Company Name: Wal-Mart Stores, Inc.
Public Availability Date: April 3, 2002
Document Sections:
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 24, 2002
Via Overnight Delivery
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Wal-Mart Stores, Inc.Notice of Intent to Omit a Gender Equality Shareholder
Proposal from Proxy Materials Pursuant to Rule 14a-8 Promulgated under the
Securities Exchange Act of 1934, as amended, and Request for No-Action Ruling
Ladies and Gentlemen:
Wal-Mart Stores, Inc., a Delaware corporation ("Wal-Mart," or the "Company")
files this letter under Rule 14a-8(j) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), to notify the Securities and Exchange
Commission (the "Commission") of Wal-Mart's intention to exclude a shareholder
proposal (the "Proposal") from the proxy materials for Wal-Mart's 2002 Annual
Meeting of Shareholders (the "2002 Proxy Materials"). The Proposal was submitted
by Linda Gerson (the "Proponent"). Wal-Mart asks that the staff of the Division
of Corporation Finance of the Commission (the "Staff") not recommend to the
Commission that any enforcement action be taken if Wal-Mart excludes the
Proposal from its 2002 Proxy Materials for the reasons described below. A copy
of the Proposal and related correspondence is attached to this letter as Exhibit
A. In accordance with Rule 14a-8(j), six copies of this letter and its
attachments are enclosed.
Due to the volume of proxy materials that Wal-Mart must produce and distribute
to its shareholders, Wal-Mart plans to commence the printing of its definitive
2002 Proxy Materials on April 5, 2002 so that it may commence mailing the 2002
Proxy Materials by no later than April 12, 2002. Accordingly, we would
appreciate the Staff's prompt advice with respect to this matter.
The Proposal
On December 17, 2001, Wal-Mart received a letter from the Proponent requesting
that the Proposal be included in Wal-Mart's 2002 Proxy Materials. The Proposal
requests that Wal-Mart prepare a report containing the following information:
"1. A statistical review regarding the workforce profile according to gender;
2. Steps the company has taken to remedy the gross disparity between the numbers
of women and men represented in upper level management;
3. The implementation of company-wide policies addressing systemic change in
determination of pay increases, access to management training programs and
promotional opportunities, and workforce diversity initiatives;
4. Plans to report to the American public the steps being taken to combat gender
discrimination in its workforce, as well as compliance with all necessary
policies;
5. Continuing monitoring practices in order to ensure and enforce equal access
to all employees."
Grounds for Exclusion
Wal-Mart intends to omit the Proposal from its 2002 Proxy Materials pursuant to
Rule 14a-8(i) on the grounds that (a) the Proposal deals with substantially the
same subject matter as proposals that have been included in the Company's proxy
materials within the preceding five calendar years and that did not receive the
requisite votes to permit their resubmission; (b) the Proposal relates to
Wal-Mart's ordinary business operations; and (c) in the event the proposal
entitled "Shareholders' Request for the Company's Equal Employment Opportunity
Report" is included in the 2002 Proxy Materials, the Proposal would be
substantially duplicative of a previously submitted proposal.
The Proposal Is Not Eligible for Resubmission (Rule 14a-8(i)(12))
The Proposal requests that Wal-Mart's management prepare a report containing
statistics on the Company's employment of women and descriptions of the
Company's programs and policies for the advancement of female employees.
Proposals dealing with substantially the same subject matter were submitted to
the Company in 1999 and 2000, and Wal-Mart included these proposals in its proxy
materials in each of those years. In 1999 and 2000, the proposals did not
receive sufficient percentages of the total votes cast to cause the Proposal to
be eligible for resubmission for inclusion in the 2002 Proxy Materials.
In 1999 and again in 2000, Wal-Mart included proposals in its proxy materials
that were submitted by the Sisters of Charity of the Incarnate Word as primary
filer and entitled "Glass Ceiling Review" (together, the "1999 and 2000
Proposals"). Copies of the 1999 and 2000 Proposals as they appeared in the
Company's proxy materials are attached to this letter as, respectively, Exhibit
B and Exhibit C. Both the 1999 and 2000 Proposals requested that Wal-Mart
prepare a report responding to recommendations made by the "Glass Ceiling
Commission," which would include information on steps being taken by the Company
and its management to address what the 1999 and 2000 Proposals called the "glass
ceiling" issue. The "glass ceiling" is defined in the 1999 and 2000 Proposals as
"invisible, artificial barriers blocking women and minorities from advancing up
the corporate ladder to management and executive level positions." Specifically,
the 1999 and 2000 Proposals asked for a report containing:
"1. Steps the company has taken to use the Glass Ceiling Commission Report and
management's recommendations flowing from it.
