Company Name: Pacific Gas and Electric Co.
Public Availability Date: 01-21-1997
[INQUIRY LETTER 1]
ORRICK, HERRINGTON & SUTCLIFFE LLP
OLD FEDERAL RESERVE BANK BUILDING
400 SANSOME STREET
SAN FRANCISCO, CALIFORNIA 94111-3143
TELEPHONE(415) 392-1122 December 12, 1996 VIA OVERNIGHT COURIER
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Division of Corporate Finance
Office of the Chief Counsel Re: Shareholder Proposal of Mr. Lawrence C. Wanlass Ladies and Gentlemen: Pursuant to Rule 14a-8(d) promulgated under the Securities Exchange Act of 1934,
I am enclosing on behalf of Pacific Gas and Electric Company six copies of
correspondence including a proposal and supporting statement (the "Proposal")
submitted by Mr. Lawrence C. Wanlass (the "Proponent") and this letter. To the
extent that the reasons stated in this letter are based on matters of law, these
reasons are the opinion of the undersigned as an attorney licensed and admitted
to practice in the State of California. Mr. Wanlass is a shareholder of Pacific Gas and Electric Company, a California
corporation ("PG&E"). PG&E believes the Proposal may be properly omitted from
the proxy materials for PG&E's annual meeting of shareholders scheduled to be
held on April 16, 1997 on the ground that are discussed below. A copy of this
letter to Mr. Wanlass shall serve to notify him of PG&E's intent to omit his
proposal from its proxy statement for the 1997 annual meeting. I. THE PROPOSAL MAY BE OMITTED UNDER RULE 14A-8(C)(3) AND RULE 14A-9 AS IT IS
VAGUE AND MISLEADING Rule 14a-8(c)(1) permits the omission of a shareholder proposal "if the proposal
or the supporting statement is contrary to any of the Commission's proxy rules
and regulations, including Rule 14a-9, which prohibits false or misleading
statements in proxy soliciting materials." Vague and ambiguous language in a
proposal may render it misleading. See Connecticut Natural Gas Corp. (November
23, 1993). Further, Rule 14a-5 requires that "the information in the proxy
statement shall be clearly presented . . ." In applying these rules, the staff
of the Commission has recognized that a shareholder proposal may be so
inherently vague and indefinite that the shareholders voting upon it would not
be able to determine with any reasonable certainty the actions which would be
taken if the proposal were approved. Such a proposal is misleading because the
action taken to implement the proposal may be quite different from that
envisioned by the shareholders in voting upon the proposal. See, e.g., Argonaut
Group (January 25, 1991); Loews Corporation (January 25, 1991); Unitrin,
Incorporated (February 27, 1991). The Proposal makes charges concerning improper behavior on the part of PG&E:
"the shareholders of the Pacific Gas and Electric Company take exception to the
action of the company's Chief Executive Officer and the elected Directors of the
company in actively opposing the California Civil Rights Initiative (CCRI),
Proposition 209, leading up to the November 5, 1996 California elections...a
wiser course of action would have been to leave this question of the use of
quotas and preferences, which the company states it does not comply, to the
voters." It is unclear what the Proponent wishes PG&E to do if the Proposal were
to appear in the proxy materials for its 1997 annual shareholder meeting and the
shareholders were to vote to approve it. (See Rule 14a-9(b), note (b).) II. THE PROPOSAL MAY BE OMITTED UNDER RULE 14A-8(C)(4) AS IT RELATES TO THE
REDRESS OF A PERSONAL CLAIM OR GRIEVANCE AND IS DESIGNED TO FURTHER A PERSONAL
INTEREST NOT SHARED WITH OTHER SECURITY HOLDERS AT LARGE. The Proponent hopes to use the shareholder proposal process to achieve his
objective, castigating PG&E's activities in support of affirmative action. The
Proposal furthers a personal interest of the Proponent. Between the beginning of
August and the end of October, the Proponent sent eight separate forms of
letters (in addition to the Proposal), to various individuals, including members
of the PG&E board of directors, PG&E executives, Governor Wilson, members of the
California Public Utilities Commission, and Republican politicians. Each of the
letters dealt with the Proponent's displeasure and disagreement with PG&E's
efforts with respect to Proposition 209. In his letter dated October 11, 1996
sent to various members of PG&E's Board of Directors, the Proponent asks that
the directors "consider the sleaze of the opposition's campaign . . ." and
questions "are there no Republicans among the directors? And if there are, why
are they letting themselves be led around in this fashion?" In his statement
supporting the Proposal, the Proponent again refers to political affiliation,
accusing PG&E of "siding with the Democrats," and being "unwise." The
Proponent's correspondence indicates that he has deeply held feelings with
respect to the subject of Proposition 209 and intends to use the annual meeting
proxy materials as a soapbox upon which to stand and espouse his political
beliefs. PG&E has no reason to believe that this personal interest is one shared
across-the-board with other shareholders at large, and thus the Proposal should
be omitted under Rule 14a-8(c)(4). II. THE PROPOSAL MAY BE OMITTED UNDER RULE 14A-8(C)(7) AS RELATING TO ORDINARY
BUSINESS OPERATIONS. PG&E believes that the Proposal may be omitted from the proxy materials for the
