Company Name: Walgreen Co.
Public Availability Date: November 2, 1999
Document Sections:
LETTER OF INQUIRY 1
APPENDIX
LETTER OF INQUIRY 2
APPENDIX
APPENDIX
APPENDIX
APPENDIX
APPENDIX
STAFF REPLY LETTER
[LETTER OF INQUIRY 1]
September 30, 1999
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Walgreen Co.Commission File No. 1-604
Shareholder Proposal under Rule 14a-8 of the Securities Exchange Act of 1934
Ladies and Gentlemen:
Walgreen Co. ("the Company"), an Illinois corporation, received a letter dated
June 21, 1999 from the Trust For The International Brotherhood of Electrical
Workers' Pension Benefit Fund ("IBEW") transmitting a shareholder proposal (the
"Proposal") for inclusion in the Company's proxy materials for its 2000 Annual
Meeting of Shareholders. The Company intends to omit the Proposal from its proxy
materials in accordance with Rule 14a-8 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). For the reasons hereafter set forth, we
ask for your concurrence with the Company's intent to exclude the Proposal.
In accordance with Rule 14a-8(j), the Company is filing with the Securities and
Exchange Commission ("the Commission") six (6) copies of (i) the Proposal
(together with its transmittal letter and Supporting Statement), and (ii) this
letter setting forth the basis on which the Company believes the Proposal may be
excluded. A copy of this letter is being sent simultaneously to the IBEW.
The Company intends to file its definitive proxy statement on or about November
24, 1999. The Company respectfully requests that the Commission permit it to
make this submission less than 80 days prior to that date because of the
Company's good faith belief that the Proposal would be withdrawn in response to
the Company's adoption of a confidential voting policy. Due to the 48-day gap
between the Company's letter dated July 30, 1999, in which the Company advised
the IBEW of its adoption of the policy, and their reply dated September 17,
1999, the Company believed that it had complied with the IBEW's recommendations
in all substantive respects and that the Proposal would be withdrawn. Six copies
of the correspondence between the Company and the IBEW are included with this
letter.
The Company is aware that, in some circumstances, a shortening of the 80-day
period may limit the time available for the staff of the Division of Corporation
Finance (the "Staff") to consider complicated issues. We do not believe that
this case presents such issues given the policy that we adopted in response to
the Proposal. Accordingly, we respectfully submit that shortening the 80-day
period would not create hardship for the Staff.
I. The Proposal
The Proposal submitted by the IBEW recommends that the Company adopt and
implement a policy of confidential voting at all meetings of its shareholders.
It also recommends that the policy provide that "the voting of all proxies,
consents and authorizations be secret, and that no document shall be available
for examination nor shall the vote or identity of any shareholder be disclosed
except to the extent necessary to meet legal requirements." Further, the
Proposal recommends that the policy provide that the receipt, certification and
tabulation of such votes be performed by independent election inspectors. The
Proposal states that "should you decide to adopt the provisions of the proposal
as corporate policy, we will ask that the proposal be withdrawn from
consideration at the annual meeting."
II. Background
After receipt of the Proposal submitted by the IBEW, the Company undertook a
review of its voting policies and procedures, as well as the confidential voting
policies in effect at other companies. As a result, the Company adopted the
following confidential voting policy at its July 14, 1999, Board of Directors
meeting:
Shareholder proxies, ballots and voting materials that identify the votes of
specific shareholders shall be kept confidential and will not be disclosed to
the Company, its directors, officers and employees except (i) in the case of
communications intended for management, (ii) in the event of certain contested
matters, including proxy contests, or (iii) as required by law. Votes will be
received and tabulated by independent tabulators (which can be Company's
transfer agent) and summaries of the tabulation will be provided to management
and publicly announced at the meeting of shareholders to which such vote totals
relate. Certain outside agents, such as those serving as proxy solicitors, who
have agreed to comply with this policy, may be permitted access to proxies and
ballots to facilitate their participation in soliciting proxies and conducting
the meeting. The agents may notify the Company if a shareholder has failed to
vote so that the shareholder may be reminded and requested to do so.