2. Company-wide policies addressing leadership development, employee mentoring,
workforce diversity initiatives and family friendly programs.
3. An explanation of how executive compensation packages and performance
evaluations include executive efforts in breaking the glass ceiling.
4. The top one hundred or one percent of company wage earners broken down by
gender and race."
The 2000 Proposal added an additional request that was not contained in the 1999
Proposal:
"Plans of the CEO and Board to address the glass ceiling issue."
The 1999 Proposal received 4.8% of the total votes cast thereon at Wal-Mart's
1999 annual meeting of shareholders and the 2000 Proposal received 4.9% of the
total votes cast thereon at Wal-Mart's 2000 annual meeting of shareholders, in
each case, not including abstentions or broker non-votes. Therefore, if the
Staff agrees that the Proposal deals with substantially the same subject matter
as the 1999 and 2000 Proposals, then Wal-Mart may exclude the Proposal in
accordance with Rule 14a-8(i)(12).
In adopting current Rule 14a-8(i)(12), the Commission changed the language of
the earlier rule, which had referred to resubmissions of the same proposal, to
refer to resubmissions dealing with substantially the same subject matter. The
Commission did this so that proponents could not avoid the minimum percentage
vote threshold for resubmission "by simply recasting the form of the proposal,
expanding its coverage, or by otherwise changing the language in a manner that
precludes one from saying that the proposal is identical to a prior proposal."
Rel. No. 34-19135 (October 14, 1982). In considering whether a proposal deals
with substantially the same subject matter, the Commission indicated that the
overall substantive concern raised by the proposal is the essential factor,
rather than any specific language or proposed actions. Rel. No. 34-20091 (August
18, 1983). The Staff has followed this interpretation on numerous occasions. In
Chevron Corp. (March 4, 1999), the proponent attempted to submit a proposal
asking the board of directors to issue a report on Chevron's code of business
conduct with respect to human rights and environmental responsibility. Although
the proposals were worded differently and asked the board of directors to take
different actions, the Staff found that the proposals, "when viewed together
with their supporting statements, all appear to focus on Chevron's operations in
Nigeria." The following are additional examples of no-action requests that were
granted by the Staff based on Rule 14a-8(i)(12) where the proposals were not
identical in either form or substance, or both, but were found to deal with
substantially the same subject matter: General Electric Co. (January 29, 1999)
(the proposals "when viewed together with their supporting statements, appear to
focus on decommissioning reactors and halting General Electric's promotion of
nuclear power"); Eastman Chemical Co. (March 27, 1998); AT&T Corporation
(February 17, 1998); Eastern Chemical Co. (February 28, 1997); Great Lakes
Chemical Corporation (February 22, 1996); Gannett Co., Inc. (February 12, 1996);
Bristol-Myers Squibb Co. (February 6, 1996); United Technologies Corp. (January
11, 1995); A.O. Smith Corp. (December 22, 1994); American Brands, Inc. (February
10, 1994); Minnesota Mining and Manufacturing Co. (January 21, 1994);
International Paper Co. (December 22, 1993); The Gillette Company (February 25,
1993); American Brands, Inc. (February 10, 1993); Kennametal, Inc. (August 24,
1992); The Interpublic Group of Companies, Inc. (April 3, 1992); and General
Electric Co. (January 14, 1986).
Although the wording of the Proposal is somewhat different from that of both the
1999 and 2000 Proposals, the subject matter is substantially the same.
All three proposals seek data on the Company's current employment of women
broken down by gender. See (1) in the Proposal, (4) in the 1999 Proposal and (5)
in the 2000 Proposal. The 1999 and 2000 Proposals also seek information on
minorities, but this change in scope is not sufficient to remove the Proposal
from exclusion under Rule 14a-8(i)(12). See General Motors Corp. (March 18,
1999), where the Staff concurred with General Motors that it could exclude the
proposal under Rule 14a-8(i)(12)(ii). In that instance, the 1994 and 1998
proposals submitted to GM by the proponent dealt with slave labor in the Soviet
Union and China, while the 1999 proposal covered only slave labor in China.