1997 annual meeting pursuant to the provisions of Rule 14a-8(c)(7) because it
deals with matters relating to the conduct of the ordinary business operations
of PG&E. The design and conduct of employment practices of a company, including practices
and programs to further affirmative action are fully within the business
responsibility of management. Although the area is heavily regulated by federal,
state and local authorities, the specific approaches are matters that should be
left to management to determine, and should not be made part of the shareholder
proposal process. The fact that a shareholder proposal concerning a company's
employment policies and practices for the general workforce is tied to a social
issue will no longer be viewed as removing the proposal from the realm of
ordinary business operations of the company. See Cracker Barrel Old Country
Store, Inc. (Oct. 13, 1992). The Proposal, which would condemn PG&E's past
actions with respect to employment matters, is the same type of employment-based
proposal that the Staff has determined to be excludable before. Accordingly,
PG&E is of the view that the Proponent may be excluded from its proxy materials
for the 1997 annual shareholders meeting. III. THE PROPOSAL MAY BE OMITTED UNDER RULE 14A-8(C)(1) AS IT IS NOT A PROPER
SUBJECT FOR ACTION BY SHAREHOLDERS UNDER STATE LAW Section 300 of the CGCL "Corporate Powers to Be Exercised by Board . . ."
provides that: ". . . the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction of
the board," absent a contrary provision in the CGCL or a corporation's Articles
of Incorporation. Nothing in the CGCL or PG&E's Articles of Incorporation places
the decision making relating to the matters covered in the Proposal in the hands
of a corporation's shareholders. The Proposal in no way recommends or requests
that the board of directors of PG&E take the action mandated in the Proposal or
suggests an amendment to the Articles of Incorporation to delegate this matter
to the shareholders. Thus, the Proposal is an improper subject for action by
shareholders under state law. IV. THE PROPOSAL MAY BE OMITTED UNDER RULE 14A-8(C)(10) AS IT HAS BEEN RENDERED
MOOT The Proposal relates to activities carried out by PG&E prior to the November 5,
1996 elections, and may be omitted from the 1997 proxy materials as moot under
Rule 14a-8(c)(10) because PG&E has already made a determination, within its
discretion as an ordinary business matter, with respect to the subject of the
Proposal. As the election is past PG&E's position cannot be changed now, even if
the management of PG&E determined such a change would be in the best interests
of PG&E. On the basis of the foregoing, Pacific Gas and Electric Company respectfully
requests the concurrence of the staff of the Commission that Mr. Wanlass'
proposal may be excluded from PG&E's proxy statement relating to its 1997 annual
meeting. Please confirm his filing by returning a receipt-stamped copy of this letter. An
extra copy of this letter and a pre-addressed postage paid envelope are
enclosed. Very truly yours, Maria Gray Enclosures cc: w/o enc.: Mr. Lawrence C. Wanlass Leslie H. Everett
Vice President and Corporate Secretary
Pacific Gas and Electric Company
[INQUIRY LETTER 2]
PACIFIC GAS AND ELECTRIC COMPANY
77 BEALE STREET
P.O. BOX 770000
SAN FRANCISCO, CA 94177
TELEPHONE(415) 973-1955 August 21, 1996 Mr.Lawrence C. Wanlass
11476 Ghirardelli Court
Gold River, CA 95670 Dear Mr. Wanlass: Thank you for your recent letter requesting information for submitting a
shareholder proposal. In order to be eligible to submit a proposal for inclusion in the proxy
soliciting material for the Company's 1997 annual meeting of shareholders, a
shareholder must be a record or beneficial holder of at least $1,000 in market
value of PG&E common or preferred stock and must have held such stock for at
least one year, and the shareholder must continue to own such stock through the
date of the 1997 annual meeting which is April 16, 1997. Proposals must be submitted in writing to the Corporate Secretary of the Company
at the address listed above. A proposal to be presented at the 1997 annual
meeting must be received by the Corporate Secretary's office no later than
November 1, 1996. In order to avoid any question as to the date on which a
proposal was received by the Company, it is suggested that shareholders submit
their proposals by certified mail, return receipt requested. At the time a proposal is submitted, the shareholder must provide the Company
with his or her name, address, the number of shares of PG&E stock held of record
or beneficially, the date(s) upon which those shares were acquired, and
documentary support for a claim of beneficial ownership (e.g., a letter from a
bank or broker or a copy of the shareholder's account statement). A shareholder may submit no more than one proposal per annual meeting. A
statement of the shareholder in support of the proposal may be submitted to the
Company at the time the proposal is submitted. The proposal and the supporting
statement together may not exceed 500 words. After the Company receives a shareholder proposal, we will evaluate whether it
is proper for inclusion in the proxy material for the 1997 annual meeting. The
regulations of the Securities and Exchange Commission (SEC) regarding the
inclusion of shareholder proposals in a company's proxy material are included in