The Company believed this policy to be consistent with the recommendations of
the IBEW and sent a letter to Mr. Edwin D. Hill, Trustee, on July 30, 1999. The
Company met with its voting tabulator and adopted the procedures necessary to
ensure that votes will be kept confidential during the proxy voting process. No
ballots will be seen by the Company. The Company occasionally receives comments
from its retail customers on those ballots. The Company has arranged for the
voting tabulator to separately communicate those comments to the Company. As of
September 1, 1999, the Company had not received a response from the IBEW to its
July 30, 1999 letter, by which the Company advised the IBEW of its adoption of
this confidential voting policy. Thus, the Company sent a follow-up letter on
September 1, 1999. On September 17, 1999, the IBEW sent a letter to the Company
advising the Company that it did not intend to withdraw its proposal. It cited
two points in the Company's policy as the reason for that decision.
III. Reasons for Excluding Proposal
For the reasons set forth below, we believe that the Company should be entitled
to exclude the IBEW's Proposal from the Company's proxy materials for the 2000
Annual Meeting.
Rule 14a-8(i), Question 9, Section 10, provides that a Proposal may be excluded
if the Company has already substantially implemented the Proposal. The Company
believes that it has substantially implemented the Proposal, as the Company has
in fact adopted a policy that will result in the Company not seeing any votes by
any particular shareholder. As noted in Section II, above, the Company's vote
tabulators will provide aggregate vote summaries only. Proxy cards will not be
returned to the Company.
The Company does not understand the IBEW's objection to the portion of the
policy that applies to the hiring of outside agents, such as proxy solicitors.
In such instances, the Company will still only have access to aggregate vote
totals. The policy's exception in the event of certain contested matters was an
exception that the Company found to be present in nearly every confidential
voting policy that it reviewed. The Company has not had a contested matter on
its proxy ballot in its almost 100 years of existence.
The Company believes that it has taken the steps necessary to ensure
confidential voting of the ballots for its 2000 Annual Meeting and that it has
substantially implemented the recommendations of the IBEW.
For the reasons explained above, we believe there are grounds to exclude the
IBEW's Proposal and ask for your concurrence with our position. The Company
respectfully requests confirmation that the Staff will not recommend any
enforcement action against the Company if the Proposal is omitted from the proxy
material for the Company's 2000 Annual Meeting. In addition, the Company
requests that the Commission permit the Company to file its definitive proxy
materials on a date that is less than 80 days following the date of this
statement of objection.
Please contact the undersigned at (847) 914-3004 if you have any questions or
desire additional information.
Very truly yours,
WALGREEN CO.
By
Julian A. Oettinger
Vice President, General Counsel and Corporate Secretary
[APPENDIX]
WALGREEN
SHAREHOLDER PROPOSAL CONCERNING
CONFIDENTIAL VOTING
BE IT RESOLVED: That the stockholders of Walgreen ("Company"), recommend that
our Board of Directors take the steps necessary to adopt and implement a policy
of Confidential Voting at all meetings of its stockholders, which includes the
following provisions:
1. That the voting of all proxies, consents and authorizations be secret, and
that no such document shall be available for examination nor shall the vote or
identity of any shareholder be disclosed except to the extent necessary to meet
the legal requirements, if any, of the Corporation's state of incorporation; and
2. That independent election inspectors shall perform the receipt, certification
and tabulation of such votes.
SUPPORTING STATEMENT:
It is the proponents' belief that it is vitally important that a system of
Confidential Proxy Voting be established at WALGREEN. Confidential balloting is
a basic tenet of our political electoral process ensuring its integrity. The
integrity of corporate board elections should also be protected against
potential abuses given the importance of corporate policies and practices to
corporate owners (stockholders) and our national economy.
The implementation of a Confidential Voting System would enhance shareholder
rights in several ways. First, in protecting the confidentiality of the
corporate ballot, shareholders would feel free to oppose management nominees and
issue positions without fear of retribution. This is especially important for
professional money managers whose business relationships can be jeopardized by
their voting positions.
A second important benefit of Confidential Voting would be to invigorate the
corporate governance process at the Corporation. We believe that shareholder
activism would be promoted within the Corporation. It is our belief that
shareholders empowered with a free and protected vote would be more active in
the proposing of corporate policy resolutions and alternate board candidates.
Finally, it is our belief that the enhancement of the proxy voting process would
change the system where too often shareholders vote "with their feet," not with
their ballots. This change would help to develop a long-term investment
perspective where corporate assets could be deployed, and used in a more
effective and efficient manner.
The vast majority of major corporations have adopted a Confidential Voting
Policy and it is time for Walgreen to join them.
WE URGE YOU TO VOTE FOR THIS PROPOSAL.