Thus, the proponent's attempt to modify the proposal sufficiently to escape
exclusion under Rule 14a-8(i)(12) by limiting its scope was not successful.
All three proposals seek a description of the Company's policies and programs
to increase numbers of women in responsible positions. See (2) and (3) in the
Proposal, (2) in the 1999 Proposal and (3) in the 2000 Proposal.
The main substantive difference between the Proposal and the 1999 and 2000
Proposals is that the Proposal seeks a description of how the Company intends to
report to the public the steps being taken to combat gender discrimination in
its workforce, and a report on monitoring practices, while the 1999 and 2000
Proposals seek an explanation of how executive compensation packages and
performance evaluations include executive efforts in breaking the glass ceiling.
Wal-Mart believes that this difference is no more than "recasting the form of
the proposal, expanding its coverage, or ... otherwise changing the language in
a manner that precludes one from saying that the proposal is identical to a
prior proposal." Rel. No. 34-19135. The Proposal deals with substantially the
same subject matter, as illustrated above, with a few differing details. This is
precisely the situation that the Commission intended to address when it amended
Rule 14a-8(i)(12), as is clear from the Commission's observation that "contrary
to the rule's stated objective, security holders of a number of issuers are
being called upon to vote over and over again on issues in which they have shown
little interest." Rel. No. 34-19135.
As the Proposal deals with substantially the same subject matter as proposals
that have been included in the Company's proxy materials within the preceding
five calendar years and did not receive the requisite votes to permit their
resubmission, Wal-Mart has concluded that it may omit the Proposal from its 2002
Proxy Materials in accordance with Rule 14a-8(i)(12).
The Proposal Relates to Wal-Mart's Ordinary Business Operations (Rule
14a-8(i)(7))
Under Rule 14a-8(i)(7), a proposal may be omitted from a registrant's proxy
statement if such proposal "deals with a matter relating to the company's
ordinary business operations." In Exchange Act Release No 40018 (May 21, 1998),
the Commission noted that the policy underlying the ordinary business exclusion
rests on two central policy considerations. The first is that "certain tasks are
so fundamental to management's ability to run a company on a day-to-day basis
that they could not, as a practical matter, be subject to direct shareholder
oversight." The second relates to the degree to which the proposal seeks to
"micro-manage" the company by probing too deeply into matters of a complex
nature upon which shareholders, as a group, would not be in a position to make
an informed judgment.
The Proposal violates both of these policy considerations. By requesting
information on Wal-Mart's internal employment policies and statistics, the
Proposal seeks to interfere in the Company's management of its workforce. In
Release No. 40018, the Commission stated that management of the workforce is one
example of a task that is fundamental to management's ability to run a company.
Additionally, the intended effect of the Proposal is the micromanagement of the
Company's employment practices by the shareholders. The Staff has agreed
repeatedly that proposals requesting the preparation of reports addressing
diversity issues, such as equal opportunity and affirmative action, relate to
employment matters and therefore relate to a company ordinary business
operations. See, e.g., The Home Depot (February 24, 1998) (request that company
prepare a report on its affirmative action policies and programs); AT&T
Corporation (February 17, 1998) (request that company prepare a report on its
affirmative action programs); Rite Aid Corp. (January 26, 1998) (request that
company prepare a report on its affirmative action policies and programs);
ConAgra, Inc. (July 10, 1997) (request that company prepare a report on its
affirmative action policies and programs); GTE Corporation (January 8, 1997)
(request that company prepare a report on its affirmative action policies and
programs); and Wal-Mart Stores, Inc. (March 12, 1996) (request that board of
directors prepare a report on glass ceiling issues). Furthermore, the Proposal
relates to litigation strategy, as is evidenced by its references in the
Supporting Statement to "serious questions of liability" and "all the lawsuits
that have been filed recently." Proposals related to litigation strategy have
been found to be excludable by the Staff under Rule 14a-8(i)(7).
As the Proposal deals with a matter that involves Wal-Mart's ordinary business
operations and is thus not a matter that should be subject to direct shareholder
control, Wal-Mart has concluded that it may omit the Proposal from its 2002
Proxy Materials in accordance with Rule 14a-8(i)(7).
