Company Name: Dominion Resources, Inc.
Public Availability Date: January 25, 2004Document Sections:INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER [INQUIRY LETTER]
December 11, 2003 Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Dominion Resources, Inc. - Omission of Shareholder Proposal Under SEC Rule
14a-8(i)(1) - Improper Under State Law, SEC Rule 14a-8(i)(6) - Dominion Lacks
Authority to Implement and SEC Rule 14a-8(i)(3) - Misleading in Violation of
Proxy Rules Ladies and Gentlemen: Dominion Resources, Inc. ("Dominion") respectfully requests that the Staff of
the Division of Corporation Finance concur with our view that we may omit the
shareholder proposal and supporting statement referred to below and attached as
Exhibit A (the "Proposal") from our proxy statement for our 2004 Annual Meeting
of Shareholders pursuant to Rule 14a-8(i)(1), Rule 14a-8(i)(6)and Rule
14a-8(i)(3) of the Securities Exchange Act of 1934, as amended (the "Act").
Dominion also requests that the Staff indicate that it will not recommend any
enforcement action by the Securities and Exchange Commission (the "Commission")
if Dominion omits such Proposal from its proxy statement. The Proposal
The Proposal is from the Utility Workers Union of America General Fund, a
shareholder of Dominion (the "Proponent"). The Proposal includes a resolution
requiring the amendment of Dominion's bylaws to prohibit officers from receiving
annual compensation in excess of the limits established by the U.S. Internal
Revenue Code for deductibility of employee remuneration, without prior approval
by a vote of a majority of Dominion's shareholders. Dominion believes that it may omit the Proposal pursuant to Rule 14a-8(i)(1)
because it is improper under Virginia law, pursuant to Rule 14a-8(i)(6) because
Dominion lacks the power or authority to implement it and pursuant to Rule
14a-8(i)(3) because it is misleading in violation of the Commission's proxy
rules. Discussion Rule 14a-8(i)(1) - Proposal is Improper Under State Law
Rule 14a-8(i)(1) permits an issuer to omit a shareholder proposal from its proxy
materials if the proposal is improper under state law. The note to this section
of the rule states that "some proposals are not considered proper under state
law if they would be binding on the company if approved by the shareholders."
Dominion is incorporated under the laws of the Commonwealth of Virginia. Under
Virginia law, the Board generally has the exclusive authority to manage the
business and affairs of the company. Section 13.1-673 of the Virginia Stock
Corporation Act provides that "[a]ll corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation managed
under the direction of, its board of directors, subject to any limitations set
forth in the articles of incorporation or in a [voting] agreement." The
determination of compensation levels for executives is a critical part of the
management of the business and affairs of Dominion. Neither Dominion's Articles
of Incorporation nor bylaws grant to its shareholders the authority to set
limits on executive compensation, nor do they limit the Board's role in this
matter. As a result, Dominion's Board has the exclusive authority to determine
the amount of compensation to be paid to its executives. Moreover, Section
13.1-690 provides that a "director shall discharge his duties as a director ...
in accordance with his good faith business judgment of the best interests of the
corporation." The Proposal, if adopted, would deny the Board the opportunity to
meet its obligation to exercise its good faith business judgment. Instead, it
would limit the Board's authority to act without permitting the Board to
consider what action is in the best interests of Dominion.
The Staff has allowed the omission of shareholder proposals that mandate or
require a company's board of directors to take a specified action if
inconsistent with the power given to the board under state law. See. e.g.,
American Electric Power Company, Inc. (January 16, 2002). Because the Proposal
is not precatory, it would deprive the Board of its exclusive authority over the
matter of executive compensation and of the opportunity to exercise its business
judgement, as required by Virginia law, to determine a methodology for setting
executive compensation that will serve Dominion's best interests.
We are aware that the Staff generally responds to requests such as this one by
requiring the proposal to be included if it is recast in precatory language and
have tried to avoid taking the Staffs time with this matter. We have contacted
the Proponent in an attempt to discuss their concerns and to request that the
Proposal be recast as a recommendation. While the Company's Corporate Secretary
spoke with the Proponent to request that the Proposal be recast as a
recommendation, to date we have not received a revised Proposal. In addition,
the Proponent declined the opportunity to discuss the Proposal, instead
indicating that their intention was to simply speak at the Company's annual
meeting. For the reasons discussed above, we have concluded that the Proposal as
submitted is improper under Virginia law and excludable under Rule 14a-8(i)(1).
I have enclosed an opinion of McGuire Woods LLP supporting the statements
concerning Virginia law set forth in this letter. Rule 14a-8(i)(6) - Dominion lacks authority to implement
Rule 14a-8(i)(6) permits an issuer to omit a shareholder proposal from its proxy
materials if the issuer would lack the power or authority to implement the
proposal. The Proposal would affect the responsibility of the Compensation Committee of
Dominion's Board of Directors to establish compensation levels for the CEO of
Dominion. However, Dominion is a New York Stock Exchange (the "Exchange") listed
company and, as such, is subject, pursuant to the terms of its listing agreement
with the Exchange, to honor the Exchange's corporate governance rules which are
contained in Section 303A of the Exchange's Listed Company Manual. Those
corporate governance rules require, among other things, that Dominion have a
compensation committee composed entirely of independent directors, and that such
committee (or such committee together with other independent members of the
Board) have "direct responsibility" to "determine and approve the CEO's
compensation level". Furthermore, under the corporate governance rules, the
committee must be directly responsible for recommending the program of
compensation for non-CEO level executives. To adopt the bylaw described in the
Proposal would remove these responsibilities from the committee (and other
independent Board members) and, consequently, would violate Dominion's agreement
with the NYSE. Proposals that would require a company to breach its existing
contractual obligations are excludable because a company would lack the power or
authority to implement such a proposal. See, Sensar Corporation (May 14, 2001)
and Safety 1\st/, Inc. (February 2, 1998). Dominion notes that the bylaw described in the Proposal purports to contain a
savings provision that would allow Dominion to comply with any contrary
contractual obligations. However, where the contractual obligations completely
eviscerate the substance of the bylaw, one must conclude that the Proposal is
beyond the power and authority of Dominion to effectuate. For this reason, we have concluded that the Proposal as submitted is excludable
under Rule 14a-8(i)(6). Rule 14a-8(i)(3) - Proposal is Misleading in Violation of Proxy Rules
Rule 14a-8(i)(3) permits an issuer to omit a shareholder proposal from its proxy
materials if the proposal is contrary to any of the Commission's proxy rules,
including Rule 14a-9, which prohibits materially false or misleading statements
in proxy soliciting materials. Rule 14a-9 prohibits solicitations which are
false or misleading with respect to any material fact, or which omit to state
material facts necessary in order to make the statement not false or misleading.
