Company Name: Phillips-Van Heusen Corp.
Public Availability Date: April 21, 2000
Document Sections:
LETTER OF INQUIRY 1
APPENDIX
APPENDIX
LETTER OF INQUIRY 2
STAFF REPLY LETTER
[LETTER OF INQUIRY 1]
March 31, 2000
VIA COURIER
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-1004
Re: Phillips-Van Heusen Corporation
Ladies and Gentlemen:
Phillips-Van Heusen Corporation (the "Company") has received a shareholder
proposal (the "Proposal") from Robert D. Morse by letter dated July 27, 1999. I
hereby give notice of the Company's intention to omit the Proposal from its
proxy statement and proxy for its Annual Meeting of Stockholders to be held on
June 13, 2000 (together, the "2000 Proxy Materials") pursuant to Rule 14a-8(j)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). I
respectfully request confirmation from the Staff of the Division of Corporation
Finance that no enforcement action will be recommended to the Securities and
Exchange Commission if the Company omits the Proposal from the 2000 Proxy
Materials.
Six copies of the Proposal and the supporting statement submitted by Mr. Morse
(the "Supporting Statement"), as well as six copies of this letter, are included
herewith. I am concurrently forwarding a copy of this letter to Mr. Morse, who
has been given prior notice of the Company's intention to omit the Proposal.
The Proposal is "that the Officers and Directors consider the discontinuance of
all bonuses immediately, and options, rights, SAR's, etc., after termination of
any existing programs for top management ... [and the] discontinuance
of`Severance Contracts' ...," as more fully set forth in the copies of the
Proposal enclosed with this letter.
The Company believes that the Proposal may be omitted from the 2000 Proxy
Materials pursuant to Rule 14a-8(i)(9) under the Exchange Act because it is in
direct conflict with proposals to be submitted by the Company to its
stockholders.
Rule 14a-8(i)(9) provides that a company may exclude a shareholder proposal if
"the proposal directly conflicts with one of the company's own proposals to be
submitted to shareholders at the same meeting." It is well-established under
both Rule 14a-8(i)(9) and its predecessor, Rule 14a-8(c)(9), that a company may
omit a shareholder proposal if there is some basis for concluding that an
affirmative vote on both the shareholder's proposal and the company's proposal
would lead to an inconsistent, ambiguous or inconclusive mandate from the
company's shareholders. See, e.g., U.S. Bancorp (February 27, 2000); Z-Seven
Fund, Inc. (November 3, 1999); BankBoston Corporation (June 7, 1999);
Heilig-Meyers Company (April 12, 1999); Mattel, Inc. (March 4, 1999); General
Electric Company (December 28, 1995); The Gabelli Equity Trust (March 15, 1993);
Fitchburg Gas and Electric Light Company (July 30, 1991); and The Firestone Tire
and Rubber Company (February 21, 1979).
The Company will submit three compensation plansa performance incentive bonus
plan, a long-term incentive plan and a stock option planat the 2000 Annual
Meeting. The Proposal seeks a discontinuance of all compensation plans.
Therefore, the Proposal directly conflicts with the Company's proposals. The
Staff has specifically considered the application of Rule 14a-8(i)(9) to a
stockholder proposal relating to compensation when the company was proposing a
compensation plan and allowed exclusion of the stockholder proposal, see, e.g.,
Heilig-Meyers Company (April 12, 1999) and the no-action letters cited therein.
In fact, the Staff recently permitted the exclusion of substantially the same
proposal as the Proposal, as offered by the same proponent, where, as is the
case here, the company involved intended to submit a long-term incentive plan to
its stockholders for approval. Mattel, Inc. (March 4, 1999). The Proposal,
therefore, should be excluded to avoid presenting stockholders with conflicting
alternatives which, if approved along with any of the Company's proposals, would
present the Company's Board and management with inconsistent mandates. See,
BankBoston Corporation (June 7, 1999).
The Staff should waive application of the 80-day period set forth in Rule
14a-8(j) in allowing the Company to exclude the Proposal from the 2000 Proxy
Materials. The Compensation Committee of the Company's Board of Directors
generally addresses compensation issues in the first two quarters of the
Company's fiscal year, beginning after year-end numbers are available for the
prior fiscal year (in early to mid March). The timing of this process is to
permit the Committee to determine qualification of executive officers for awards
for the prior year under existing performance-based plans and to establish
performance criteria for the year just begun, which are generally based in part
on the Company's performance in the prior fiscal year. This schedule will not
allow any decisions regarding the submission by the Company of
compensation-related proposals to stockholders within the 80-day period. The
mere submission by a stockholder of a proposal regarding compensation should not
force the Company's Board of Directors and the Board's Compensation Committee to
accelerate its consideration of the compensation of the Company's executive
officers when the present schedule is designed to enable the Board and Committee
to consider such matters when all information necessary for the development of a
comprehensive compensation program are available. Cf. Cisco Systems, Inc.
(August 26, 1999) (Company delayed response while it considered proposal to
determine its merit); E.I. du Pont de Nemours and Company (March 22, 1999)
(Company delayed seeking exclusion until it completed a process that resulted in
its determination that there was basis for exclusion).
