Company Name: Boeing Co. (Recon.)
Public Availability Date: March 15, 2004Document Sections:
INQUIRY LETTER
APPENDIX 1
INQUIRY LETTER
INQUIRY LETTER
APPENDIX 2
STAFF REPLY LETTER [INQUIRY LETTER]
March 5, 2004 VIA EMAIL U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: REQUEST FOR RECONSIDERATIONShareholder Proposal Concerning Shareholder
Rights Plans Submitted by James Janopaul, With John Chevedden as Proxy, for
Inclusion in The Boeing Company 2004 Proxy Statement Dear Sir or Madam:
We are in receipt of your February 6, 2004 response to our no-action letter
request dated December 24, 2003 (respectively, the "February 6thResponse
Letter" and the "No-Action Request"), setting forth grounds for omission of a
shareholder proposal (the "Proposal") submitted to The Boeing Company (the
"Company") by James Janopaul, with John Chevedden as proxy (the "Proponent"),
for inclusion in the Company's 2004 proxy statement and form of proxy (the "2004
Proxy Materials"). We are submitting this supplemental letter to you to respectfully request that
you reconsider your disposition of our No-Action Request and that, based on the
new facts provided in this letter, you confirm that the Company may exclude the
Proposal pursuant to Rule 14a-8(i)(10) under the Securities Exchange Act of
1934, as amended. Background The Proposal requests that the Company's Board of Directors (the "Board") submit
the adoption, maintenance or extension of any shareholder rights plan to a
shareholder vote and further requests that once adopted any material amendment
or removal of the Proposal would be submitted to a shareholder vote. The
Company's No-Action Request asserted various bases upon which the Proposal, or
portions thereof, is properly excludable from the Company's 2004 Proxy
Materials, specifically that the Proposal was properly excludable pursuant to
Rule 14a-8(i)(10), substantially implemented, because the Board had adopted a
policy statement relative to a shareholder rights plan (the "Policy Statement").
The Company's request for relief under Rule 14a-8(i)(10) was denied.
Effective March 4, 2004, the Company's Board has adopted the following revised
policy statement (the "Revised Policy Statement"):
Boeing does not have a shareholder rights plan and has no present intention to
adopt one. Subject to its continuing fiduciary duties, which may dictate
otherwise depending upon the circumstances, the Board shall submit the adoption
or extension of any future rights plan to a vote of the shareholders.
A certified copy of the Board resolution setting forth the Revised Policy
Statement is attached to this letter as Exhibit A. The Policy Statement will be
included in the Company's revised corporate governance guidelines that will be
available on the Company's web site and disseminated in its 2004 proxy
statement. Request for Reconsideration
In our view, the Board's Revised Policy Statement fully accords with the policy
statements of other issuers to whom the Staff has recently granted relief under
Rule 14a-8(i)(10) in response to shareholder proposals similar to the present
Proposal. See, for example, 3M Co. (Feb. 17, 2004) (policy stating that the
board "will only adopt a rights plan if... stockholders have approved the
adoption of the rights plan"); Praxair, Inc. (Feb. 13, 2004) (policy stating
that the board "shall submit [the adoption of a Stockholder Rights Plan] to a
non-binding shareholder vote"); Bristol-Myers Squibb Co. (Feb. 11, 2004) (policy
stating that "[i]t is the Company's policy to seek stockholder approval prior to
the adoption of a stockholder rights plan"); The Allstate Corp. (Jan. 28, 2004)
(policy stating that the board "shall obtain shareholder approval prior to
adopting any shareholder rights plan"); Honeywell Int. (Jan. 27, 2004) (policy
stating that board "will seek shareholder approval prior to its adoption of a
Shareowner Rights Plan"); General Electric Co. (Jan. 19, 2004) (policy stating
that "if GE were ever to adopt a poison pill, the board would seek prior
shareholder approval"); Hewlett-Packard (Dec. 24, 2003) (policy stating that the
board "shall submit the adoption or extension of any poison pill to a shareowner
vote before it acts to adopt any poison pill"). In each of the foregoing decisions the Staff granted relief under Rule
14a-8(i)(10) because the registrant's shareholder rights plan policy stated that
the Board would submit the adoption or extension of any shareholder rights plan
to a shareholder vote. This relief was granted even though the registrant's
policy contained a "fiduciary-out" provision. See 3M Co. (Feb. 17, 2004);
Praxair, Inc. (Feb. 13, 2004); Bristol-Myers Squibb Co. (Feb. 11, 2004); The
Allstate Corp. (Jan. 28, 2004); Honeywell Int. (Jan. 27, 2004); General Electric
Co. (Jan. 19, 2004); Hewlett-Packard (Dec. 24, 2003). Here, the Board's Revised
Policy Statement similarly states that "the Board shall submit the adoption or
extension of any future rights plan to a vote of the shareholders," except in
cases where the Board's fiduciary duties might require otherwise. Moreover, we
note that the Proposal, when read in its entirety, itself includes a
"fiduciary-out" provision. The supporting statement for the Proposal states that
the Proposal "gives our Directors the flexibility to ignore our shareholder vote
if our Directors seriously believe they have a good reason."