The Proposal provides in part that "[n]o officer of the Corporation shall
receive annual compensation in excess of the limits established by the U.S.
Internal Revenue Code for deductibility of employee remuneration, without
approval by a vote of the majority of the Shareholders within one year preceding
the payment of such compensation." What the Proposal omits to state, is that the
implementation of the Proposal in accordance with its terms would be extremely
difficult if not impossible to administer and would effectively result in a cap
on executive salary rather than merely creating an opportunity for shareholder
approval of executive compensation, as the Proposal implies.
Dominion customarily pays its officers on a month-to-month basis, not annually
in a lump sum. If the Proposal was implemented as proposed, shareholders could
not approve 2004 compensation at the April 2004 annual meeting because such
approval would not constitute a vote within one year "preceding" the payment of
compensation for January through April of 2004. Similarly, shareholders could
not vote to approve 2005 executive compensation at the April 2004 annual meeting
because payments received by officers after April 2005 also would not have been
approved within one year of the shareholders' vote as required by the Proposal.
The only alternative, as the Proposal is currently written, would be for
Dominion to hold a special shareholder meeting from time to time for the sole
purpose of seeking to increase executive compensation. In addition, newly hired
or promoted executives with salaries requiring a shareholder vote under the
Proposal could not be remunerated until such time as a special shareholders
meeting was noticed and held, a period which could extend several months,
putting the Company at a competitive disadvantage. This practice would be
administratively burdensome and costly and we believe renders the Proposal
inviable. The Proposal omits these material facts and is therefore misleading.
For this reason, we have concluded that the Proposal as submitted is excludable
under Rule 14a-8(i)(3). Conclusion We hereby request that the Division of Corporation Finance concur with our view
that the Proposal may be omitted from our proxy materials and advise us that it
will not recommend any enforcement action be taken against us for omitting the
Proposal. Pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended,
six copies of this letter and the Proposal, including the supporting statement,
are enclosed as well as six copies of our opinion of counsel with respect to
state law matters discussed herein. I have mailed a copy of the letter to
Proponent, and hereby request that I be copied on any response the Proponent may
make to the Staff related to the Proposal. In compliance with Rule 14a-8(j),
this letter is submitted at least eighty (80) calendar days prior to Dominion's
anticipated filing of our definitive proxy statement in connection with the 2004
Annual Meeting of Shareholders. If you have any questions or need-additional information, please call me at
(804) 819-2171 or our Vice President & Corporate Secretary, Patty Wilkerson, at
(804) 819-2120. Sincerely, /s/
Sharon L. Burr
Senior Counsel
Enclosures cc: Mr. Donald E. Wightman
Shareholder Proponent
Ms. Patricia A. Wilkerson
Vice President and Corporate Secretary [APPENDIX]
Shareholder Proposal RESOLVED, that the Corporation's by-laws be amended by adding the following
Article XXXII: "Article XXXII. Executive Compensation. No officer of the Corporation shall
receive annual compensation in excess of the limits established by the U.S.
Internal Revenue Code for deductibility of employee remuneration, without
approval by a vote of the majority of the Shareholders within one year preceding
the payment of such compensation. For purposes of this Article, the Corporation may exclude compensation that
qualifies either as `performance-based compensation' or as an `incentive stock
option' within the meaning of the Internal Revenue Code, but only if:
(a) the Corporation shall first have disclosed to Shareholders the specific
performance goals and standards adopted for any performance-based compensation
plan; and (b) in the case of incentive stock options, the Corporation shall have recorded
as an expense in its financial statements the fair value of any stock options
granted. This Article may not be altered, amended, or repealed by the Directors."
This amendment shall be applied so as not to cause violation of any contract in
effect on the date of adoption of this resolution. Supporting Statement
This proposal would require that Dominion Resources may not pay executive
compensation in excess of the amount the Internal Revenue Code permits to be
deducted as an expense for federal income tax purposes, without first securing
shareholder approval. The Code provides that publicly held corporations generally may not deduct more
than $1 million in annual compensation for any of the company's five
highest-paid executives. The Code provides an exception for certain kinds of
"performance-based compensation." Even so, the Compensation Committee of our
Board of Directors says that it "reserves the right to approve, and in some
cases has approved, non-deductible compensation" if the Committee believes it is
in the Company's best interests. We believe the best way to determine the "best interests" of the Company is to
ask the shareholders. In our view, $1 million should be adequate compensation to
attract qualified executives. Even if not, it is reasonable to require the Board
to obtain shareholder approval before paying more than this amount.
Under our proposal, moreover, the Company would be able to pay
"performance-based compensation" in excess of the deductibility limit, so long
as management has disclosed the performance goals and standards the Board has
adopted under these plans. The proposal also provides an exception for incentive
stock options, if the Company has recorded the expense of such options in its
financial statements. We think it is reasonable to require the Company to fully disclose to
shareholders both the costs and terms of its executive compensation plans, if
the Board wishes to pay executives more than the amounts that are generally
deductible under federal income taxes. If shareholders believe that paying compensation beyond IRS deductibility limits
is necessary to attract talented executives, they will approve the compensation
plans. If not, executives should not accept compensation packages that exceed
what shareholders are willing to support. We urge shareholders to vote FOR this proposal. [INQUIRY LETTER]
November 25, 2003 Patricia A. Wilkerson
Vice President & Corporate Secretary
Dominion Resources, Inc.