SEC Rule 14a-8. A copy of these regulations can be obtained from the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. Please let me know if I can provide you with any additional information. Sincerely, Leslie Everett
Corporate Secretary cc: Stanley T. Skinner
[INQUIRY LETTER 3]
LAWRENCE C. WANLASS
11476 GHIRARDELLI COURT
GOLD RIVER, CA 95670
TELEPHONE(999) 999-9999 August 07, 1996 S. T. Skinner
Chairman and Chief Executive Officer
Pacific Gas and Electric Corporation
77 Beale Street
San Francisco, CA 94177 Dear Mr. Skinner: I am writing as a PG&E shareholder (2046 shares) to object in the strongest
possible language to your action in publicly endorsing the opposition position
to the CCRI measure on the November ballot. This kind of election activity is
outside the corporation's role, and you should not have acted as you did. You are wrong on the substance of the basic issues, and you are wrong on your
method which results in politicizing our corporation. I write as a retired political scientist and university administrator with
in-depth experience in CCRI-related areas. First, you are wrong on the substance of the basic issues because affirmative
action, which I support, is concerned with breaking down such things as "old
boy" networks in making appointments by enlarging the candidate pool and then
picking the most qualified candidate. CCRI concerns not affirmative action but
the use of quotas and preferences which are directly contrary to the 14th
amendment to the U.S. constitution as well as California's constitution. If you
foolishly wish to continue in your present course, then you should advocate a
constitutional amendment which would authorize quotas and preferences. Secondly, you are wrong in your method of politicizing our corporation over this
issue. PG&E is concerned as a utility with the efficient production,
distribution, and sale of electricity and gas. It has no business getting
hand-in-glove with either political party in this manner. You may be currying
favor in some circles with the Democratic party, but you are opening the
corporation to Governor Wilson's justified retaliation, whether CCRI passes or
fails. Because of this action on your part, I will be opposed from this point forward
to your continuation as Chief Executive Officer, and I will look for
opportunities to make my position known and understood. You need to remember that PG&E is an investor-owned company. You and members of
the board of directors work for and represent the owners. The owners, I am
convinced, would not wish you to enter into a highly charged election issue in
this fashion. But if they did, do you doubt what side the majority of the
shareholders would be on? This approaches the untenable position of saying
shareholders be damned. I know from personal experience, dating back to earlier years, that shareholders
can be effective in helping to remove a John Riccardo, to cite one example, from
the chairmanship of the Chrysler Corporation. Looking toward the next annual
meeting of PG&E in April, a resolution asking for a vote of no-confidence in you
as Chief Executive Officer will be in order. The resolution may or may not pass,
but shareholders need to find ways to make their roles meaningful. Even if the
resolution does not succeed, you should be mindful of a weakened position you
will have going into your next major mistake or taking possibly necessary but
unpopular steps such as reducing the dividend. Please have the Secretary of the Corporation send to me rules and guidelines for
a shareholder to introduce a resolution to be voted upon at the next annual
meeting. Sincerely, Lawrence C. Wanlass cc: Governor Pete Wilson
Ward Connerly
Outside directors of PG&E
Members of the Public Utility Commission
[INQUIRY LETTER 4]
LAWRENCE C. WANLASS
11476 GHIRARDELLI COURT
GOLD RIVER, CA 95670
TELEPHONE(916) 638-1584 September 06, 1996 Shareholder Proposals Section
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549 Pursuant to the enclosed correspondence, please forward to me at an early date
SEC Rule 14a-8. I wish to determine if a resolution of non-confidence concerning the Chief
Executive Officer of a corporation by a qualified shareholder (and as covered in
my letter of August 7, 1996) is in order under SEC rules. Also, please advise me if a particular officer or office of the Securities and
Exchange Commission acts to make certain that fair play holds in cases like this
one. Sincerely, Lawrence C. Wanlass cc: Mr. Skinner
Mr. Everett
Governor Pete Wilson
Mr. Ward Connerly
Outside directors of PG&E
Members of the Public Utility Commission
Senator Robert Hurtt
Speaker Curtis Pringle
Assemblyman Bernard Richter Two of the enclosures may be of special interest to you personally. Because of your former position, the letter of Sept 9 maybe Original Text
Illegible referenced enough to know better. Mr. Clarke No matter which side you individually come down on with regard to Proposition
209, I am urging you to think as clearly as you can about how you see your
representative function as a Board member. Remembering that you were elected to the Board by the shareholders to represent
them, do you see this as a form of "virtual representation" under which you know
best and can better decide your vote based on this superior knowledge, or do you
see your role as "directly representing" the shareholders by voting as you