We submit that the Board's Revised Policy Statement effectively fully implements
the Proposal, rendering it moot and thus excludable under Rule 14a8-(i)(10).
Rule 14a-8(i)(10) permits a company to exclude a shareholder proposal from its
proxy statement if the proposal has been substantially implemented by the
company, rendering it moot. To be moot, the proposal need not be implemented in
full or precisely as presented. Rule 14a8(i)(10) does not require exact
correspondence between the actions sought by a shareholder proponent and the
issuer's actions in order for the shareholder's proposal to be excluded. See
Exchange Act Release No. 20091 (Aug. 16, 1983). Rather, the standard is whether
the company's particular policies, practices and procedures compare favorably
with the guidelines of the proposal. See SEC Release No. 34-20091 (Aug. 16,
1983) at II.E.6. For example, in Hewlett-Packard Co. (Dec. 24, 2003) the Staff
permitted the omission of a proposal substantially similar to the present
Proposal on the basis of substantial implementation under Rule 14a-8(i)(10). As
the Company's Board has done, the Hewlett-Packard board adopted a policy that
requires a shareholder vote to adopt or extend any shareholder rights plan,
subject to the board's ability in exercising its fiduciary responsibilities to
act without shareholder approval if it deems it to be in the best interest of
Hewlett-Packard's shareholders. The Staff found that by adopting this binding
policy, the HP Proposal had been substantially implemented by HP, even though
the policy included a "fiduciary-out." The purpose of the Rule 14a-8(i)(10) exclusion is to "avoid the possibility of
shareholders having to consider matters that have been favorably acted upon by
management" or the board of directors and thereby avoid confusing shareholders
or wasting corporate resources on a matter that is moot. SEC Release No.
34-12598 (July 7, 1976). In our view the Company's Board has favorably responded
to the Proposal by adopting the Revised Policy Statement. Accordingly, we
believe the Company may exclude the Proposal in its entirety because the
Proposal has been substantially implemented. *****
For the foregoing reasons, we believe the Proposal may be omitted from the
Company's 2004 Proxy Materials and respectfully request that the Staff confirm
that it will not recommend any enforcement action if the Proposal is excluded.
This letter is being simultaneously sent to the Proponent at the following email
address provided by the Proponent: olmsted7p@earthlink.net.
The Company anticipates that its definitive 2004 Proxy Materials will be
finalized for filing on or about March 25, 2004. Accordingly, your prompt review
of this matter would be greatly appreciated. Should you have any questions
regarding any aspect of this matter or require any additional information,
please call the undersigned at (206) 359-8447. Very truly yours,
/s/ J. Sue Morgan
JSM:reh Enclosures
cc: John Chevedden
Mark. Pacioni, The Boeing Company
Rick E. Hansen, Perkins Coie LLP [APPENDIX 1]
Exhibit A: Secretary's Certificate and Revised Policy Statement
Secretary's Certificate I, James C. Johnson, hereby certify that I am the Secretary of The Boeing
Company (the "Company"), a Delaware corporation, and that the attached is a true
and correct copy of the statement adopted by the Company's Board of Directors by
unanimous written consent on March 4, 2004. IN WITNESS WHEREOF, I have hereunto subscribed my name.
/s/ James C. Johnson
Dated: March 4, 2004 Revised Policy Statement
Boeing does not have a shareholder rights plan and has no present intention to
adopt one. Subject to its continuing fiduciary duties, which may dictate
otherwise depending upon the circumstances, the Board shall submit the adoption
or extension of any future rights plan to a vote of the shareholders.