[LETTER OF INQUIRY 2]
October 27, 1999
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, DC 20549
Re: Walgreen Co.Commission File No. 1-604
Shareholder Proposal under Rule 14a-8 of the Securities Exchange Act of 1934
Dear Sir or Madam:
Walgreen Company ("Company") by letter dated July 30, 1999, requested that the
Staff concur with their position that the Confidential Voting shareholder
proposal ("Proposal") submitted by the International Brotherhood of Electrical
Workers' Pension Benefit Fund ("Fund") can be properly omitted from the
Company's proxy materials for the 2000 annual meeting. We believe that there is
no basis for the Staff to support the Company's request for concurrence.
By letter dated June 21, 1999, the Fund submitted the Proposal that recommends
the Company's adoption of a policy of Confidential Voting at all meetings of its
stockholders. The language of the Proposal describes a straightforward
Confidential Voting system with the only exception to strict confidentiality
being when state law dictates disclosure. On July 30, 1999, the Company sent a
letter to the undersigned stating simply that "our company's Board of Directors
has adopted a Confidential Voting Policy similar to the one which you proposed."
A copy of the Confidential Voting Policy was attached to the July 30 letter. The
letter further requested that the Fund withdraw the Proposal based on the Board
of Directors' action and the statement in the Fund's submission letter that the
Proposal would be withdrawn if the company adopted the proposal as corporate
policy. No explanation of the provisions of the Confidential Voting Policy was
provided and no explanations were provided concerning the exceptions to
confidentiality and the rights of "certain outside agents" to gain access to
proxies and ballots. In the absence of an offer to discuss and negotiate these
matters, no response was forwarded to the Company from the Fund.
The Company in a subsequent letter dated September 1, 1999, took the position
that in the absence of communication between the Fund and the Company subsequent
to the adoption of its Confidential Voting policy and its letter of July 30,
would be entitled to consider the Proposal to be withdrawn. In a letter from the
undersigned dated September 17, 1999, the Fund's position that the proposal was
not withdrawn was made clear to the Company and our concerns with the Company's
Confidential Voting Policy were briefly noted.
It is our position that the Company has not substantially implemented the action
called for by the Proposal. The exceptions to the application of confidentiality
in the Company's Confidential Voting Policy could operate to dramatically limit
voting confidentiality. Further, the access of undefined "outside agents" to the
voting records may result in significant limitations on the voting
confidentiality provided by the Company's policy. In contrast, the confidential
voting policy advocated for in the Proposal is a simple yet comprehensive policy
with the only exceptions to confidentiality being those that are dictated by
state law.
Sincerely,
Edwin D. Hill
Trustee
EDH/yl
Attachments
[APPENDIX]
September 17, 1999
VIA FAX AND U.S. MAIL
Mr. Julian A. Oettinger
Vice President, General Counsel & Corporate Secretary
Walgreen Company
Corporate Office
200 Wilmont Road
Deerfield, IL 60015
Dear Mr. Oettinger:
We are in receipt of your September 1, 1999 letter concerning Walgreen's
adoption of a Confidential Voting Policy.
Our interpretation of S.E.C. rules indicates that our shareholder proposal is
still active and must be included in the Company's upcoming Proxy Statement.
We are not in agreement with your conclusion that Walgreen's adoption of a
Confidential Voting Policy automatically nullifies our shareholder proposal.
Furthermore, we have concerns with the substance of your Confidential Voting
Policy. Specifically, your policy calls for certain exceptions to confidential
voting "in the event of certain contested matters..." and that "certain outside
agents may be permitted access to proxies and ballots..."
If you are interested in discussing these issues please contact our Corporate
Affairs Department at 202-728-6190.
Sincerely,
Edwin D. Hill
Trustee
EDH/yl
Copy to Mr. Daniel L. Jorndt
Bcc: Hill
Combs
File
[APPENDIX]
September 1, 1999
Mr. Edwin D. Hill
Trustee
Trust For The International Brotherhood of Electrical Workers'
Pension Benefit Fund
1125 Fifteenth St. N.W.
Washington, D.C. 20005
Re: Confidential Voting Policy Proposal
Dear Mr. Hill:
On July 30, 1999 I wrote to inform you that our Company has adopted a
Confidential Voting Policy. A copy of that policy was included with my letter. I
asked you to confirm that, in view of the existence of our policy, there was no
longer any need to include your proposal relating to Confidential Voting in our
1999 Annual Meeting proxy. Since you have not responded I will assume that you
agree with my conclusion and the proposal will be considered withdrawn.