The Proposal Substantially Duplicates a Previously Submitted Proposal (Rule
14a-8(i)(11)
Under Rule 14a-8(i)(11), a proposal may be excluded if it is substantially
duplicative of one previously submitted to a registrant by another proponent
that is to be included in the registrant's proxy materials. On December 7, 2001,
Wal-Mart received the first of five individual letters from the proponents of a
proposal entitled "Shareholders' Request for the Company's Equal Employment
Opportunity Report" (the "Prior Proposal") requesting that the Prior Proposal be
included in Wal-Mart's 2002 Proxy Materials. A copy of the Prior Proposal, along
with all related correspondence, is attached to this letter as Exhibit D.
Wal-Mart has requested that the Staff not recommend to the Commission that any
enforcement action be taken if Wal-Mart excludes the Prior Proposal from its
2002 Proxy Materials; however, if Wal-Mart's request for no-action with respect
to the Prior Proposal is not granted, and if the Staff does not find the
Proposal to be excludable on either of the other grounds set forth in this
letter, then Wal-Mart respectfully requests that the Staff grant no-action on
the exclusion of the Proposal under Rule 14a-8(i)(11).
The Prior Proposal requests that Wal-Mart prepare a report containing the
following information:
"1. A chart identifying employees according to their sex and race in each of the
nine major EEOC defined job categories for 1999, 2000, 2001 listing numbers in
each category.
2. A summary description of any Affirmative Action policies and programs to
improve performances, including job categories where women and minorities are
underutilized.
3. A description of any policies and programs oriented specifically toward
increasing the number of managers who are qualified females and/or belong to
ethnic minorities.
4. A general description of how the company publicizes our company's Affirmative
Action policies and programs to merchandise suppliers and service providers."
Although the wording of the Proposal is slightly different from that of the
Prior Proposal, the Proposal is substantially duplicative of the Prior Proposal
because the subject matter of the two proposals is substantially the same.
Both proposals seek data on the Company's current employment of women broken
down by "gender" (the Proposal) or "sex" (the Prior Proposal). See (1) in the
Proposal and (1) in the Prior Proposal. The Prior Proposal also seeks
information on minorities, but this change in scope should not be sufficient to
remove the Proposal from exclusion under Rule 14a-8(i)(11), as it is not
sufficient to remove the Proposal from exclusion under Rule 14a-8(i)(12). See
General Motors Corp. (March 18, 1999), where the Staff concurred with General
Motors that it could exclude the proposal under Rule 14a-8(i)(12)(ii). In that
instance, the 1994 and 1998 proposals submitted to GM by the proponent dealt
with slave labor in the Soviet Union and China, while the 1999 proposal covered
only slave labor in China. Thus, the proponent's attempt to modify the proposal
sufficiently to escape exclusion under Rule 14a-8(i)(12) by limiting its scope
was not successful.
Both proposals seek a description of the Company's policies and programs to
increase numbers of women in responsible positions. See (2) and (3) of the
Proposal and the Prior Proposal.
The main substantive difference between the two proposals is that the Proposal
seeks a description of how the Company intends to report to the public the steps
being taken to combat gender discrimination in its workforce, and a report on
monitoring practices, while the Prior Proposal seeks a description of how the
Company publicizes its affirmative action policies to its suppliers. Wal-Mart
believes that this difference is insufficient to remove the Proposal from
excludability under Rule 14a-8(i)(11). See, e.g. General Electric Co. (February
9, 1994), in which a proposal requesting that the board of directors review the
implementation of NBC's Program Standards and issue a report to shareholders
concerning violence on NBC programs and a proposal requesting that a committee
of directors be formed to review violence on NBC programs were found to be
substantially duplicative under Rule 14a-8(i)(11).
As the Proposal is substantially duplicative of the Prior Proposal, if Wal-Mart
is required to include the Prior Proposal in its 2002 Proxy Materials, Wal-Mart
has concluded that it may omit the Proposal from its 2002 Proxy Materials in
accordance with Rule 14a-8(i)(11).
Conclusion
Based on the foregoing representations, Wal-Mart hereby requests that the Staff
confirm that it will not recommend any enforcement action if the Proposal is
excluded from Wal-Mart's 2002 Proxy Materials. Should you disagree with the
conclusions set forth herein, we would appreciate the opportunity to confer with
you prior to the issuance of the Staff's response. Moreover, Wal-Mart reserves
the right to submit to the Staff additional bases upon which the Proposal may
properly be excluded from the 2002 Proxy Materials.
