareholders. Obviously, the Rule 16b-3 definition of "disinterested person" is quite
different from the NYCERS proposal's definition of "independent director." The
NYCERS proposal defines an "independent director" as one who: (1) has not been employed by the Company or an affiliate in an executive
capacity within the last five years; (2) is not a member of a company that is
one of this company's paid advisors or consultants; (3) is not employed by a
significant customer or supplier; (4) does not have a personal services contract
with the company; (5) is not employed by a tax-exempt organization that receives
significant contributions from the company; (6) is not a relative of the
management of the company; (7) has not had any business relationship that would
be required to be disclosed under Regulation S-K. As Mr. Wollman's January 8, 1992 response to Mr. Douglas' letter states: while we agree that the Committee is presently comprised of independent
directors, it is clear from your letter that your definition of disinterested
directors does not conform to the standard we provide in our shareholder
proposal. Accordingly, we believe it is appropriate for Reebok International to adopt a
policy regarding the Compensation Committee in a manner detailed in our
resolution. Our resolution is more restrictive and does not rely on Section
16b-3 of the Securities Exchange Act. Additional support for our view that the NYCERS shareholder proposal has not
been substantially implemented comes from the SEC staff decision in Amoco
Corporation (February 14, 1990). In Amoco, the SEC staff refused to permit the
company to use (c)(10) to omit a proposal which provided for confidential voting
by shareholders and the use of independent tabulators and inspectors, when the
company used tabulators who were company employees, but otherwise had adopted
the NYCERS shareholder proposal. Thus, the proposal has not been rendered moot under (c)(10). The Proposal Does Not Deal with a Matter of "Ordinary Business" and May Not Be
Omitted under Rule 14a-8(c)(7) A shareholder proposal may not be excluded under Rule 14a-8(c)(7) if it raises
important policy issues. The NYCERS proposal to establish an independent
compensation committee clearly raises such important policy matters. The SEC has given content to the term "ordinary business" by declaring that Rule
14a-8(c)(7) is not available to exclude proposals which raise important policy
matters, but only may be used if the issue raised by the proponent is "mundane
in nature". Thus, in promulgating the present version of Rule 14a-8(c)(7), the
Commission stated in Release 34-12999 (November 22, 1976) that proposals "which
have significant policy, economic or other implications inherent in them" will
not be excluded by Rule 14a-8(c)(7) and that the Rule would only restrict those
"proposals that deal with truly `ordinary' business matters...that are mundane
in nature and do not involve any substantial policy or other consideration."
Subsequent amendments to Rule 14a-8 were not intended to alter this
interpretation of what constitutes "ordinary business." See Release 34-20091
(August 16, 1983). The issue of an independent compensation committee cannot be considered "mundane
in nature." National attention has been given to the issue of excessive
executive compensation after President Bush's recent trip to Japan, when he was
accompanied by several American corporate chief executives whose average
compensation last year was $3.4 million, six times the average for their
Japanese counterparts. Surely the issue of excessive executive compensation
raises profound policy issues that are the subject of public debate as American
corporations seek to restructure for a more competitive global market. In addition, contrary to the Company's assertions, the SEC staff has recognized
in the last two years that certain issues relating to executive compensation are
no longer to be considered "ordinary business." See Transamerica Corporation
(January 10, 1990), where the SEC staff reversed its position with respect to
the structuring of certain executive compensation plans, finding that proposals
concerning "golden parachute" arrangements are not within the rubric of ordinary
business and thus are not excludable under (c)(7). In Tranamerica, the SEC staff
cited external events in support of its decision, such as changes in the
Internal Revenue Code and increasing public debate "concerning potential
anti-takeover, tax and legal implications of golden parachutes." We urge you to
look at the increasing public debate surrounding excessive executive
compensation and permit the NYCERS proposal to be included in Reebok's proxy
material. The NYCERS proposal, asking the Company to establish an independent Compensation
Committee, can easily be distinguished from prior SEC staff determinations
rejecting as "ordinary business" those shareholder proposals requesting specific
details of management compensation (Shop Television Network, May 20, 1991) and
MCI Communications Corp., (March 7, 1991); capping compensation of senior
managers (Cigna Corporation, February 8, 1991); or reducing salaries of senior
management (Salomon, Inc., February 12, 1991) and Chase Manhattan Corporation
(March 5, 1991). In May, 1991, Linda C. Quinn, Director of the SEC's Division of Corporation
Finance, indicated that shareholder proposals "aimed at reforming the
compensation process or setting criteria for executive and director pay...would
most likely be approved by the SEC staff in 1992." Corporate Governance
Highlights, Investor Responsibility Research Center, Vol. 2, No. 24 (May 16,
1991). And, most recently, SEC Chairman Richard Breeden is reportedly pressing
for a change in the proxy rules to allow shareholders to vote on a broader range
of proposals relating to executive pay. Wall Street Journal, January 21, 1992.
Mr. Breeden stated that: Sometimes under the current disclosure system, you need to be a Ph.D. in finance
to determine the value of an executive's compensation package. My sense is there
really is a problem. This is something that is relevant to analysts, directors
and shareholders. Clearly, the issue of executive compensation, which under the NYCERS proposal,
will be evaluated by an independent compensation committee, has become an issue
of substantial policy consideration, and should be included in Reebok's proxy
statement. Conclusion Accordingly, it is my opinion, as Deputy Counsel to New York City Comptroller
Elizabeth Holtzman, that the NYCERS proposal does not violate SEC Rule 14a-8,
and therefore should be included in Reebok's proxy materials for its 1992 annual
meeting. Very truly yours, Sue Ellen Dodell
Deputy Counsel reebok.sed cc: David B. Walek
Ralphine N. O'Rourke
[STAFF REPLY LETTER]
March 16, 1992 RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE RE: Reebok International Ltd. (the "Company")
Incoming letter dated January 16, 1992 The proposal requests the Company's Board of Directors establish a Compensation
Committee. The Compensation Committee would evaluate and establish executive
compensation. All Committee members would be independent as that term is defined
in the proposal. The Division is unable to concur in your view that the proposal may be excluded
under Rule 14a-8(c)(7). That provision permits the omission of a proposal that
"deals with a matter relating to the conduct of the ordinary business operations
of the registrant." In view of the widespread public debate concerning executive
and director compensation policies and practices, and the increasing recognition
that these issues raise significant policy issues, it is the Division's view
that proposals relating to senior executive compensation no longer can be
considered matters relating to a registrant's ordinary business. Under the
circumstances, the staff does not believe that Company may rely on Rule
14a-8(c)(7) as a basis to exclude the proposal from its proxy materials. We are also unable to concur with your view that the proposal may be excluded
pursuant to rule 14a-8(c)(10) on the basis that it has been "substantially
implemented". In reaching a position, the staff is unable to conclude from the
information provided that the questions raised by the proposal are addressed
under the Company's existing committee arrangements and provisions, including
the issue of independence, so that the matter may be considered moot within the
meaning of paragraph (c)(10) of rule 14a-8. Under the circumstances, we do not
believe that the Company may rely on this basis to omit the proposal from its
proxy materials. Sincerely, John C. Brousseau
Special Counsel
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