3Shareholder Input on a Poison Pill
RESOLVED: Shareholders request that our Directors increase shareholder voting
rights and submit the adoption, maintenance or extension of any poison pill to a
shareholder vote as a separate ballot item as soon as may be practical. Also
once this proposal is adopted, any material change or removal of this proposal
is requested to be submitted to a shareholder vote as a separate ballot item at
the earliest possible shareholder ballot. We as shareholders voted in support of this topic:
Year.............Rate of Support
2002.............50.6% 2003.............50.7%
These percentages are based on yes and no votes cast. I believe this repeated
level of shareholder support is more impressive than the raw percentages because
this support followed our Directors' objections. The 49%-vote favoring
management's objections equals only 31% of Boeing shares outstanding and
insiders own 20% of our stock. The Council of Institutional Investors
www.cii.org formally recommends shareholder approval of poison pills and
adoption of proposals which achieve a majority of votes cast. Institutional
investors in general own 65% of our stock. James Janopaul, 1255 Buchanan Street, Arlington, Virginia 22205 submitted this
proposal. Poison Pill Negative The key negative of poison pills is that pills can preserve management deadwood.
Source: Moringstar.com The Potential of a Tender Offer Can Motivate Our Directors
Hectoring directors to act more independently is a poor substitute for the
bracing possibility that shareholders could sell the company out from under its
present management. Source: Wall Street Journal, Feb. 24, 2003
Diluted Stock An anti-democratic management scheme [poison pill] to flood the market with
diluted stock is not a reason that a tender offer for our stock should fail.
Source: The Motley Fool Like a Dictator
Poison pills are like a dictator who says, "Give up more of your freedom and
I'll take care of you. T.J. Dermot Dunphy, CEO of Sealed Air (NYSE) for 25 years
I believe our Directors took a step in the right direction their Oct. 2003
statement that the Board intends to submit any poison pill to a vote of
shareholders. However the Council of Institutional Investors was dissatisfied
with the "huge loophole" in the type of policy that our Directors issued. This
proposal is intended to enhance shareholder rights beyond our Directors'
statement by providing for a shareholder vote any time a poison pill is adopted
and a shareholder vote if this policy is materially changed or discontinued.
Director Confidence in Our Management
I believe that, by our Directors taking the steps to adopt this proposal, our
Directors will signal their confidence that our managementsubject to their
oversightwill be the best management to enhance shareholder value.
Shareholder Input on a Poison Pill Yes on 3
Notes: The above format is the format submitted and intended for publication.
Please advise if there is any typographical question.
The company is requested to assign a proposal number (represented by "3" above)
based on the chronological order in which proposals are submitted. The requested
designation of "3" or higher number allows for ratification of auditors to be
item 2. References: The Motley Fool, June 13, 1997
Moringstar.com, Aug. 15, 2003 Mr. Dunphy's statements are from The Wall Street Journal, April 28, 1999.
IRRC Corporate Governance Bulletin, JuneSept. 2003
Council of Institutional Investors, Corporate Governance Policies, March 25,
2002 [INQUIRY LETTER]
March 12, 2004 Via Airbill 6 Copies
7th copy for date-stamp return Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
Mail Stop 0402
450 Fifth Street, NW
Washington, DC 20549 Rebuttal to Perkins Coie LLP No Action Request
The Boeing Company (BA)
Poison Pill Topic Ladies and Gentlemen:
The following text, consistent with the revised company policy illustrates of
the meaningless of the revised company policy: The Board's view of its fiduciary duty will have first priority in whether a
shareholder vote is allowed on poison pills. If the Board's view of its
fiduciary duty allows, the Board shall submit the adoption or extensions of any
future rights plan to a shareholder vote. However the board makes no commitment
to conduct this vote within any time-period whatsoever if the Board's view does
allow such a vote. Boeing has had since November 2001 to adopt a poison pill policy. A rule 14a-8
proposal on this topic was submitted to the company in November 2001.
There is no company defense that its March 5, 2004 letter should not be
considered a new and untimely no action request. The company appears to be attempting to set a practice for companies to make one
or two no action requests after the company receives Staff non-concurrence on
the first company no action request. Had the board acted immediately after the
February 6, 2004 Staff Response the company could by now have adopted a third
resolution and then submitted a third no action request based on a still further
revised resolution. This would allow companies to repeatedly shop the bare
minimum to the Staff on meeting a partially implemented criteria at the last
possible minute. The company has submitted a meaningless company resolution because there is no
time limit to have a shareholder vote. Since poison pills often have 10-year
terms, a vote could technically be scheduled 9-years after adoption.
