Company Name: Kroger Co.
Public Availability Date: April 11, 2003Document Sections: INQUIRY LETTER
APPENDIX
INQUIRY LETTER
STAFF REPLY LETTER [INQUIRY LETTER]
February 18, 2003 Via Airborne Express Office of Chief Counsel Division of Corporation Finance Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20547 RE: Shareholder Proposal of AFSCME Ladies and Gentlemen: Enclosed for filing, pursuant to Rule 14a-8(j) under the Exchange Act, are the
following: A. Six copies of this letter; B. Six copies of a letter dated November 1, 2002, from AFSCME Employees Pension
Plan to The Kroger Co., along with a shareholder proposal (the "Proposal")
(Exhibit A); and C. One additional copy of this letter along with a self-addressed return
envelope for purposes of returning a file-stamped receipt copy of this letter to
the undersigned. The Proposal seeks to amend Kroger's Regulations (Bylaws) to require the Board
of Directors to constitute a committee of shareholders (the "Committee") and to
meet with the Committee, under certain circumstances. Kroger intends to mail to shareholders, on or about May 10, 2003, its definitive
proxy statement and form of proxy (the "Proxy Materials") in connection with its
2003 Annual Meeting. That meeting currently is scheduled to be held on June 26,
2003. Kroger intends to file definitive copies of its Proxy Materials with the
Commission at the same time the Proxy Materials are first mailed to
shareholders. We believe that the Proposal properly may be omitted from the Proxy Materials
pursuant to Rules 14a-8(i)(1), (3), (7), and 14a-9, and Kroger intends to
exclude the Proposal from the Proxy Materials. By a copy of this letter to
AFSCME, we are notifying it of our intentions. To the extent Kroger's reasons
for excluding the Proposal relate to matters of state law, this letter
constitutes the supporting opinion of counsel required by Rule 14a-8(j)(2)(iii).
Please confirm that no enforcement action will be recommended if the Proposal is
excluded. A. The Proposal is properly excludable under Rule 14a-8(i)(7) because it deals
with a matter relating to Kroger's ordinary business operations. The Proposal seeks to legislate to the Board of Directors the manner in which
Kroger deals with its shareholders. Indeed, Kroger routinely discusses with
shareholders, through its Investor Relations and Public Affairs departments,
issues of interest to shareholders. Members of Kroger senior management meet
with shareholders, including the proponent of the prior proposals referred to by
AFSCME in its supporting statement (the "Prior Proposals"), to discuss proposals
and other matters of interest to those shareholders. In Exchange Act Release No.
34-40018, the Commission stated that the application of Rule 14a-8(i)(7)
requires case-by-case analysis, taking into account such factors as the nature
of the proposal and the circumstances of the company at which it is directed. It
is intended to avoid micro-management by shareholders. PG&E Corporation (January
27, 2000); The Walt Disney Company (October 18, 1999); American Home Products
(January 9, 1987). Yet this precisely is what the Proposal seeks to do. By requiring the Board of
Directors to meet with a shareholder Committee to discuss shareholder proposals
regardless of the nature of the proposal and even if the proposal deals with the
ordinary business operations of Kroger, AFSCME legislates, through the use of an
amendment to Kroger's Regulations, micro-management of Kroger by a select group
of shareholders. The Proposal is virtually identical to a proposal submitted last year by AFSCME,
for which Kroger received a no-action letter from the Staff. The Kroger Co.