By copy of this letter, the Proponent is being notified of Wal-Mart's intention
to omit the Proposal from its 2002 Proxy Materials.
Please acknowledge receipt of this letter by date-stamping the accompanying
acknowledgment copy and returning it to the undersigned in the self-addressed
postage pre-paid envelope provided. Please call the undersigned at (479)
277-2345 if you require additional information or wish to discuss this
submission further.
Thank you for your consideration.
Respectfully Submitted,
/s/
Allison D. Garrett
Vice President and Assistant General Counsel
Wal-Mart Stores, Inc.
cc: Linda Gerson
Enclosures
[APPENDIX]
GENDER EQUALITY
WAL-MART STORES
Whereas:
The American public is increasingly concerned with discrepancies in the
workforce between women and men regarding pay and opportunity for advancement.
Wal-Mart's current retail workforce is over 72% female yet only one-third of
the management positions are held by women as claimed in Wal-Mart's 1999 filings
with the U.S. Equal Employment Opportunity Commission (EEOC).
The number of women in management positions at Wal-Mart today is at a
substantially lower level than that of Wal-Mart's competitors (including retail
stores Kmart, Target, and Ames) in 1975. Wal-Mart's top 20 competitors have an
overall percentage of total female employees comparable to that of Wal-Mart, yet
women working for our company's competitors comprise over 56% of management.
Further, women comprise less than 10% of all Store Managers and approximately 4%
of all District Managers. This information was obtained from a suit filed in
June 2001 in a U.S. District Court in San Francisco.
There is only one woman among Wal-Mart's 21 executive officers, according to
information obtained from the company's website as of December 2001.
Be It Resolved: That shareholders request that the Board of Directors prepare a
report to shareholders with the results of a review and recommended changes in
practice within four months from the date of the annual meeting, (at reasonable
expense and excluding any proprietary information). This report shall include:
(1) A statistical review regarding the workforce profile according to gender;
(2) Steps the company has taken to remedy the gross disparity between the
numbers of women and men represented in upper level management;
(3) The implementation of company-wide policies addressing systemic change in
determination of pay increases, access to management training programs and
promotional opportunities, and workforce diversity initiatives;
(4) Plans to report to the American public the steps being taken to combat
gender discrimination in its workforce, as well as compliance with all necessary
policies;
(5) Continuing monitoring practices in order to ensure and enforce equal access
to all employees.
Supporting Statement:
We believe Wal-Mart, as the world's largest retailer and the nation's largest
private employer, has a responsibility to the American workforce and the
American people to treat all its employees fairly and with equal opportunity for
advancement. In order to continue to remain competitive, Wal-Mart's upper level
management positions should reflect its workforce as a whole. Additionally, the
disparity between male and female employees at Wal-Mart regarding unequal pay
and promotional opportunities may raise serious questions of liability and
prevent our company from competing against our major retail competitors in the
future. Given all the lawsuits that have been filed recently, this condition
could lead to a reduction in shareholder value.
[INQUIRY LETTER]
January 29, 2002
Via Overnight Delivery
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Wal-Mart Stores, Inc.; Correction to No-Action Request dated January 24,
2002 Relating to a Gender Equality Shareholder Proposal Submitted by Linda
Gerson (the "Proponent")
Ladies and Gentlemen:
On January 24, 2002, Wal-Mart filed a request with the Commission regarding the
omission of a shareholder proposal submitted by the Proponent from Wal-Mart's
proxy materials for its 2002 Annual Meeting of Shareholders. The second
paragraph of the letter states, in pertinent part: "Due to the volume of proxy
materials that Wal-Mart must produce and distribute to its shareholders,
Wal-Mart plans to commence the printing of its definitive 2002 Proxy Materials
on April 5, 2002 so that it may commence mailing the 2002 Proxy Materials by no
later than April 12, 2002." The cited sentence contains a typographical error.
Wal-Mart intends to commence mailing the proxy materials for its 2002 Annual
Meeting of Shareholders by no later than April 15, 2002, and not April 12, 2002.
By copy of this letter, Wal-Mart is notifying the Proponent of its correction of
the typographical error contained in the no-action request.
Please call the undersigned at (479) 277-2345 if you require additional
information or wish to discuss this submission further. We apologize for any
inconvenience this error may have caused the Staff or the Proponent. Thank you
for your consideration.