believe they would vote, were they to be directly consulted? And if the former, "virtual representation," is how you view your role, do you
believe in this particular case with its constitutional, political, and social
implications that you are that much smarter and better informed than the
shareholders electing you, so that your "virtual representation: vote should
hold as it might in regard to more technical matters with which the shareholders
would have had much less experience? I am responding to Mr. Skinner's August 21 letter. But in the meantime, I need
to ask you this question. If PG&E has no quotas or preferences, as he states,
why did you decide to join the Democratic party by coming out in opposition to
Proposition 209, which covers quotas and preferences and makes no reference to
affirmative action which we all support. Would it not have been wiser to simply
come out in favor of affirmative action as a corporation policy, leaving
Proposition 209 to the voters? Larry Wanlass This letter has been sent to Senator Hurtt, Speaker Pringle, and Assemblyman
Richter. Next week, I am planning to send it to all of the other Republic
Senators and Assemblymen with the opening -- If you are worried about your own
re-election, you well know which people to hold accountable. Because Proposition 209 is of great importance--in and of itself--and because of
its pivotal role in deciding other elections, I thought you would find this
challenge to Mr. Skinner to be worth your thought and support. Because of your shrewdness, it will be clear to you that if Stanley Skinner
succeeds with what is surely his interior strategy (see his enclosed letter to
me dated August 21), he will be lining up PG&E as an ally of the Democratic
party for many years going forward. He should be held accountable by Republican
party members in the legislature as well as by the Governor. Because this action by Stanley Skinner has such unusual weight, the members of
the Board of Directors of PG&E who supported Mr. Skinner should perhaps be held
individually as well as collectively responsible, based on your own best
estimate and judgment. It is possible, and in some cases probable, that they
have or will have legislative matters of concern to them. I believe the outside directors to be
W. S. Davila R. B. Madden S. T. Reeves R. A. Clarke D. M. Lawrence Rebecca Q. Morgan H. M. Conger J. C. Sawhill C. L. Cox Mary S. Metz Alan Seelenfreund R. D. Glynn C. E. Reichardt B. L. Williams
Brief profiles covering each of these people should be available through the
Annual and other reports of PG&E. As for Mr. Skinner, I think that he has crossed the line through his egregious
action with regard to Proposition 209. In your position, I would make it clear
to PG&E's directors that any further approaches to the legislature should be by
a new CEO. Lawrence C. Wanlass cc: Governor Pete Wilson
Mr. Ward Connerly
The people mentioned above
[INQUIRY LETTER 5]
LAWRENCE C. WANLASS
11476 GHIRARDELLI COURT
GOLD RIVER, CA 95670
TELEPHONE(916) 638-1584 September 10, 1996 S. T. Skinner
Chairman and Chief Executive Officer
Pacific Gas and Electric Corporation
77 Beale Street
San Francisco, CA 94177 Dear Mr. Skinner: Further to my other mailing to you with this same date, I have also mailed the
enclosed letters to the corporation's directors and to Governor Wilson, Curt
Pringle, Rob Hurtt, Bernie Richter and Ward Connerly. New week I am planning to mail this same letter to every other Republican member
of the legislature with the following opening--If you are worried about your own
reelection, you have these specific people to hold accountable. Sincerely, Lawrence C. Wanlass --If your mind is open to some fence mending, please give thought to a telephone
meeting with the other directors, followed by a press release stating that
PG&E's intention was to underline your good affirmative action record, but with
the appellate court's action in defining Proposition 209 as dealing with quotas
and preferences and based on the fact that PG&E does not have quotas and
preferences, it is the position of PG&E that Proposition 209 is better left to
the voters (or better chosen words to this same effect). If you do this, you will still be able to say to Democratic leaders that you
were out front in trying to help them. And you will be able to say to Republic
leaders that you misjudged in going too far, but you have now moved towards the
middle with regard to this highly divisive and sensitive i ssue. I am not planning to send this particular letter to anyone but you. And I will
cease and desist, if you decide to take this prudent step. LCW
[INQUIRY LETTER 6]
LAWRENCE C. WANLASS
11476 GHIRARDELLI COURT
GOLD RIVER, CA 95670
TELEPHONE(916) 638-1584 September 24, 1996 Leslie H. Everett
Corporate Secretary
Pacific Gas and Electric Corporation
77 Beale Street
P. O. Box 770000
San Francisco, CA 94177 Dear Mr. Everett: With regard to my pending shareholder's resolution for the next annual meeting,
would you please mail to me a copy of the public announcement of PG&E's
opposition to Proposition 209. I wish to be certain with regard to the complete
statement that was made. Please also let me know of the exact financial commitment made or to be made by
PG&E in opposition to Proposition 209. Your straightforward approach to this matter is appreciated. Sincerely, Lawrence C. Wanlass This mailing sent today to the following members of PG&E's Board of Directors:
W. S. Davila, R. A. Clarke, H. M. Conger, Mary S. Metz, C. E. Reichardt, R. B.
Madden, D. M. Lawrence, J. C. Sawhill, Alan Seelenfreund, B. L. Williams, S. T.
Reeves, Rebecca Q. Morgan, C. L. Cox, and R. D. Glynn. Three questions. Are you really that happy that you are actively supporting opposition to
Proposition 209 in your capacity as a Pacific Gas and Electric director?
Consider the sleaze of the opposition's campaign as they desperately attempt to
vilify an honest advocate of not using quotas and preferential set-asides. Is
not Ward Connerly being punished because as a black person he dared to take a
leadership role in this matter? Is this not a kind of racism you profess to
oppose? Would it have been wiser not to jump into this matter with both feet as
and when you did--especially with the courts still clarifying at that time the
distinctions between preferences and affirmative action programs (which are not
excluded by Proposition 209 and which many people believe can also be based on
economic disadvantage)? Are there no Republicans among the directors? And if there are, why are they
letting themselves be led around in this fashion? Is PG&E's corporation secretary, Leslie Everett, justified in stalling a
response, whether positive or negative, to my straightforward request per the
enclosed letter? The letter was mailed on September 24. To this date, I have not
received a reply of any kind. Isn't this a form of conduct not up to the
standards of a large and important corporation such as PG&E? Please remember that you are the shareholder's representatives. And, less
importantly, please recall that I have been a shareholder for many years and
currently hold more than 2000 PG&E shares. Lawrence C. Wanlass cc: Ward Connerly
Governor Wilson
Stanley Skinner
Leslie Everett
Bernie Richter I am sorry that you have chosen to ignore my request. If you have been too busy,
an assistant could have been courteous enough to respond. Doesn't your sense of
professionalism enter this picture?
[STAFF REPLY LETTER]
January 21, 1997 RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE Re: Pacific Gas and Electric Company (the "Company")
Incoming letter dated December 12, 1996 The proposal states that shareholders take exception to the Company's opposition
to California's Proposition 209. The Division is unable to concur in your view that the proposal may be excluded
under rule 14a-8(c)(1) as an improper subject for shareholder action under
applicable state law. Accordingly, the Division is unable to conclude that rule
14a-8(c)(1) may be relied upon as a basis for excluding the proposal from the
Company's proxy materials. The Division is unable to concur in your view that the proposal may be excluded
under rule 14a-8(c)(3) as false and misleading or vague and indefinite.
Accordingly, the Division is unable to conclude that rule 14a-8(c)(3) may be
relied upon as a basis for excluding the proposal from the company's proxy
materials. The Division is unable to concur in your view that the proposal may be excluded
under rule 14a-8(c)(4) as being submitted to redress a personal claim or
grievance of the proponent or to further a personal interest of the proponent.
Accordingly, the Division is unable to conclude that rule 14a-8(c)(4) may be
relied upon as a basis for excluding the proposal from the Company's proxy
materials. The Division is unable to concur in your view that the proposal may be excluded
under rule 14a-8(c)(7) as ordinary business. Accordingly, the Division is unable
to conclude that rule 14a-8(c)(7) may be relied upon as a basis for excluding
the proposal from the Company's proxy materials. The Division is unable to concur in your view that the proposal may be excluded
under rule 14a-8(c)(10) as moot. Accordingly, the Division is unable to conclude
that rule 14a-8(c)(10) may be relied upon as a basis for excluding the proposal
from the Company's proxy materials. Sincerely, Amy M. Trombly
Attorney Advisor
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