(March 18, 2002). The Staff concurred with Kroger's belief that the prior year's
proposal could be excluded because it dealt with Kroger's ordinary business
operations. The only difference between last year's proposal and the Proposal is
a provision that would have permitted members of the Committee to discuss "other
issues of interest to the Committee." The modification to this year's Proposal does nothing to cure the prior year's
defect. Although this year's Proposal arguably limits the Committee discussions
to prior shareholder proposals that were not implemented, it does not exclude
prior proposals that may deal with Kroger's ordinary business operations. These
could arise in at least two ways. First, a proposal in a prior year could have
been deemed to be of significant interest at the time of the proposal and yet
ordinary in nature at the subsequent date on which the Committee is required to
be established. Second, Kroger could elect to include a shareholder proposal
that properly is excludable under Rule 14a-8(i)(7), and such inclusion would not
alter the character of the proposal as dealing with ordinary business
operations. The Staff consistently has permitted issuers to exclude proposals relating to
the establishment of committees to review ordinary business matters. Hudson
United Bancorp (January 24, 2003); The Southern Company (January 21, 2003);
E*TRADE Group, Inc. (October 31, 2000); NYNEX Corporation (January 24, 1990);
Mobil Corporation (February 13, 1989). The purpose of the Committee is to
discuss with the Board of Directors shareholder proposals without regard to how
mundane or ordinary they may be. Although portions of the Proposal may fall
outside of the scope of ordinary business operations, it has been the practice
of the Division of Corporation Finance to not permit proponent revisions under
Rule 14a-8(i)(7). As a result, if any portion of a proposal could be excluded
because it relates to the registrant's ordinary business operations, the entire
proposal may be excluded. Adobe Systems Incorporated (February 1, 2002);
International Business Machines Corporation (January 21, 2002); E*TRADE Group,
Inc. (October 31, 2000). The Proposal may require the Committee to discuss
matters that deal in part with Kroger's ordinary business operations, and
therefore this Proposal may be excluded, as was last year's proposal, pursuant
to Rule 14a-8(i)(7). The Kroger Co. (March 18, 2002). Further, the Staff consistently has held that the ordinary business operations
exclusion applies to matters concerning shareholder relations. AmSouth Bancorp
(January 15, 2002); Niagara Mohawk Holdings, Inc. (March 5, 2001); Chevron
Corporation (February 8, 1998); Tucson Electric Power Company (February 12,
1997); U.S. West Inc. (September 21, 1993); Minnesota Power & Light Company
(March 12, 1992). For the foregoing reasons, it is our opinion that the Proposal is properly
excludable under Rule 14a-8(i)(7). B. The Proposal is properly excludable under Rules 14a-8(i)(3) and 14a-9 because
it is in violation of the proxy rules for containing false or misleading
statements. The Staff previously has determined that a shareholder proposal may be omitted
pursuant to Rules 14a-8(i)(3) and 14a-9 if it is "so inherently vague and
indefinite that neither theshareholders voting on the proposal nor the company
in implementing the proposal (if adopted), would be able to determine with any
reasonable certainty exactly what actions or measures the proposal requires."
Wal-Mart Stores, Inc. (April 2, 2001); Philadelphia Electric Company (July 30,
1992). In particular, the Proposal is vague and misleading in the following respects:
1. AFSCME's supporting statement is misleading by stating "Kroger's board has
not taken any steps toward declassification." This statement mischaracterizes
the Board's response to the Prior Proposals, and leads shareholders to wrongly
believe that Kroger's Board has the power to change the manner in which members
of the Board of Directors are elected. As outlined below, only the shareholders
can take the action requested in the Prior Proposals. The Proposal falsely leads shareholders to conclude that the Board of Directors
has breached its fiduciary duties to shareholders by not taking steps to
declassify the Board even though shareholders have adopted the Prior Proposals
requesting the Board to do so. In fact, each time the Prior Proposals have been
adopted by shareholders, the Board of Directors has met, consulted with outside
advisors, and reconsidered whether or not the Prior Proposals were in the best
interests of shareholders and other affected constituents. Each time the Board,