It is important to note that the plans being submitted to the stockholders by
the Company are not "new" plans, in that the Company had similar plans in effect
for the prior fiscal year and, other than with respect to the LTIP, for at least
several years before that. However, other than with respect to the option plan,
the plans had been adopted on an annual basis and had not been submitted to
stockholders for approval. A determination was made this year that it would be
in the best interests of the Company to submit the LTIP and bonus plan for
stockholder approval as well as submit a new stock option plan for approval (as
opposed to other alternatives considered, which included leaving the present
option plan in place and unchanged). Since the Company's general compensation
program for its executive officers was not being altered, there was no basis to
know that the Committee or Board would approve any plans for submission to the
Company's stockholders (as opposed to adopting them as they had previously)
until the matters were properly considered and the decision to seek such
approval was made. Furthermore, since the proposed plans are, in essence,
continuations of existing plans, it cannot be stated that these plans were
developed to exclude the Proposal. Similarly, it cannot be stated that the
decision to seek stockholder approval was motivated by the desire to exclude the
Proposal. The same proponent submitted substantially the same proposal to the
Company last year and it was soundly defeated, receiving only approximately 4%
of the vote.
The Company attempted to contact Mr. Morse to discuss its decision, rather than
seek the approval now sought in this letter, because Mr. Morse had indicated in
his correspondence what appeared to be a lack of desire to become involved in a
dispute over his submission and a willingness to withdraw the proposal. This was
supported by his complaint that the Company had not discussed with him first the
Company's objection (on other grounds) to last year's proposal and the extreme
lack of support for that proposal. Most of the communications directed to Mr.
Morse detailed the reason for the Company's attempt to contact him. After
several attempts to contact Mr. Morse, he finally contacted the undersigned on
the day prior to the date of this letter and indicated that he was unwilling to
withdraw his proposal. (Mr. Morse was unable or unwilling to discuss the meaning
of his overture in the letter accompanying the Proposal wherein he sought to
avoid recourse by the Company to the Commission to exclude the Proposal.) Mr.
Morse's sole basis for his position was that he had notified the Company first
and, therefore, had an incontestable "prior right" to have the Proposal included
in the 2000 Proxy Materials. He further stated that he was tired of companies
making proposals just to exclude his proposals. There is no basis for Mr. Morse
to claim a priority right for the Proposal. In fact, the underlying purpose of
14a-8(i)(9) would appear to be to give deference to a company's proposal when
and if a conflict arises with a shareholder proposal. See, Z-Seven Fund, Inc.
(November 3, 1999). As indicated above, there is also no basis for him to claim
that the Company is making its proposals to exclude the Proposal.
Finally, Mr. Morse would not be prejudiced by the exclusion of the Proposal. The
defeat of any or all of the Company's proposals to adopt its plans arguably
would accomplish Mr. Morse's intentions and, therefore, the Proposal would not
provide the Company's stockholders with a greater opportunity to express their
views and desires regarding compensation than the Company's proposals. See,
Z-Seven Fund, Inc. (November 3, 1999). In addition, Mr. Morse would be eligible
to resubmit the Proposal next year (subject to the proxy rules) if he is
dissatisfied with the vote on the Company's proposals. This option would not be
available to him if the Proposal is defeated as badly this year as it was last.
For the reasons and on the basis of the authorities cited above, the Company
respectfully requests the Staff's concurrence with the Company's view that the
Proposal can be excluded from the 2000 Proxy Materials and that the 80-day
requirement set forth in Rule 14a-8(j) should be waived. Insofar as such waiver
is requested, please be advised that the Company intends to file the 2000 Proxy
Materials with the Commission on May 1, 2000. Expedited treatment of the
foregoing request would, therefore, be greatly appreciated. If you disagree with
the Company's conclusions, I request the opportunity to confer with you prior to
the issuance of your position.
Kindly acknowledge receipt of this letter by stamping the enclosed copy of this
letter and returning it to the undersigned in the envelope provided.
Please telephone me at (212) 381-3509 if you have any questions.
Very truly yours,
Mark D. Fischer
[APPENDIX]
July 27, 1999
Phillips-VanHeusen Corp.
1290 Avenue of the Americas
New York, NY 10104
Office of the Secretary:
Dear Secretary:
I believe I am eligible to present the enclosed proxy for printing in Year 2000.
I would also like to note the following:
I would appreciate hearing from the Company if there are any objections, prior
to contacting the SEC, as a way to save time and MONEY. I am conservative
Some companies have been printing the amount of my holdings, even though I do
not disclose it. This is a private matter, of no use other than so-called
"embarrassment" when compared with Management holdings. Likewise, some ask for
proof of ownership, and I wonder why they can't refer to the Company's
Registration Agent, through a phone call, usually free.