120 Tredegar Street
Richmond, VA 23219 Via fax no. 804/819-2233
Re: Shareholder proposal Dear Ms. Wilkerson:
On behalf of the Utility Workers Union of America General Fund, I hereby submit
the enclosed shareholder proposal for inclusion in the Dominion Resources, Inc.
("Company") proxy statement to be circulated to Company shareholders in
conjunction with the 2004 annual meeting. Our organization is a beneficial owner of 100 shares of Company common stock,
and has held these shares continuously for more than one year prior to this date
of submission. We intend to hold these shares at least through the date of the
Company's next annual meeting. I am enclosing a written statement from Merrill
Lynch verifying that that we have continuously held these shares since on or
before January 1, 1980. Either the undersigned or a designated representative will present the proposal
for consideration at the annual meeting of shareholders. Please let me know if
you require additional information. Sincerely,
/s/ Donald E. Wightman
National President [INQUIRY LETTER]
December 16, 2003 Office of the Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Dominion Resources, Inc., Shareholder Proposal
Ladies and Gentlemen: I am writing on behalf of Utility Workers Union of America General Fund in
response to the request by Dominion Resources for a no-action letter in the
above matter. The Company's objections have no merit and should be rejected.
Rule 14a-8(i)(1)the proposal is proper under Virginia law, which clearly
authorizes shareholders to amend the bylaws Dominion's primary objection to the proposalthat it is an improper subject for
shareholder action under state lawis clearly erroneous, not only under Virginia
law, but indeed under the Company's bylaws. The Virginia Stock Corporation Act plainly provides that "a corporation's
shareholders may amend or repeal the corporation's bylaws even though the bylaws
also may be amended or repealed by its board of directors." Indeed, the statute
provides that "the shareholders in adopting or amending particular bylaws [may]
provide expressly that the board of directors may not amend or repeal that
bylaw." Va. Code Ann. §13.1-714. Similarly, Article XXVIII of the Company's bylaws provides:
"Both the Board of Directors and the Shareholders shall have the power to alter,
amend or repeal the Bylaws of the Corporation or to adopt new Bylaws, but Bylaws
enacted by the Shareholders, if expressly so provided, may not be altered,
amended or repealed by the Directors." Thus, it cannot be doubted that shareholders have primacy over the directors
concerning the content of the bylaws. Under Virginia law, moreover, the
corporate bylaws "may contain any provision for managing the business and
regulating the affairs of the corporation that is not inconsistent with law or
the articles of incorporation." Va. Code Ann. §13.1-624.
Both the courts and the SEC staff have recognized this to be the case. See,
e.g., International Brotherhood of Teamsters General Fund v. Fleming Companies.
Inc., 975 P.2d 907 (Okla. 1999) (applying Oklahoma's corporations law,
substantially identical to the Virginia statute, to hold that shareholders
clearly have the authority to amend the bylaws). The staff, moreover, has squarely rejected the position advanced by Dominion in
this case. See, e.g., Southwest Gas Corp. (available March 19, 2002).1
Neither Dominion nor the opinion letter it has submitted from McGuireWoods
bother to mention these provisions of Virginia law or the Company's bylaws.
Instead, Dominion relies on an unsupported proposition that the board of
directors "generally" has the exclusive authority to manage the business of the
company. Whatever else might be said about this general proposition, it cannot
alter the clear statutory right of shareholders to amend the bylaws.
Indeed, Dominion's position would completely eliminate shareholders' rights
under both the statute and the Company's own bylaws. According to the Company,
because §13.1-673 generally provides that the "the business and affairs of the
corporation [shall be] managed under the direction of its board of directors,"
the directors therefore have some exclusive authority to manage the corporation
that cannot be limited by bylaws adopted by the shareholders.
If this were the case, however, the shareholders could adopt no bylaws, even
though the statute and Dominion's bylaws unambiguously grant them this
authority. Under the statute, moreover, shareholders may incorporate into the
bylaws "any provision for managing the business and regulating the affairs of
the corporation," limited only by the law and the articles. Va. Code Ann.
§13.1-624 (emphasis supplied). The meaning of the statute could not be clearer: directors generally have the
authority to manage the corporation's business and affairs, subject however to
the power of the shareholders to adopt or amend the bylaws. Since the
shareholder proposal constitutes a valid bylaws amendment, it may not be omitted
under Rule 14a-8(i)(1).2 Rule 14a-8(i)(6)there is no lack of authority for Dominion to implement the
proposal There is no basis for the Company's position that the New York Stock Exchange
listing requirements remove authority from Dominion to implement the proposal.3
In particular, nothing in the bylaws amendment would prevent the Company's
independent directors from exercising their authority "to determine and approve
the CEO's compensation level." As in the case of any other subject, of course, the directors must comply with
the bylaws. Under our proposal, the Compensation Committee could easily comply,
either by establishing compensation levels within the limits established by the
bylaws orif directors deem higher amounts to be desirableby seeking
shareholder approval. The NYSE listing requirements cited by Dominion are clearly designed to provide
that decisions by directors in establishing executive compensation should be
independent of undue interference by management. It would be ironic indeed if
reforms intended by the Exchange to protect shareholders were interpreted to
violate the shareholders' right under state law to amend the bylaws.
In any event, as Dominion correctly observes, the proposal clearly provides that
it "shall be applied so as not to cause violation of any contract in effect on
the date of adoption of this resolution." Even if the NYSE listing standards
could reasonably be interpreted to preclude shareholders from regulating
executive compensation practices under the bylaws, the proposal by its terms
would not apply to any existing contract Dominion may have with the Exchange.