in the exercise of its fiduciary responsibilities, has concluded that no further
action was appropriate. Notwithstanding the foregoing, had the Board concluded otherwise, the Board is
without authority to implement the Prior Proposals, as only shareholders can
change the manner in which members of the Board are elected. As a result,
AFSCME's supporting statement serves only to impugn the character of the Board
of Directors by implying that they are not responsive to shareholders. 2. The Proposal seeks to amend Kroger's regulations to appoint a committee of
shareholders if the Board of Directors "does not take the action requested in
the [p]roposal." The Proposal, however, does not make clear what constitutes
action on the part of the Board. In its supporting statement, AFSCME refers to
the Prior Proposals submitted to declassify Kroger's Board of Directors as the
genesis for the Proposal. In the case of the Prior Proposals, only the
shareholders can change the methodology for electing Directors by amending the
regulations in accordance with Section 1701.11(A) of the Ohio Revised Code (the
"Code"). The Proposal seems to require the constitution of a Committee any time
a precatory proposal is not implemented by the Board. However, the Proposal does
not indicate how or why a Committee is to be formed in the event that a
precatory shareholder proposal, such as the Prior Proposal, is beyond the
authority of the Board to implement under Ohio law. 3. For the same reasons identified in paragraph 2 above, the Board may be unable
to determine when the Committee, if formed, could be abolished. Under
circumstances as identified in AFSCME's supporting statement, the Board lawfully
is incapable of taking the requested action and therefore the Committee would
remain in perpetuity. 4. The Proposal requires the Board to constitute the Committee, comprised of a
proponent and all other interested shareholders. However, the Proposal provides
no guidance on how the Committee is to be selected, by whom it is to be
selected, and whether notice of the formation of the Committee must be provided
to all shareholders, soliciting their interest. 5. The Proposal is vague and ambiguous regarding those steps the Board must take
in the event subsequent proposals would require the formation of a Committee,
even though an existing Committee remained in place. Would the "new" proponents
simply become members of the existing Committee, or would additional Committees
be formed? For the foregoing reasons, it is our opinion that the Proposal is properly
excludable under Rules 14a-8(i)(3) and 14a-9. C. The Proposal is properly excludable under Rule 14a-8(i)(1) because it is not
the proper subject for action by shareholders under Ohio law. Kroger is incorporated in the State of Ohio. Section 1701.59(A) of the Code
provides that "[e]xcept where the law, the articles, or the regulations require
action to be authorized or taken by shareholders, all of the authority of a
corporation shall be exercised by or under the direction of the directors..."
This statute gives the Board of Directors the exclusive authority and
discretion, subject to authorization by shareholders in circumstances required
by law, the articles, or the regulations, to manage the business and affairs of
Kroger. This would include the formation of committees, including the Committee,
and the determination of the number of meetings of the Board of Directors and
with whom the Board should meet. The Proposal, styled as an amendment to Kroger's regulations, neither requires
nor authorizes action to be taken by shareholders. Rather, it mandates the Board
to take action. As a result, it falls outside of the application of Section
1701.59(A) of the Code. Section 1701.11 of the Code provides for the adoption and amendment by the
shareholders of regulations for the government of Ohio corporations. Section
1701.11(B)(10) of the Code provides that regulations may be adopted for
"[d]efining, limiting, or regulating the exercise of the authority of the
corporation, the directors, the officers, or all of the shareholders."
Regulations adopted under Section 1701.11 of the Code can limit the authority of
the Board of Directors to take action under certain circumstances. They cannot,
however, usurp the authority of the Board of Directors and force the Board to
take actions in managing the business and affairs of the corporation that it
otherwise would not take. Section 1701.11 does not contemplate or permit the
amendment of regulations to mandate Board action. Ohio law also is quite specific about the manner in which shareholders may act.
