Company Name: Westinghouse Electric Corp. (Sisters of St. Joseph)
Public Availability Date: 02-03-1993INQUIRY LETTER
Westinghouse Electric Corporation
Westinghouse Building, Gateway Center
Pittsburgh, Pennsylvania 15222
TELEPHONE(412) 642-4905 December 14, 1992 Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, DC 20549 Dear Sir or Madam: The Sisters of St. Joseph of Peace, the Grey Nuns of the Sacred Heart, the
Reformed Church in America, the School Sisters of Notre Dame Cooperative
Investment Fund, the Domestic and Foreign Missionary Society of the Episcopal
Church and the Sisters of Charity of Halifax, Nova Scotia; shareholders of
Westinghouse Electric Corporation ("Westinghouse" or the "Corporation"), have
given notice that the enclosed proposal (the "Proposal") and supporting
statement relating to withdrawal from the management and cleanup of certain U.S.
Department of Energy facilities is intended to be presented to the shareholders
of the Corporation at its 1993 Annual Meeting of Shareholders to be held on
April 28, 1993 (the "Annual Meeting"). The resolution submitted by the Proposal requests the Westinghouse Board of
Directors to "establish a plan for orderly withdrawal from the nuclear weapons
business." This Resolution also seeks implementation of this plan during 1993
and issuance of a progress report to shareholders in April 1994. Westinghouse believes the Proposal and accompanying statement may be properly
omitted from its proxy statement and form of proxy for the Annual Meeting
pursuant to paragraph (c)(7) of Rule 14a-8 of the General Rules and Regulations
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the
Proposal relates to the conduct of the ordinary business practices of the
Corporation. To the extent that this letter relates to matters of law, this
letter should be deemed to be the supporting opinion of counsel required by Rule
14a-8(d)(4) of the Exchange Act. Rule 14a-8(c)(7) provides that a shareholder proposal may be omitted from a
registrant's proxy materials ""XADi"XBDf the proposal deals with a matter
relating to the conduct of ordinary business operations of the registrant." The
Proposal itself deals with ordinary business matters, namely, the withdrawal
from a specific business activity, i.e., the management and cleanup of certain
facilities owned by the U.S. Department of Energy, and therefore involves a
determination that is reserved to the Board of Directors and management of the
Corporation. Section 1721 of the Pennsylvania Business Corporation Law provides that the
business and affairs of every Pennsylvania business corporation (e.g.,
Westinghouse) "shall be managed under the direction of a board of directors." A
decision to adopt a plan to withdraw from a contract or a specific line of
business is a matter properly determined by the Corporation's Board of Directors
and management. The Staff has consistently recognized that decisions involving
complex business considerations are not susceptible to review by shareholders.
The Staff has also specifically agreed that decisions to abandon certain lines
of business or business activities relate to the conduct of ordinary business
operations under paragraph (c)(7). See, Salomon Inc., January 25, 1990 (proposal
to prohibit index stock arbitrage transactions); Pinnacle West Capital Corp.,
March 10, 1989 (proposal to divest all non-utility subsidiaries); General Motors
Corporation, March 31, 1988 (proposal to re-deploy assets into more profitable
lines of endeavor). In this case, a determination whether to abandon the
management of U.S. Department of Energy facilities necessarily involves various
complex business considerations, and therefore is not appropriate for
shareholder action. Prior to 1972, former Rule 14a-8(c)(2) provided in part that a proposal could be
omitted from a company's proxy material "if it clearly appears that the proposal
is submitted by the security holder. . . primarily for the purpose of promoting
general economic, political, racial, religious, social or similar causes."
Following the decision in Medical Committee for Human Rights v. SEC,
432 F.2d 659 (D.C. Cir. 1970), vacated as moot,
404 U.S. 403 (1972) and the later
adoption of Release No. 34-12999 (November 22, 1976), the Commission interpreted
"ordinary business' so as not to exclude proposals that involved important
social or other public policy issues. See Southern California Edison Co.,
January 8, 1980. Since that time, proposals raising such policy questions have
been included in registrant's proxy materials, even though they otherwise
related to the conduct of the registrants' "ordinary business operations." See,
e.g., General Electric Company (Surr), January 29, 1988 (proposal that board of
directors not renew a contract to manage a plant which produces parts for
nuclear weapons); Ford Motor Company, April 11, 1985; Eastman Kodak Company,
February 22, 1984. Recognizing the widespread interest in political and social
issues, the Commission's position was that such proposals involved "substantial
corporate policy considerations" that went beyond the conduct of the company's
ordinary business operations. The Commission, however, has maintained flexibility in determining those issues
that, from time to time, involve "substantial" corporate policy considerations.