Thus, the proposal would apply to future contracts only. Remarkably, Dominion
asserts that "where the contractual obligations completely eviscerate the
substance of the bylaw," the former must prevail. With all due respect, we believe Dominion has this precisely backwards: in a
hypothetical conflict between the corporate bylaws and management's future
contractual aspirations, it is the bylaws that prevail. Rule 14a-8(i)(3)the proposal is not misleading
Dominion's claim that the proposal is misleading is based not on any relevant
facts that have been omitted, but rather on the Company's mischaracterizations
of the effect of the proposal. Contrary to Dominion's assertions, compliance with the bylaw would be
straightforward: the Board could simply establish executive compensation levels
within the limits established by the bylaw and IRS deductibility limits, or else
it could seek annual approval from shareholders to pay higher amounts.
Dominion's speculations about the month-to-month compensation levels of its
executives and the timing of its annual meetings are therefore clearly
misplaced. Dominion variously claims that the proposal would be "difficult" to administer,
"burdensome," and "costly." The Company bases these assertions not on any
material "fact" that has been omitted, but rather on a strained interpretation
of the proposal itself. Although these arguments might be proper subjects for management to include in a
statement of opposition in the proxy statement, they clearly provide no basis to
prevent shareholders from voting on the proposal altogether. We believe that,
like managers, shareholders are capable of reading the proposal and determining
its relative merits for themselves. Conclusion
For these reasons, we urge the staff to reject Dominion's request for a
no-action letter. Please let me know if you require additional information
concerning our position in this matter. Sincerely,
/s/ Mark Brooks
cc: Sharon L. Burr, Senior Counsel, Dominion Resources, Inc.
Patricia A. Wilkerson, Vice President and Corporate Secretary
Donald E. Wightman, President, Utility Workers Union of America
-----FOOTNOTES----- 1 The only staff opinion cited by Dominion to support its position, American
Electric Power Co. (available Jan. 16, 2002), did not involve a bylaws amendment
and therefore is clearly inapplicable. 2 In its letter, Dominion suggests that the Proponent was somehow obligated to
accept the Company's invitation to "recast" the proposed bylaws amendment as a
mere precatory recommendation. We declined this invitation because it was based
on an incorrect interpretation of Virginia law. The practice, of course, is for
staff to permit an opportunity for a proponent to recast a mandatory proposal as
a recommendation, but only after first concluding that the company's position
has merit. See, e.g., American Electric Power Co. (available Jan. 16, 2002).
3 The staff has rejected 14a-8(i)(6) as a basis for omission of a shareholder
proposal substantially identical to the present proposal. Mony Group, Inc.
(available Feb. 18, 2003.) [INQUIRY LETTER]
January 2, 2004 Office of the Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Dominion Resources, Inc. Ladies and Gentleman:
On behalf of Dominion Resources, Inc. ("Dominion"), I write to respond to the
letter to your office dated December 16, 2003 from the Utility Workers Union of
American General Fund ("Utility Workers"). Dominion reiterates that the proposal
submitted by the Utility Workers is improper under Virginia law and that the SEC
should reject the arguments set forth in the December 16 letter. An opinion from
McGuireWoods LLP in support of the analysis of Virginia law discussed below is
enclosed. Discussion The Utility Workers attempt to refashion the issue to be whether shareholders
have the authority to amend the bylaws of a Virginia corporation and Dominion's
bylaws in particular. This is not the issue. The question is whether Virginia
law or Dominion's Articles of Incorporation grant shareholders the authority to
manage the business and affairs of the corporation. Neither Virginia law nor
Dominion's Articles permit shareholders to exercise this power.
As the Utility Workers note, the shareholders may amend the Company's bylaws.
Va. Code §13.1-714.3 and Article XXVIII of the Company's bylaws. However, no
bylaw provision can be "inconsistent with the law or the articles of
incorporation." Va. Code §13.1-624. (Dominion's bylaws are consistent with
Virginia law and its Articles because they grant the Board authority to exercise
all corporate powers in managing the affairs of the Company. Bylaws, Article
XX.) The Utility Workers would have the SEC believe that the language of the statute
and Dominion's bylaws, by themselves, answer the question of whether their
proposed amendment is a proper subject of a shareholder vote. They conclude that
by merely having the authority to amend the bylaws, the shareholders may amend
them on any subject. That is clear from their facile argument that the statute
and the bylaw grant shareholders "primacy over the directors" concerning the
content of the bylaws, irrespective of the subject matter. To the contrary, the
statute requires inquiry into whether a bylaw provision is contrary to the
Articles or Virginia law. As discussed below, that inquiry leads to the
unassailable conclusion that the proposed amendment is inconsistent with both
Virginia law and the Company's Articles. Virginia law could not be clearer about the role of a corporation's board of
directors. Section 13.1-673(B) of the Virginia Code states:
All corporate powers shall be exercised by or under the authority of, and the
business and affairs of the corporation managed under the direction of, its
board of directors; subject to any limitation set forth in the articles of
incorporation or in [a voting] agreement authorized under §13.1-671.1.
Having granted the board the corporate power to manage the business and affairs
of the corporation, Virginia law then imposes upon each director the obligation
to exercise that power "in accordance with his good faith business judgment of
the best interests of the corporation." Va. Code §13.1-690.A.
The statutes are consistent with earlier Virginia case law regarding a board's
responsibilities to and its relationship with its shareholders. In an often
cited case, the Virginia Supreme Court in 1944 emphasized repeatedly the
distinction between a company's board and its shareholders regarding the
management of the company's business affairs. Kaplan v. Block, 31 S.E. 2d 893
(Va. 1944). The Court endorsed the following synopsis of general corporate law
from American Jurisprudence: The directors are not ordinary agents in the immediate control of the
stockholders, but the powers of boards of directors are, in a very important
sense, original and undelegated; the stockholders do not confer, nor can they
revoke, those powers or create a sterilized board of directors. Rather, the
directors hold their office charged with the duty to act for the corporation
according to their best judgment, and in so doing they cannot be controlled in
the reasonable exercise and performance of such duty. 13 Am.Jur. 907, sec. 947.