Section 1701.39 provides for actions at annual meetings of shareholders, and
Section 1701.54 provides for action by written consent. Nothing in Ohio's Code
contemplates action by committees that represent shareholder interests. Indeed,
the only legitimate representatives of shareholders are the lawfully elected
Board of Directors. For the foregoing reasons, it is our opinion that the Proposal is properly
excludable under Rule 14a-8(i)(1). D. Conclusion For each of the foregoing reasons, the Proposal may be excluded from the Proxy
Materials. If you disagree with the conclusions contained in this request, I
would appreciate the opportunity to confer with you prior to the issuance of the
Staff's response. Please call me at (513) 762-1482 if you require additional
information or wish to discuss this submission further. Very truly yours, /s/ Bruce M. Gack cc. Michael Zucker, AFSCME [APPENDIX]
Exhibit A RESOLVED, that the shareholders of The Kroger Co. ("Kroger" or the "Company"),
pursuant to Title XVII, section 1701.11 of the Ohio Revised Code and article VII
of the bylaws, hereby amend the bylaws to add the following: "ARTICLE VIII MAJORITY VOTES ON SHAREHOLDER PROPOSALS If a proposal (the "Proposal") submitted by a shareholder for a vote at a
meeting of shareholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission receives a majority of the votes cast (a "Majority Vote"), and the
Board of Directors (the "Board") does not take the action requested in the
Proposal (or, in the case of a Proposal seeking a charter amendment, does not
resolve to submit such amendment to shareholders, and recommend in favor of its
approval, at the next shareholders' meeting) within 180 days of the meeting at
which the vote was obtained, then: (a) The Board shall constitute a "Majority Vote Shareholder Committee" (the
"Committee") composed of the proponent of the Proposal and other shareholders
that indicate to the Company an interest in participating in the Committee; (b) The purpose of the Committee will be to communicate with the Board regarding
the subject matter of the Proposal; the Committee will not be authorized to act
on behalf of the Board or to compel the Board to take action, and will not
interfere with the Board's authority to manage the business and affairs of the
company; and (c) The independent members of the Board shall meet with the Committee no fewer
than two times between the date on which the Committee is constituted and the
next annual meeting of shareholders. The Board may abolish the Committee if (i) the Board takes the action requested
in the Proposal; or (ii) the Proposal's proponent notifies the Board that it
does not object to abolition of the Committee." SUPPORTING STATEMENT In 1999, 2000, 2001 and 2002, a majority of Company shareholders voting on the
matter supported a shareholder proposal seeking declassification of the
Company's board of directors. Nonetheless, Kroger's board has not taken any
steps toward declassification. In a letter to the Council of Institutional
Investors dated August 22, 2002, Kroger suggests that the proposal's proponent
should "directly" effectuate the declassification, which is contained in the
regulations. However, as Kroger should be aware, shareholder approval of such an
amendment would be far more likely if the board proposed and recommended in
favor of it, rather than requiring the proponent to undertake a binding
shareholder proposal or independent solicitation which the board could oppose
using company funds. The purpose of this proposal is to create a mechanism by which shareholders can
communicate with their representatives, the independent directors. This proposal
does not aim to supplant the board's decisionmaking power, but to improve that
decisionmaking by ensuring that shareholders' viewpoints are fully presented to
the independent directors. We urge shareholders to vote FOR this proposal. [INQUIRY LETTER]
March 21, 2003 Securities and Exchange Commission Division of Corporation Finance Office of Chief Counsel 450 Fifth Street, NW Washington, DC 20549 Re: Shareholder proposal of AFSCME Employees Pension Plan; no-action request by
The Kroger Co. Dear Sir/Madam: Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, the AFSCME
Employees Pension Plan (the "Plan") submitted to The Kroger Co. ("Kroger" or the
"Company" shareholder proposal (the "Proposal") amending Kroger's bylaws to
provide for the creation of shareholder committee (the "Committee") in the event
the Company's board (the "Board") does [text illegible] implement a shareholder
proposal supported by a majority of the shares voted (a "Majority Vote [text
illegible] Proposal"). In a letter to the Commission dated February 19, 2002, Kroger stated that it
intends to [text illegible] the Proposal from its proxy materials being prepared
for the 2002 annual meeting of shareholder [text illegible] The Company argues
that the Proposal is excludable pursuant to Rule 14a-8(i)(7) because it [text
illegible] to the Company's ordinary business operations; pursuant to Rule
14a-8(i)(4), on the theory that [text illegible] Proposal seeks to further a
personal interest of the Plan not shared by shareholders at large; [text
illegible] false or misleading pursuant to Rule 14a-8(i)(3); and under Rule
14a-8(i)(1) because the Prop[text illegible] subject is not a proper one for
action by shareholders under Ohio law. As discussed more fully below, the
Company has failed to meet its burden of demonstrating its entitlement to rely
on [text illegible] those four exclusions. Ordinary Business Rule 14a-8(i)(7) permits a company to omit a proposal if its subject matter
relates to the company's ordinary business operations. Kroger argues that the
Proposal aims to effect the micromanagement of the Company by the "select group"
of shareholders comprising the Committee. Kroger likens the Proposal to
proposals addressing investor relations and the [text illegible] the companies'
shareholder meetings, which have been found by the Staff to be excludable.