Thank you for your continued interest in our Company.
Very truly yours,
JAO/ym
Certified Mail
Return Receipt Requested
[APPENDIX]
July 30, 1999
Mr. Edwin D. Hill
Trustee
Trust For The International Brotherhood of Electrical Workers'
Pension Benefit Fund
1125 Fifteenth St. N. W.
Washington, D.C. 20005
Re: Confidential Voting Policy Proposal
Dear Mr. Hill:
This will acknowledge our receipt of your letter and attached shareholder
proposal relating to a Confidential Voting Policy.
I wanted to advise you that our company's Board of Directors has adopted a
Confidential Voting Policy similar to the one which you proposed. A copy of that
policy is attached for your review.
In your letter you indicate that you would withdraw your proposal from
consideration by shareholders if such a proposal is adopted as corporate policy.
By this letter, I am requesting your agreement to withdraw your proposal. Please
confirm that you will do so, and that it will not be necessary to include this
in our upcoming Proxy Statement. Thank you in advance for your cooperation.
Very truly yours,
JAO:js
Enclosure
[APPENDIX]
CONFIDENTIAL VOTING POLICY
Shareholder proxies, ballots and voting materials that identify the votes of
specific shareholders shall be kept confidential and will not be disclosed to
the Company, its directors, officers and employees except (i) in the case of
communications intended for management, (ii) in the event of certain contested
matters, including proxy contests, or (iii) as required by law. Votes will be
received and tabulated by independent tabulators (which can be Company's
transfer agent) and summaries of the tabulation will be provided to management
and publicly announced at the meeting of shareholders to which such vote totals
relate. Certain outside agents, such as those serving as proxy solicitors, who
have agreed to comply with this policy, may be permitted access to proxies and
ballots to facilitate their participation in soliciting proxies and conducting
the meeting. The agents may notify the Company if a shareholder has failed to
vote so that the shareholder may be reminded and requested to do so.
[APPENDIX]
June 21, 1999
VIA FAX AND U.S. MAIL
Daniel L. Jorndt
President, Director & CEO
Walgreen Company
200 Wilmot Road
Deerfield, IL 60015-4616
Dear Mr. Jorndt:
On behalf of the Board of Trustees of the Pension Benefit Fund ("Fund") I hereby
submit the enclosed shareholder proposal for inclusion in the Walgreen Company
("Company") proxy statement to be circulated to Corporation Shareholders in
conjunction with the next Annual Meeting of Shareholders in 1999. The proposal
relates to the Company's "Confidential Voting Policy" and is submitted under
Rule 14(a)-8 (Proposals of Security Holders) of the U.S. Securities and Exchange
Commission's Proxy Guidelines.
The Fund is a beneficial holder of 25,462 shares of Walgreen Company common
stock. The Fund has held the requisite number of shares required under Rule
14a-8(a)(1) for more than a year. The Fund intends to hold the shares through
the date of the company's 1999 Annual Meeting of Shareholders. The record holder
of the stock will provide the appropriate verification of the Fund's beneficial
ownership by separate letter.
Should you decide to adopt the provisions of the proposal as corporate policy,
we will ask that the proposal be withdrawn from consideration at the annual
meeting.
Either the undersigned or a designated representative will present the proposal
for consideration at the Annual Meeting of the Shareholders.
Sincerely yours,
Edwin D. Hill
Trustee
EDH/yl
Enclosure
[STAFF REPLY LETTER]
November 2, 1999
Response of the Office of Chief Counsel
Division of Corporation Finance
Re: Walgreen Co.
Incoming letter dated September 30, 1999
The proposal recommends that the board take the steps necessary to adopt and
implement a policy of confidential voting, including specified provisions, at
all meetings of its stockholders.
We are unable to concur in your view that Walgreen may exclude the proposal
under rule 14a-8(i)(10). Accordingly, we do not believe that Walgreen may omit
the proposal from its proxy materials in reliance on that rule.
We note that Walgreen did not file its statement of objections to including the
proposal in its proxy materials at least 80 calendar days before the date on
which it will file definitive proxy materials as required by rule 14a-8(j).
Noting the circumstances of the delay, we do not waive the 80-day requirement.
Sincerely,
Carolyn Sherman
Special Counsel
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