Id. at 895. In Penn v. Pemberton & Penn, 53 S.E. 2d 823 (Va. 1949), the Virginia Supreme
Court reviewed a lower court's decision denying shareholders' request to
dissolve a solvent corporation. The shareholders complained, among other things,
that the board approved the corporation's payment of salaries to officers who
did not deserve them. In rejecting the shareholders' claim, the Supreme Court
noted again that "the board of directors, in its discretion, determines whether
to declare dividends on the stock, or to apply the earnings and surplus to
operating capital, or to some other corporate purpose" Id at 828, 829.
Virginia's statutory and case law is in accord with general corporate law
regarding the division of rights and responsibilities between the board and the
shareholders. See, e.g., 18B Am.Jur. 2d Corporations §1483 (2003) ("The
corporate board of directors, exercising their reasonable and good faith
business judgment, possess the paramount right to control corporate
management"); 18B Am.Jur. 2d Corporations §1492 (2003) ("[The board has] the
discretion, to be exercised in good faith, to control the infinite details of
the business, such as, for example, the number of working hours, the conditions
under which labor is carried on, and the price for which the product is offered
to the public.") Eisenberg, Contractual Freedom & Corporate Law, 89 Colum. L.
Rev. 1461, 1471 (1989) ("under corporate law the shareholders cannot make
ordinary business decisions ..."); Bainbridge, The Board of Directors as Nexus
of Contracts, 88 Iowa L. Rev. 1, 9 (2002) ("All state corporate codes provide
for a system of nearly absolute delegation of power to the board of
directors...This must be so, because shareholders lack both the information and
the incentives necessary to make sound decisions on either operational or policy
questions."). This author cites approvingly Delaware's Chancellor Allen in
Paramount Communications, Inc. v. Time, Inc., 1989 WL 79880 (1989), aff'd
571 A.2d 1140 (Del. 1990) as follows:
The corporation law does not operate on the theory that directors, in exercising
their powers to manage the firm, are obligated to follow the wishes of a
majority of shares. In fact, directors, not shareholders, are charged with the
duty to manage the firm .... That many, presumably most, shareholders would
prefer the board to do otherwise than it has done does not ... afford a basis to
interfere with the effectuation of the board's business judgment.
In examining any bylaw provision, the ultimate question is whether the subject
matter encroaches upon the powers which the law has granted to, and imposed
upon, the board of directors. Does the Utility Workers' proposed amendment
regarding executive compensation fall within the province of ordinary business
decisions which the Board must make in fulfilling its obligation to manage the
business and affairs of the Company? Clearly it does. One of the fundamental functions reserved to the Board of Directors is the
hiring and retention of the best officer corps possible. This is central to
managing the business affairs of the corporation. And setting compensation is
critical to attracting and retaining competent officers. Courts have recognized
this self-evident proposition. For example, in Cohen v. Ayers,
596 F.2d 733
(7thCir. 1979), a shareholder challenged a corporation's board actions with
respect to employee stock options. The Court rejected the claim, as had the
trial court, and opined that "The question of the adequacy of consideration [for
the options] is committed to the sound business judgment of the corporation's
directors." Id. At 739. To counter the argument the Utility Workers rely in part on the Staff response
to the no action letter request in Southwest Gas Corporation. Apart from
significant differences in the nature of the California statute that was at
issue, the proposed bylaw in that matter related to the adoption of a
shareholder rights plan. The proponent noted that "the shareholder rights plan
has no effect on the business and affairs of the corporation itself but only on
the ownership of shares of stock of the corporation ...." See February 1, 2002
letter to SEC from Richard G. McCracken, counsel for the proponent. Here, the
Utility Workers cannot and do not make the argument that executive compensation
does not fall within the scope of the management of the business and affairs of
the corporation which has been entrusted to the sound business judgement of the
Company's board. The Utility Workers also argue incorrectly that International
Brotherhood of Teamsters General Fund v. Fleming Companies, Inc.,
975 P.2d 907
(Okla. 1999) supports their proposal. Once again, the Court in International
Brotherhood was addressing a shareholder rights plan. Article V of Dominion's Articles of Incorporation puts the corporation's
business and affairs in the hands of the Board of Directors. Paragraph One of
Article V of the Articles of Incorporation states: The business and affairs of the Corporation shall be managed by or under the
direction of a board of directors consisting of not less than ten nor more than
seventeen Directors, the exact number of Directors to be determined from time to
time by resolution adopted by the affirmative vote of a majority of the
Directors then in office or at least two-thirds of the shares entitled to vote
at a meeting of Stockholders. Article V is simply a corporate codification of Va. Code §13.1-673.B. Any
amendment to the Company's bylaws which is inconsistent with the Articles would
be impermissible under Va. Code §13.1-624. As detailed above, the Utility
Workers' proposed amendment is in direct contravention of the Articles as well
as Virginia law. In sum, the proposed amendment is invalid unless it is
concluded that the decision to hire and compensate corporate officers falls
outside the scope of managing the business and affairs of the Company. That
supposition is incorrect, and it has not been put forward by the Utility Workers
for obvious reasons. We note that the Utility Workers' letter also speaks to the other grounds for
exclusion discussed in our letter of December 11, 2003. We disagree and
reiterate our views as stated in our December 11 letter. For these reasons, we
hereby repeat our request that the Division of Corporation Finance concur with
our view that the Proposal may be omitted from our proxy materials.