Kroger's argument misconstrues both the intent of the Proposal and the operation
of the Company. The Proposal was crafted as a response to the resistance of boards of
directorsincluding Kroger's Boardto implementing Majority Vote Proposals. The
Plan believes that boards should implement Majority Vote Proposals because they
represent the wishes of a majority of the company's owners. However, after three
years of majority votes on a board declassification proposal, Kroger's Board
stated in response to an inquiry by the Council of Institutional Investors that
board classification was "in the best interests of shareholders and other
affected constituents." The Proposal provides a mechanism to ensure that shareholders have a way to
communicate with their elected representativesthe independent directors. The
Proposal is really about director accountability to shareholders, not any
particular matter that the Committee and independent directors might discuss. In
other words, the subject of the Proposal is the creation of a structure to give
shareholders greater voice in the corporate governance of Kroger under certain
circumstances. The Staff has recognized this distinction in numerous no-action rulings on
proposals to create shareholder advisory committees, holding that such proposals
were not excludable under Rule 14a-8(i)(7) because the committees would be
created "for the purpose of representing the interests of shareholders on
matters under consideration by the Board, rather than for the purpose of
assisting communication between management and shareholders on matters related
to the Company's ordinary business operations." McDonald & Company Investment,
Inc. (available May 6, 1991); see also Aydin Corporation (available Jan. 31,
1997); Evans, Inc. (available Mar. 30, 1993); Exxon Corporation (available Feb.
28, 1992); TRW Inc. (available Feb. 12, 1990). Like Kroger, each of the companies above, with the exception of Aydin, argued in
its no-action request that the proposal dealt with investor relations; several
contended that the proposed committee would disrupt the existing investor
relations apparatus. In each case, the Staff sided with the proponent, who, in
the case of the Exxon proponent, had argued that shareholder-board communication
differed from the management-shareholder communication function handled by a
company's investor relations department. The Proposal, like those in Exxon, TRW,
Evans, Aydin and McDonald & Company, deals with shareholder-board communication
and not the kinds of investor relations minutiae, such as the location of the
annual meeting, at issue in the letters cited by Kroger. Kroger points to the mandate given to the Committeeto meet with shareholder
proponents and others to discuss Majority Vote Proposals and other matters of
interest to the Committee membersand argues that ordinary business matters
could fall within that definition. The language to which Kroger objects was
included in the Proposal to make clear that the discussions between the
Committee and Kroger's independent Board members could encompass all corporate
governance issues, not just the subjects of Majority Vote Proposals. The Plan
has found that it is often useful to view individual corporate governance
structures in the context of a company's overall governance profile. However, to
clarify that ordinary business matters will not be involved, the Plan does not
object to specifying in the Proposal that the Committee and independent
directors will discuss the subject of any Majority Vote Proposal and other
corporate governance matters. In sum, the Proposal provides a mechanism to facilitate shareholder-board
communication and does not involve day-to-day matters relating to Kroger's
investor relations management function. Accordingly, Kroger has not met its
burden of showing that it is entitled to exclude the Proposal pursuant to Rule
14a-8(i)(7). Personal Claim or Grievance Rule 14a-8(i)(4) allow a company to omit a proposal if it was submitted to
redress a personal claim or grievance, or to further a personal interest not
shared by other shareholders. Kroger contends that because the Proposal would
require the independent Board members to meet with the Committee to discuss
"other issues of interest to the members of the Committee," the Proposal seeks
to further special interests of individual Committee members. As discussed above, the Plan is willing to amend the Proposal to clarify that
the Committee would discuss matters related to corporate governance with the