Encl: Proxy Material
Rhymes for stress relief
Sincerely,
[APPENDIX]
July 29, 1999
PROXY PROPOSAL FOR YEAR 2000
Proposal to: Phillips-VanHeusen Corporation
I, Robert D. Morse, of 212 Highland Avenue, Moorestown, NJ. 08057, being the
owner of $2000.00 or more of Company stock, held over one year and to be held
beyond the meeting date, present the following Proxy Proposal:
I propose that the Officers and Directors consider the discontinuance of all
bonuses immediately, and options, rights, SAR's, etc., after termination of any
existing programs for top management. I must also include discontinuance request
of "Severance Contracts", which overpay a person no longer satisfactory to the
Company, just to leave!
This does not include any programs for employees.
REASONS:
Management and Directors are compensated enough to buy on open market, just as
You and I, if they are so motivated.
Management is already well paid with base pay, life insurance, retirement plans,
paid vacations, free use of vehicles and other perks.
Options, rights, SAR's, are available elsewhere, and a higher offer would induce
transfers, not necessarily "attain and hold" qualified persons.
Who writes the objections to my proposal? Is it not the same persons who
nominate and pay the directors who in turn will provide Management these
exorbitant extras above a good base salary? Shareowners should start reading and
realizing that these persons are not providing them entertainment on an
individual choice basis, as do athletes, movie stars, and similar able
performers.
"Align management with shareowners" is a repeated ploy or "line" to lull us as
to continually increasing their take of our assets. Do we get any options to
purchase at previous [presumed} lower rates, expecting prices to increase?
After taxes, present base salaries are way above the $200,000.00 our President
receives plus free lodging, and Management only looks after a Company, not the
USA and some of the world problems. If they filled out a daily work or
production sheet, what would it show?
Please vote "YES" for this proposal,
Thank You,
[LETTER OF INQUIRY 2]
April 9, 2000
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-1004
Re: Phillips-Van Heusen Corporation
Ladies and Gentlemen:
This is my answer to a letter from above Corporation requesting deletion of my
proposal from upcoming proxy material for annual meeting:
The proposal is not in direct conflict as it was entered as stated in their
letter as having a date of July 27, 1999. Now, after an 8 month delay, they come
up with supposed conflicting proposals. This is the third event of this kind, as
Kodak Corporation and Mattel Corporation did likewise and I was excluded
unfairly, It is very easy under this part of the Rule 14-8[J]. etc. to delay
until now and ask for a belated ruling before printing time occurs. I resent
this approach as no copy of purported proposals was submitted either, only "to
be submitted" in the proxy.
None of the quoted other exclusion rulings apply: Quote: Page 2, Paragraph 2,
lines 9-10 [intended to submit] does not imply that such was prepared at the
time.
Likewise, Page 2, Paragraph 3 asks the Staff to waive the 80 day period,
contrary to the Rules. There follows a rambling explanation of the delay, and
that the proposal will be similar to last year's existing Plan. There is no
statement that an existing Plan will expire, necessitating a new request for a
vote on a renewal or otherwise.
Next we have the matter of communication. I have been away and not receiving any
mail. The phone message of March 29 was recorded and noticed by my Son, who in
turn relayed it to me. I returned the call as stated on March 30 and stated I
was not in favor of withdrawing my proposal, which would defeat the purpose of
trying to slow or reduce the outlandish disposal of Company funds over and above
very generous base pay received.
Mr. Fisher is wrong as were others in requesting a phone conference to further
discuss the situation, without including myself as a party to the conference,
which is contrary to SEC procedure. He is also out of order bothering the SEC
with the "only 4% received soundly defeated vote" comment. If this is the
"norm", why be so concerned about a repeated insertion? "One share, one vote" is
not a democratic expression of the will of the majority of stockholders, it is
the wealth of holdings in the hands of a few entities that controls the outcome,
as you can readily ascertain.
Therefor, my proposal is correct and properly presented for publication.
Thank you for your interest,
[STAFF REPLY LETTER]
April 21, 2000
Response of the Office of Chief Counsel
Division of Corporation Finance
Re: Phillips-Van Heusen Corporation
Incoming letter dated March 31, 2000
The proposal relates to the discontinuance of all bonuses immediately, and
options, rights and SARs after termination of any existing programs for top
management, as well as the discontinuance of severance contracts.
There appears to be some basis for your view that Phillips-Van Heusen may
exclude the proposal under rule 14a-8(i)(9). You represent that matter to be
voted on at the upcoming shareholders' meeting include three proposals sponsored
by Phillips-Van Heusen seeking approval of a performance incentive bonus plan, a
long-term incentive plan, and a stock option plan. You have also represented
that these proposals have terms and conditions that conflict with those set
forth in the proposal. You indicate that the proposal and the matters sponsored
by Phillips-Van Heusen present alternative and conflicting decisions for
shareholders and that submitting all four proposals to a vote could provide
inconsistent and ambiguous results. Accordingly, because the proponent's
proposal seeks to discontinue payment of at least some of the types of
compensation covered by the proposed plans, we will not recommend enforcement
action to the Commission if Phillips-Van Heusen omits the proposal from its
proxy materials in reliance on rule 14a-8(i)(9).
We note that Phillips-Van Heusen did not file its statement of objections to
including the proposal 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 grant Phillips-Van Heusen's request that the
80-day requirement be waived.
Sincerely,
Michael Ferraro
Attorney-Advisor
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