Prior to 1989, the Staff permitted registrants to omit proposals dealing with
plant closing. In Pacific Telesis Group, February 2, 1989, the Staff
reconsidered this position and held that such proposals involved "significant"
corporate policy considerations beyond the conduct of ordinary business
operations. The Staff cited "heightened state and federal interest in the social
and economic implications of plant closing and relocation decisions." Within the last year, the Commission recognized that the corporate policy issues
that are significant to shareholders involve corporate governance and executive
compensation. On February 13, 1992, Chairman Breeden announced a Commission
initiative on executive compensation and released 10 no-action letters holding
that proposals on compensation and benefits for senior executives and directors
may not be omitted under Rule 14a-8(c)(7). In these letters, the Staff noted the
"now widespread public debate concerning compensation policies and practices
relating to senior executives and directors, and an increasing recognition that
these matters raise significant policy issues." Most significantly, the Staff recently reconsidered the application of Rule
14a-8(c)(7) to employment-related proposals directed at a company's
non-executive workforce. In Cracker Barrel Old Country Store, Inc., October 13,
1992, the Staff stated that an employment-related proposal's connection with a
social issue will no longer remove the proposal from the realm of ordinary
business operations. In this context, the Staff has indicated its willingness to
re-examine the "social policy" exception for matters that otherwise involve
ordinary business operations. Although Cracker Barrel Old Country Store, Inc. involved an employment-related
proposal, we believe the Staff's rationale there applies completely to this
Proposal. In this instance, the Proposal may be tied to the "social" issue of
the widsom of the U.S. Government's maintenance of its nuclear
production-related facilities. As the Staff indicated, however, the character of
the Proposal under Rule 14a-8(c)(7) is properly determined by examining the
nature of the Proposal. In this instance, the Proposal essentially involves the
Corporation's withdrawal from a particular business activity -- the management
and cleanup of certain facilities owned by the U.S. Department of Energy, and
this subject clearly relates to the conduct of the ordinary business operations
of the Corporation. For these reasons, we submit that the Proposal and accompanying statement of
support may be excluded from the Westinghouse proxy materials for the Annual
Meeting. Very truly yours, Thomas F. Seligson
Senior Counsel Enclosures corporat/sisters.tfs WESTINGHOUSE ELECTRIC WHEREAS Westinghouse Electric manages the Savannah River Plant, a nuclear
defense-related production facility owned by the Department of Energy and
located near Aiken, South Carolina. WHEREAS on July 13, 1992, President Bush announced the U.S. will no longer
produce the plutonium or enriched uranium used in nuclear warheads, but
plutonium and uranium will continue to be recycled from old warheads and,
contingent on the restart of the K-reactor located at the Savannah River Plant
site, tritium will be manufactured and stockpiled for nuclear warheads at that
plant. WHEREAS the primary mission of the Savannah River Plant is to produce plutonium,
tritium and heavy water for nuclear warheads, a mission whose expense can no
longer be justified by the Cold War between the U.S. and Soviet Union, and there
is no adversary on the horizon against which further escalation of military
equipment could be considered necessary. WHEREAS civilian manufacturing and the economic well-being of its citizens is
the cornerstone of our nation's security; WHEREAS many communities and state governments are studying alternative uses for
closing military bases and de-funded military manufacturing facilities to
provide productive employment in socially useful, environmentally sustainable
occupations; WHEREAS Westinghouse is the fourth largest federal government contractor and the
eleventh largest Department of Defense contractor and therefore, has been and
will be in the future highly affected by military cuts; THEREFORE BE IT RESOLVED that the shareholders request the Board of Directors to
establish a plan for orderly withdrawal from the nuclear weapons business, that
this plan be put into effect during 1993 and a progress report to stockholders
be made in April, 1994. STATEMENT OF SUPPORT The proponents of this resolution, as religiously-affiliated organizations
following the tenets of their faith, believe companies should move away from
preparation for nuclear war and toward production of goods and services that
enhance human life. As investors, we question the logic Westinghouse uses to justify management of
Savannah River and other nuclear weapons production sites for the Department of
Energy. We do not believe continuing with these kinds of contracts makes
financial, moral, environmental or social sense. The Cold War justification for
a nuclear buildup is gone. Yet there has been little reduction in the nuclear
weapons budget. At the same time, U.S.--and global--social needs are growing,
e.g., health care and prevention of disease, affordable housing, education, job
retraining and development of infrastructure. Furthermore, the extraordinary and
rapid political changes we are witnessing throughout the world serve to heighten
the need for environmental restoration and conservation and wise, just economic
decision-making. For these reasons, we believe that Westinghouse should disengage from the
production of nuclear weapons.
[STAFF REPLY LETTER]
03 FEB 1993 RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE Re: Westinghouse Electric Company (the "Company")
Incoming letter dated December 14, 1992 The proposal requests that the board of directors establish a plan for the
orderly withdrawal from the nuclear weapons business. The Division is unable to concur in your view that the proposal may be excluded
under Rule 14a-8(c)(7), which allows the omission of a proposal that "deals with
a matter relating to the conduct of the ordinary business operations of the
issuer." It is the view of this Division that a decision to withdraw from the
nuclear weapons business is not a matter that relates to the ordinary business
operations of the Company. Accordingly, this Division does not believe that the
Company may rely on that provision as a basis for omitting the proposal from its
proxy materials. Sincerely, Amy Bowerman Freed
Special Counsel
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