Six copies of this letter are enclosed as well as six copies of our opinion of
counsel with respect to the state law matters discussed herein. If you have any
questions or need additional information, please call me at (804) 819-2171 or
our Vice President and Corporate Secretary, Patty Wilkerson, at (804) 819-2120.
Sincerely, /s/
James F. Stutts cc: Patricia A. Wilkerson, Vice President and Corporate Secretary
Sharon L. Burr, Senior Counsel
Donald E. Wightman, President, Utility Workers Union of America
Mark Brooks, Esq.
[STAFF REPLY LETTER]
January 2, 2004 Dominion Resources, Inc.
120 Tredegar Street
Richmond, VA 23219
Office of Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Response Letter from the Utility Workers Union of America General Fund
Ladies and Gentlemen: We are counsel to Dominion Resources, Inc., a Virginia corporation ("Dominion").
Dominion submitted a letter to your Office on December 11, 2003 requesting a
"no-action" letter in connection with a shareholder proposal submitted by the
Utility Workers Union of America General Fund (the "Proponent") for inclusion in
Dominion's proxy materials for its 2004 Annual Meeting of Shareholders. On
December 16, 2003, Dominion received a copy of the letter submitted by the
Proponent to your Office in response to Dominion's no-action letter request. We
have reviewed the Proponent's response letter, the letter dated January 2, 2004
from James F. Stutts, Vice President and General Counsel of Dominion, to your
Office (the "Letter") and such other documents as we have deemed necessary or
appropriate as a basis for the opinions set forth herein. We believe that the statements contained in the Letter, to the extent they
purport to describe the laws of the Commonwealth of Virginia, are fair
statements of Virginia law. While we cannot predict with certainty the outcome
of any litigation concerning the application of the Virginia Stock Corporation
Act to Dominion, we believe that a Virginia court, if properly presented with
the issues concerning Virginia law that are discussed in the Letter, would reach
the same conclusions contained in the Letter. This opinion is rendered solely to the addressees hereof. This opinion may not
be relied upon for any other purpose, or by any other person, without our prior
written consent. If you have any questions concerning this matter, please contact Jane Whitt
Sellers, Esq. at (804) 775-1054. Very truly yours,
/s/ [INQUIRY LETTER]
January 7, 2004 521 Gallatin Road, Suite 7
P.O. Box 68380
Nashville, Tennessee 37206
(615) 227-4350
(615) 227-4351 (fax)
Office of the Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Dominion Resources, Inc., Shareholder Proposal
Ladies and Gentlemen: I am writing on behalf of Utility Workers Union of America General Fund in
response to the Jan. 2, 2004, letter from Dominion Resources in the above
matter. Dominion fails to establish that the proposal is an improper subject for
shareholder action The central fallacy of Dominion's position is this: from the unremarkable
statutory principle that "the business and affairs of the corporation [shall be]
managed under the direction of its board of directors," the Company would
fashion a sweeping prohibition against shareholders enacting any bylaw that
might concern the "business and affairs" of the Company.
This ignores the fact that Virginia law expressly provides that "a corporation's
shareholders may amend or repeal the corporation's bylaws," and moreover that
the bylaws "may contain any provision for managing the business and regulating
the affairs of the corporation" not inconsistent with law or the articles.1
Clearly, Dominion's position proves too much: if shareholders were prohibited
from enacting bylaws that restrict directors' ability to manage "the business
and affairs of the corporation" or to exercise "all corporate powers," then
plainly shareholders could enact no bylaws. Indeed, it is difficult to imagine
any subject for a corporate bylaw that would pass muster under the Company's
interpretation of the statute. The Virginia legislature, however, has made plain that the shareholders' right
to amend the bylaws is coextensive with the directors' power to manage the
"business and affairs" of the corporation. The only way to read §13.1-673
consistently with §§13.1-624 and 13.1-714 is that the board has the authority to
manage the corporation, but this authority is subject to the shareholders' right
to amend the bylaws. Other than this general grant of authority for the board to manage the affairs
of the corporation, Dominion cites no provision of the articles of incorporation
or Virginia law that the proposed bylaws amendment would supposedly violate.
None of the authorities cited by the Company, moreover, involved the
shareholders' undisputed statutory right to amend the bylaws.2
Dominion's position is contrary to the relevant case law and SEC staff opinions
The only case on point, Int'l Brotherhood of Teamsters General Fund v. Fleming
Companies, Inc.,3 clearly contradicts Dominion's position. The Company's
suggestion that Fleming is limited to shareholders' right to enact bylaws
dealing with poison pills cannot withstand scrutiny. The Oklahoma Supreme Court made clear in Fleming that the case broadly involved
a question of "corporate governance and what degree of control shareholders can
exact upon the corporation is which they own stock." While acknowledging that
corporate boards certainly have the power to manage the corporation, the court
squarely held that corporate owners can exercise their statutory right to
"shareholder oversight" by enacting valid bylaws.4
Nor is there any logic to Dominion's claim that a shareholder rights plan does
not involve an exercise of "corporate power" or management of the "business and
affairs" of the corporation. A poison pill is a merely a form of contract
designed to discourage unsolicited corporate takeovers. It involves the exercise
of corporate poweri.e., the power to enter into contractsand management of the
company's business as much as any other subject Dominion's reasoning would
withhold from shareholder-enacted bylaws. Similarly, Dominion's assertion that the SEC staff response in Southwest Gas
Corp. was limited to bylaws amendments concerning poison pills is clearly
incorrect. Staff has rejected the exact position advanced by Dominion in this
matter in the case of bylaws amendments involving a variety of
subjectsincluding executive compensation. See, e.g., Commonwealth Energy Corp.