independent directors. Surely, Kroger does not believe that corporate governance
is a "special interest" of only certain shareholders. In any event, the
Committee, once established, will be open to shareholders generally, reducing
the likelihood that "special interests" of any particular shareholder will be
advanced at the expense of corporate governance issues of interest to
shareholders more broadly. False or Misleading Statements Rule 14a-8(i)(3) allows a company to omit a proposal that violates any of the
Commission's rules, including Rule 14a-9's prohibition on false or misleading
statements. Kroger complains that the Proposal is excessively vague and that it
contains misleading statements. A number of Kroger's objections are predicated on the fact that Kroger's Board
cannot unilaterally amend the regulations to provide for annual election of
directors, the subject of prior Majority Vote Proposals. Kroger characterizes as
misleading the statement that "Kroger's board has not taken any steps toward
declassification," complaining that it implies that the Board has the power to
declassify itself and that the Board has violated its fiduciary duties to
shareholders. Nowhere does the Proposal state that the Board acting alone can
effect declassification. Rather, the Proposal criticizes the Board for not
taking the step it can takenamely, putting declassification and the regulation
amendment required to accomplish it up for a shareholder vote, together with a
recommendation to vote in favor of the proposal. Such a recommendation is
especially important in light of the 75% shareholder vote necessary to amend the
regulation classifying the Board. On a related note, Kroger claims that the language requiring creation of the
Committee if the Board "does not take the action requested in the Proposal" is
misleading because only shareholders can effect the declassification requested
in the prior Majority Vote Proposals. Similarly, Kroger argues that the Board
may be unable to determine when the Committee may be abolished because the Board
may be legally incapable of taking the requested action. The Proposal only asks the Board to take the steps it is legally capable of
taking. As discussed above, in the case of the declassification proposals
approved in prior years, "the action requested in the Proposal" would consist of
submitting for a shareholder vote a management proposal amending Kroger's
regulations to effect declassification. In the case of other proposals, a
failure to take the action requested in the "Resolved" clause would trigger the
obligation to establish the Committee. In those cases where the Board believes
it cannot legally take any action requested by the proposal, it would be
appropriate to seek no-action relief from the Staff, or, if the proposal was
submitted outside the Rule 14a-8 process, obtain other appropriate relief to
prevent the proposal from coming to a vote. Kroger objects that the Proposal is misleading because it does not specify how
Committee members are to be selected or by whom, or indicate whether notice of
the formation of the Committee must be provided to all shareholders. Kroger also
argues that it is unclear how the approval of subsequent Majority Vote Proposals
would affect a Committee constituted in response to an earlier Majority Vote
Proposal. In drafting the Proposal, the Plan assumed that there would not likely be a
flood of shareholders seeking membership on the Committee, since service on the
Committee would entail a commitment of time and resources. If an unworkably
large number of shareholders express an interest in joining the Committee,
Kroger's Board and the Plan can negotiate a mutually agreeable procedure for
limiting the Committee's membership. Likewise, upon shareholder approval of a
Majority Vote Proposal, the Plan and Kroger's Board can agree on the method by
which shareholders will be informed about the Committee's formation. Such
incidental procedural issues, however, are not material to shareholders'
decisions whether to vote for the Proposal. The Staff has rejected arguments like those made by Kroger, holding that binding
proposals requiring establishment of a shareholder advisory committee were not
excessively vague and thus excludable under Rule 14a-8(i)(3) simply because they
did not set forth a selection methodology, describe how shareholders' views will
be ascertained or specify how compensation and expenses would be handled. See
New Iberia Bancorp, Inc. (available Nov. 21, 1994); Evans Inc. (available Apr.