Respectfully Submitted,
/s/
Allison D. Garrett
Vice President and Assistant General Counsel
Wal-Mart Stores, Inc.
cc: Linda Gerson
[INQUIRY LETTER]
March 14, 2002
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Wal-Mart Stores, Inc.; Response to Letter from Harrington Investments, Inc.
Regarding No-Action Request dated January 24, 2002 Relating to a Gender Equality
Shareholder Proposal Submitted by Linda Gerson (the "Proponent")
Ladies and Gentlemen:
On January 24, 2002, Wal-Mart Stores, Inc. ("Wal-Mart," or the "Company") filed
a no-action request with the Securities and Exchange Commission regarding the
proposed omission of a shareholder proposal submitted by the Proponent (the
"Proposal") from Wal-Mart's proxy materials for its 2002 Annual Meeting of
Shareholders (the "No-Action Request"). On March 8, 2002, Wal-Mart received a
copy of a letter from John C. Harrington of Harrington Investments, Inc. to the
Commission (the "Proponent Letter")** in response to Wal-Mart's no-action
request. Wal-Mart is submitting this letter only to respond to certain points
set forth in the Proponent Letter; therefore, this letter does not restate the
contents of, and should be read in conjunction with, the No-Action Request.
Rule 14a-8(i)(12)
In the first and second full paragraphs of the second page of the Proponent
Letter, Mr. Harrington attempts to demonstrate that the Proposal is eligible for
resubmission to Wal-Mart because it does not deal with substantially the same
subject matter as proposals that Wal-Mart included in its proxy materials in
1999 and 2000 (the "1999 and 2000 Proposals"). Mr. Harrington argues that the
difference between the Proposal and the 1999 and 2000 Proposals is that the
Proposal is "not requesting a response to a general report but rather specific
accountability by the Company to shareholders regarding issues of gender
discrimination in its management and its possible effect on the economic
efficiency of Wal-Mart Stores." If the 1999 and 2000 Proposals are compared with
the stated purpose of the Proposal, it is obvious that the Proposal deals with
substantially the same subject matter as the 1999 and 2000 Proposals. The 1999
and 2000 Proposals sought the same type of information that Mr. Harrington
describes the Proposal as seeking: information relating to specific
accountability by the Company regarding gender discrimination in the Company's
management. Specifically, all three proposals seek to cause Wal-Mart to prepare
a report addressing Company-wide policies to eliminate any pay discrepancy
between men and women, and to train and promote women into management positions.
The mere fact that the Proposal does not refer to the "Glass Ceiling Initiative
Report" by name should not permit the Proponent to resubmit the Proposal to
Wal-Mart when the Proposal deals with substantially the same subject matter as
proposals that have been included in the Company's proxy materials for its
annual meetings of shareholders in two of the past three years.
For the above reasons and for all of the reasons expressed in the No-Action
Request, the Proposal is an invalid resubmission of two previously included
proposals (the 1999 and 2000 Proposals), the latter of which received less than
the required minimum percentage of the shareholder vote to require that the
Proposal be included in the proxy materials for Wal-Mart's 2002 Annual Meeting
of Shareholders. The Proposal is therefore excludable in accordance with Rule
14a-8(i)(12). The overall substantive concern addressed by the Proposal is
substantially the same as that addressed by the 1999 and 2000 Proposals and,
therefore, the Proposal violates the principle set forth in Release No. 34-19135
(Oct. 14, 1982) that proponents may not avoid the resubmission thresholds of
Rule 14a-8(i)(12) "by simply recasting the form of the proposal, expanding its
coverage, or by otherwise changing the language in a manner that precludes one
from saying that the proposal is identical to a prior proposal." For this
reason, as fully discussed in the No-Action Request, Wal-Mart believes that the
Proposal may be excluded under Rule 14a-8(i)(12).
Rule 14a-8(i)(7)
In the first full paragraph of the third page of the Proponent Letter, Mr.
Harrington references the amendments to Rule 14a-8 that are set forth in Release
No. 34-40018 (May 21, 1998) (the "Release"), in an effort to imply that these
amendments lead to a conclusion that the Proposal is not excludable on ordinary
business grounds. The portion of the Release that addresses current Rule
14a-8(i)(7) explicitly reverses the position the Staff had taken in Cracker
Barrel Old Country Stores, Inc. (Oct. 13, 1992). In Cracker Barrel, the Staff
had indicated that all employment-related shareholder proposals, even those
raising social policy issues, would be excludable on ordinary business grounds.