(available Nov. 15, 2002) (bylaw proposal regulating executive compensation and
director indemnification); Cell Pathways, Inc. (available April 4, 2003) (bylaw
proposal requiring shareholder approval of executive stock options); and The Kroger Co. (available April 11, 2003) (bylaw proposal creating a shareholder
committee). Conclusion In summary, it cannot be said that Dominion has met its burden of proving that
state law renders the proposed bylaw amendment an improper subject for
shareholder action.5 The Company's position is contrary to the plain meaning of
the statute and the corporate bylaws, and moreover has been rejected by numerous
SEC staff opinions. Dominion also fails to cite any Virginia case concerning the
scope of shareholders' power to amend the bylaws, or to distinguish the only
reported decision that addresses the subject. By contrast, the Virginia Supreme Court has long recognized that the state
statute "insures ultimate corporate control in the shareholders,"
notwithstanding the broad authority of directors to manage the business. This is
true, according to the Court, to the extent that the board's own power to amend
bylaws may not be exercised in a way that would defeat other bylaws "the
instrument regulating the intracorporate balance of power" or that might lead
to "usurpation of shareholder control of those matters which may be most vital
to their protection." 6 For these reasons, we urge the staff to decline Dominion's request for a
no-action letter in this matter. Sincerely,
/s/ Mark Brooks
cc: James F. Stutts, Vice President & General Counsel, Dominion Resources, Inc.
Donald E. Wightman, President, Utility Workers Union of America
-----FOOTNOTES----- 1 Va. Code Ann. §§13.1-624 & 13.1-714.
2 Penn v. Pemberton & Penn, 53 S.E.2d 823 (Va. 1949), for example, involved a
lawsuit by minority shareholders challenging the board's power to declare
dividends or pay executive salaries. The case has nothing to say about
shareholders' statutory right to regulate executive compensation by enacting
valid bylaws. 3 975 P.2d 907, 910-11 (Okla. 1999).
4 The section of the Oklahoma corporation statute relied upon by Fleming was
virtually identical to the Virginia statute cited by Dominion: "The business and
affairs of every corporation ... shall be managed by or under the direction of a
board of directors, except as may be otherwise provided for in this act or in
the corporation's certificate of incorporation." Okla. Stat. Ann., tit. 18,
§1027(A). 5 Southwest Gas Corp. (available March 19, 2002) (corporation must meet "its
burden of establishing that the proposal is an improper subject for shareholder
action under applicable state law"). 6 Scott County Tobacco Warehouses, Inc. v. Harris, 214 Va. 508, 201 S.E.2d 780
(1974). [INQUIRY LETTER]
January 20, 2004 Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Shareholder Proposal - Dominion Resources, Inc.
Ladies and Gentlemen: We have been asked by Dominion Resources, Inc., a Virginia corporation
("Dominion"), to review the correspondence relating to a shareholder proposal
(the "Proposal") submitted to Dominion on November 25, 2003 by the Utility
Workers Union of America General Fund (the "Proponent") and to respond to the
Proponent's letter to the Staff dated January 7, 2004. Our response below is
based on a review of the Proponent's initial submission to Dominion dated
November 25, 2003, Dominion's initial letter to the Staff dated December 11, the
Proponent's letter to the Staff dated December 16, Dominion's further
correspondence to the Staff dated January 2, and the Proponent's letter to the
Staff dated January 7. Virginia Law The Proposal seeks to amend Dominion's by laws to prohibit Dominion from paying
compensation in excess of the deductibility limits established by the Internal
Revenue Code unless Dominion first obtains the approval of "a majority of the
Shareholders within one year preceding the payment of such compensation."
Dominion's prior correspondence to the Staff sets forth three bases for
excluding the Proposal: Rules 14a-8(i)(1), (3) and (6). The Proponent's January
7 letter addresses only Rule 14a-8(i)(1), which permits exclusion of a proposal
that is not a proper subject for shareholder action under applicable state law.
As Dominion explained in its letter of January 2, Section 13.1-673(B) of the
Virginia Code confers upon the board of directors of a Virginia corporation the
exclusive authority to manage the business and affairs of the corporation.
Because the determination of executive compensation is a component of the
business and affairs of a corporation, and no provision of Virginia law or
Dominion's certificate of incorporation authorizes shareholders to override the
board's determination of executive compensation, a shareholder proposal that
limits the board's authority to determine executive compensation by imposing a
shareholder approval requirement is inconsistent with Virginia's corporate code
and therefore is not a proper subject for shareholder action under Virginia law.
These conclusions regarding Virginia law are set forth in Dominion's letter of
January 2 and are supported by the legal opinion of McGuireWoods LLP, Dominion's
Virginia counsel, which accompanied Dominion's letter. The Proponent has not
submitted a legal opinion addressing Virginia law or the conclusions set forth
in Dominion's letter of January 2. Instead, in its letter of January 7, the
Proponent provides the views of a Tennessee-based attorney regarding the scope
and application of Virginia law.1 The Proponent's letter argues that, because
Section 13.1-624 of the Virginia Code provides that the shareholders of a
Virginia corporation may amend the corporation's bylaws, a shareholder proposal
couched as a bylaw amendment is necessarily a proper subject for shareholder
action. For the reasons set forth below, we believe that the Proponent misreads
the authorities cited in support of this argument, and that the Proposal is
excludable under Rule 14a-8(i)(1). The Proposal Is Inconsistent with Virginia Law
Dominion's letter of January 2 and the accompanying legal opinion of
McGuireWoods make clear that the bylaw amendment proposed by the Proponent is
inconsistent with Section 13.1-673(B) of the Virginia Code, which confers upon
the board of directors the authority to manage the business and affairs of the
corporation, including executive compensation. Although Virginia law does
authorize the shareholders to propose and adopt amendments to the corporation's
bylaws, that authority is limited by Section 13.1-714 of the Virginia Code,
which prohibits inclusion in the bylaws of any provision that is inconsistent
with law. Because the bylaw amendment proposed by the Proponent is inconsistent
with Section 13.1-673(B)'s allocation of management responsibility to the board
of directors, the Proposal is inconsistent with Virginia law and therefore, we
believe, is not a proper subject for shareholder action. The Fleming Case Is Inapposite
The Proponent argues that International Brotherhood of Teamsters General Fund v.