It is a stretch to the breaking point that a proposal calling for a shareholder
vote can be substantially implemented by a resolution that may allow for no vote
in perpetuity. At this late date the company appears to be shopping an inferior proposal policy
than the company cited Praxair and Bristol-Meyers resolutions:
Praxair: The Boards' policy is that it shall adopt or materially amend a Stockholder
Rights Plan only if, in the exercise of its fiduciary responsibilities under
Delaware law, and action by a majority of its independent directors, it
determines that such action is in the best interests of [the Company's]
shareholders. If the Board adopts or materially amends a Stockholder Rights
Plan, it shall submit such action to a non-binding shareholder vote as a
separate ballot item at the first annual meeting of shareholders occurring at
least six months after such action. Bristol-Meyers:
"It is the Company's policy to seek stockholder approval prior to its adoption
of a stockholder rights plan [poison pill], unless the board determines, with
the concurrence of a majority of its independent non-executive members, that,
due to timing concerns, it is in the best interests of the Company' stockholder
to adopt a rights plan without delay. "If a rights plan is adopted without prior stockholder approval, the plan must
provide that it shall expire unless ratified by stockholder within one year of
adoption." I do not believe the company has met its burden of proof obligation according to
rule 14a-8. For the above reasons this is to respectfully request non-concurrence with the
company no action request. Sincerely,
/s/ John Chevedden
Boeing Company shareholder cc:
James Janopaul
Lewis Platt [INQUIRY LETTER]
March 12, 2004 Via Airbill 6 Copies
7th copy for date-stamp return Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
Mail Stop 0402
450 Fifth Street, NW
Washington, DC 20549
The Boeing Company
Poison Pill Topic
Ladies and Gentlemen: Included is a supplemental rule 14a-8 shareholder proposal which is submitted
consistent with following the successful lead of companies in both a) submitting
supplemental no action arguments and b) in submitting new facts. This is a
request to receive the same consideration as the supplemental company no action
requests and the new company facts. This could be considered less than a
supplemental proposal because it is the same as the original proposal except a
sentence is withdrawn concerning director discretion. It is believed that rule 14a-8 intends for shareholders and companies to have
the same rights for reconsideration. In other words that there is not be a
two-tier system for reconsideration with companies being given a superior number
of options to obtain successful reconsideration. Companies now have the last-minute option of obtaining Staff concurrence with
fine-tuning the text of their response to rule 14a-8 shareholder proposals. This
is a shareholder request for less than an opportunity for fine-tuningsimply the
withdrawal of text. SLB 14 does not set an absolute limit on the opportunity to revise shareholder
proposals: Division of Corporation Finance: Staff Legal Bulletin No. 14
5. When do our responses afford shareholders an opportunity to revise their
proposals and supporting statements? We may, under limited circumstances, permit shareholders to revise their
proposals and supporting statements. Additionally this shareholder request can be considered the most minor of
revisions, if even a revision, because it merely withdraws text.
This request is submitted consistent with shareholders having a lesser option in
the rule 14a-8 process than companies havethat of merely withdrawing text.
Sincerely, /s/
John Chevedden
Boeing Company shareholder cc:
James Janopaul
Lewis Platt [APPENDIX 2]
From: J [olmsted7p@earthlink.net] To: [cfletters@sec.gov]
Cc: [james.c.johnson@boeing.com]
Date: Monday, March 8, 2004 11:22 PM
Subject: The Boeing Company (Feb. 6, 2004)
JOHN CHEVEDDEN
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
310-371-7872 6 Copies
FX: 202-942-9525
cfletters@sec.gov March 8, 2004
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
The Boeing Company (Feb. 6, 2004) Ladies and Gentlemen:
This is to respectfully request that an opportunity for a rebuttal be permitted
before the Staff responds to the company March 5, 2004 letter.
Sincerely, /s/
John Chevedden cc: James Janopaul
James C. Johnson
james.c.johnson@boeing.com
[STAFF REPLY LETTER]
March 15, 2004 J. Sue Morgan
Perkins Coie LLP
1201 Third Avenue, Suite 4800
Seattle, WA 98101-3099 Re: The Boeing Company Incoming letter dated March 5, 2004
Dear Ms. Morgan: This is in response to your letter dated March 5, 2004 concerning the
shareholder proposal submitted to Boeing by James Janopaul. We also have
received one letter on the proponent's behalf dated March 8, 2004 and two
letters on the proponent's behalf dated March 12, 2004. On February 6, 2004, we
issued our response expressing our informal view that, unless the proponent
provides Boeing with a proposal and supporting statement revised in a specified
manner, Boeing could exclude portions of the supporting statement from its proxy
materials. You have asked us to reconsider our position in light of Boeing's
representation that is has adopted a revised policy that requires a shareholder
vote in adopting any rights plan. The Division grants the reconsideration request, as there now appears to be some
basis for your view that Boeing may exclude the proposal under rule
14a-8(i)(10). Accordingly, we will not recommend enforcement action to the
Commission if Boeing omits the proposal from its proxy materials in reliance on
rule 14a-8(i)(10). Sincerely, /s/
Martin P. Dunn
Deputy Director cc: John Chevedden
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
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