The Release changed that position, as it stated that the Staff would "return to
its case-by-case approach that prevailed prior to the Cracker Barrel no-action
letter." The Release went on to say that "there is no bright-line test to
determine when employment-related shareholder proposals raising social issues
fall within the scope of the `ordinary business' exclusion," and further stated
that the Staff will "make reasoned distinctions in deciding whether to furnish
`no-action' relief." The Release does not indicate that the "ordinary business"
ground will be inapplicable to any and all employment-related shareholder
proposals purporting to raise social policy issues. Wal-Mart did not argue in
the No-Action Request that the Proposal should be excludable because all
employment-related shareholder proposals are excludable. Rather, Wal-Mart argued
that the Proposal should be excludable when analyzed individually in accordance
with the guidance provided by the Release.
In the second full paragraph of the third page of the Proponent Letter, Mr.
Harrington refers to Amalgamated Clothing and Textile Workers Union v. Wal-Mart
Stores, Inc., 821 F. Supp. 877 (S.D.N.Y. 1993), asserting that this decision
governs Wal-Mart's treatment of the Proposal. This assertion is inaccurate. The
facts of the Amalgamated case were as follows: The proposal submitted to
Wal-Mart by the proponents was an equal employment opportunity proposal. In
accordance with its Cracker Barrel position, the Staff granted Wal-Mart
no-action, permitting it to exclude the proposal. The proponents sought and
obtained an injunction to force Wal-Mart to include the proposal in its proxy
materials. The basis for the court's decision to grant the injunction was that
the Staff's Cracker Barrel standard "sharply deviate[d] from the standard
articulated in the 1976 Interpretive Release," which was the release that then
governed the interpretation of the "ordinary business" ground for exclusion. The
Release supersedes the interpretive guidance provided by the 1976 Interpretive
Release. Therefore, if Amalgamated were decided today, it is not at all clear
that a court would reach the same holding it reached in 1993, since it would
defer to the Release, which indicates that employment-related proposals must be
analyzed by the Staff on a case-by-case basis.
Rule 14a-8(i)(11)
In the first full paragraph of the fourth page of the Proponent Letter, Mr.
Harrington asserts that the Proposal does not substantially duplicate the
proposal entitled "Shareholders Request for the Company's Equal Employment
Opportunity Report" (the "Prior Proposal"). The fact is that the Proposal and
the Prior Proposal request a great deal of overlapping information. If Wal-Mart
were to include both the Proposal and the Prior Proposal in its proxy materials
for its 2002 Annual Meeting of Shareholders, and both were adopted by the
shareholders, Wal-Mart would be forced to make extremely duplicative efforts to
comply with both proposals. Wal-Mart would be forced to gather and disseminate
substantially the same information twice, in slightly different formats, since
the Proposal and the Prior Proposal request that the Company provide
substantially the same information in slightly different formats. This would be
a waste of Company resources, and would violate the intent of Rule 14a-8(i)(11).
Wal-Mart is sending a copy of this letter to the Proponent concurrently with its
submission to the Staff. Please call the undersigned at (479) 277-2345 if you
require additional information or wish to discuss this submission further. Thank
you for your consideration.
Respectfully Submitted,
/s/
Allison D. Garrett
Vice President and Assistant General Counsel
Wal-Mart Stores, Inc.
cc: Linda Gerson
-----FOOTNOTES-----
** This letter was not made publicly available by the SEC.
[STAFF REPLY LETTER]
April 3, 2002
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Wal-Mart Stores, Inc.
Incoming letter dated January 24, 2002
The proposal requests that the Wal-Mart prepare a report on gender equality in
employment at Wal-Mart.
There appears to be some basis for your view that Wal-Mart may exclude the
proposal under rule 14a-8(i)(11), as substantially duplicative of the previously
received proposal that you reference in your letter and will include in
Wal-Mart's proxy materials. Accordingly, we will not recommend enforcement
action to the Commission if Wal-Mart omits the proposal from its proxy materials
in reliance on rule 14a-8(i)(11). In reaching this position, we have not found
it necessary to address the alternative bases for omission upon which Wal-Mart
relies.
Sincerely,
/s/
Grace K. Lee
Attorney-Advisor
|