23, 1993); Baltimore Bancorp (available Mar. 11, 1991). The same result should
obtain here. Not a Proper Subject for Shareholder Action Kroger contends that the Proposal violates Ohio law because it impermissibly
intrudes on the authority of the board to manage the business and affairs of the
company, including the formation of committees and the Board's activities.
Kroger points to Section 1701.11(B)(10) of Ohio's Corporations Code, which
provides that regulations may be adopted for "[d]efining, limiting, or
regulating the exercise of the authority of the corporation, the directors, the
officers, or all of the shareholders." According to Kroger, that section does
not "contemplate or permit the amendment of regulations to mandate board
action." The plain language of the statute does not compel Kroger's interpretation. A
proposal to establish a shareholder committee could be characterized as
"defining" or "regulating" the exercise of the board's authority to manage the
business and affairs of the corporation. Kroger does not explain why constraints
on directors' authority are permissible under the statute but regulations
mandating the creation of a shareholder committee are not. Nor has Kroger cited
any case law supporting its interpretation. The suggestions made by the
Committee would not be binding on the Board, so the Committee could not be seen
as usurping any of the Board's power. In Baltimore Bancorp (available Mar. 11, 1991), the company made nearly
identical arguments to those advanced here by Kroger, contending that a bylaw
amendment much like the one contained in the Proposal would intrude upon the
board's authority to manage the business and affairs of the company. Like
Kroger, Baltimore Bancorp cited no support for its interpretation of the statute
and no case law on the issue. The Staff declined to grant no-action relief,
noting that "the function of the Stockholders Advisory Committee would be purely
advisory and as such would not intrude upon nor detract from the board of
director's authority to manage the Company." See also Aydin Corporation
(available Jan. 31, 1997) (Delaware); Oryx Energy Company (available Feb. 12,
1996) (Delaware); Sprint Corporation (available Jan. 18, 1995) (Kansas); Exxon
Corporation (available Feb. 28, 1992) (New Jersey). Kroger has not met its burden of establishing that a regulation establishing an
advisory shareholder committee would violate Ohio law, offering only conclusory,
unsupported assertions. Accordingly, Kroger should not be permitted to exclude
the Proposal in reliance on Rule 14a-8(i)(1). If you have any questions or need additional information, please do not hesitate
to call me at (202) 429-1007. Very truly yours, /s/ Charles Jurgonis Plan Secretary cc: Bruce M. Gack Vice President and Assistant General Counsel
[STAFF REPLY LETTER]
April 11, 2003 Response of the Office of Chief Counsel Division of Corporation Finance Re: The Kroger Co. Incoming letter dated February 18, 2003 The proposal would amend Kroger's bylaws to provide for the creation of a
shareholder committee to communicate with the Board regarding the subject matter
of shareholder proposals that are approved and not acted upon. We are unable to conclude that Kroger has met its burden of establishing that
Kroger may exclude the proposal under rule 14a-8(i)(1) as an improper subject
for shareholder action under applicable state law. Accordingly, we do not
believe that Kroger may omit the proposal from its proxy materials in reliance
on rule 14a-8(i)(1). We are unable to concur in your view that Kroger may exclude the entire proposal
under rule 14a-8(i)(3). However, there appears to be some basis for your view
that a portion of the supporting statement may be materially false or misleading
under rule 14a-9. In our view, the proposal must be revised to delete the
sentence that begins "Nonetheless, Kroger's board ..." and ends "... any steps
toward declassification." Accordingly, we will not recommend enforcement action
to the Commission if Kroger omits only this portion of the supporting statement
from its proxy materials in reliance on rule 14a-8(i)(3). We are unable to concur in your view that Kroger may exclude the proposal under
rule 14a-8(i)(7). Accordingly, we do not believe that Kroger may omit the
proposal from its proxy materials in reliance on rule 14a-8(i)(7). Sincerely, /s/ Alex Shukhman Attorney-Advisor |