Fleming Companies, Inc.,
975 P.2d 907 (Okla. 1999), is "on point" and "clearly
contradicts Dominion's position." We believe that the Proponent's reliance on
Fleming is misplaced, for two reasons. The Oklahoma Statute Interpreted in Fleming Was Not Similar to the Virginia
Statute Relied on by Dominion Fleming involved the question whether Oklahoma law allowed shareholders of an
Oklahoma corporation to initiate and adopt a bylaw amendment prohibiting the
board of directors from adopting a "shareholder rights plan" without shareholder
approval. The proponent in that case argued that a shareholder proposal cast as
a bylaw amendment was a proper subject for shareholder action because Section
1013 of the Oklahoma corporate code provided that shareholders may amend the
corporation's bylaws, so long as the amendment is not inconsistent with law or
the corporation's certificate of incorporation. The registrant did not counter
that the proposal was inconsistent with a statute conferring management
authority on boards of directors, but instead argued that the proposal was
inconsistent with Section 1038 of the Oklahoma corporate code, which provided
that every "corporation" has the right to issue options (which underlie a
shareholder rights plan). The Oklahoma Supreme Court held that Section 1038's
reference to the power of a "corporation" to issue options did not confer
exclusive authority on the board of directors, but was intended to confer
authority over options on shareholders as well. The court reasoned that, if the
state legislature had intended to restrict the authority to issue options to the
board of directors, the legislature would have used the term "board of
directors" in Section 1038 instead of the broader term "corporation."
The Proponent states (in footnote 4 of its January 2 letter) that "[t]he section
of the Oklahoma corporation statute relied upon by Fleming was virtually
identical to the Virginia statute cited by Dominion." In fact, however, the
Virginia statute cited by Dominion, Va. Code §13.1-673(B), expressly provides
that the business and affairs of the corporation are to be managed under the
direction of "the board of directors." Unlike the Oklahoma statute relied on by
the court in Fleming, therefore, the Virginia statute unambiguously confers
authority on the board of directors, not on "the corporation." Accordingly,
Fleming does not support the Proponent's position, and in fact suggests that the
Proposal is excludable under Rule 14a-8(i)(1). Shareholder Rights Plans Are Not Similar to Executive Compensation
Shareholder rights plans have a controversial history, and the authority of
boards to adopt them was initially unclear. As the court noted in Fleming, many
states have enacted statutes expressly permitting boards to adopt shareholder
rights plans, and Oklahoma's failure to adopt such a statute was a factor in the
court's conclusion that the board of directors did not have exclusive authority
to adopt a shareholder rights plan. The authority of boards of directors to
establish executive compensation, in contrast, has never been in doubt. To the
contrary, the listing standards recently adopted by the New York Stock Exchange
and Nasdaq make clear that the board of directors, and specifically the
compensation committee, is responsible for determining executive compensation.
The policy concerns that contributed to the court's holding in Fleming,
therefore, do not apply to executive compensation. Even with respect to shareholder rights plans, the Fleming case does not
necessarily dictate the result in other states. In Quickturn Design Systems,
Inc. v. Mentor Graphics Corp.,
721 A.2d 1281 (Del.Sup.Ct. 1998), the Delaware
Supreme Court held that a defensive measure barring a newly elected board from
redeeming the company's shareholder rights plan was inconsistent with Section
141(a) of the Delaware General Corporation Law (which, like Section 13.1-673(B)
of the Virginia Code, vests the board of directors with the authority to manage
the corporation). In finding that "dead-hand" provisions are invalid under
Section 141(a), the court noted that "[o]ne of the most basic tenets of Delaware
corporate law is that the board of directors has the ultimate responsibility for
managing the business and affairs of a corporation. Section 141(a) requires that
any limitation on the board's authority be set out in the certificate of
incorporation." 721 A.2d at 1291. This statement suggests that any mandatory
bylaw amendment that prevents a board of directors from fulfilling its fiduciary
duty to manage the business and affairs of the corporation is not a proper
subject for shareholder action, at least under Delaware law. See Richards &
Stearn, Shareholder By-laws Requiring Boards of Directors to Dismantle Rights
Plans Are Unlikely to Survive Under Delaware Law, 54 Bus. Law. 607 (1999);
Hamermesh, The Shareholder Rights By-Law: Doubts from Delaware, Corp. Gov.
Advisor (Jan./Feb. 1997). Prior Staff Positions Support Exclusion of the Proposal
Historically, the Staff has taken the position that a shareholder-proposed bylaw
amendment that would restrict the board's ability to determine executive
compensation is excludable under Rule 14a-8(i)(1). See PacificCorp, Inc.
(February 24, 1994). Even when not proposed as a bylaw amendment, a proposal
seeking to mandate (rather than recommend) limitations on the board's authority
to determine executive compensation has been deemed excludable under Rule
14a-8(i)(1). See Union Pacific Corporation (January 25, 1999); Kroger Co. (April
21, 2000). Despite these Staff positions, the Proponent states that "the Staff has rejected
the exact position advanced by Dominion in this matter in the case of bylaws
amendments involving a variety of subjects - including executive compensation."
The Proponent then cites four no-action letters that, in our view, do not
support the Proponent's position. The shareholder proposal in Kroger Co. (April 11, 2003) involved a bylaw
amendment that would have required the board of directors to appoint an advisory
committee of shareholders if the board failed to implement a Rule 14a-8 proposal
that had received a majority vote of shareholders. The proposed bylaw would
merely have required the board to consult with an advisory committee, and did
not seek to limit the board's unfettered authority to act as it considered
appropriate and in accordance with its fiduciary duty. The bylaw amendment proposed in Southwest Gas Corporation (March 19, 2002) did
not involve executive compensation, but would have prohibited the board of
directors from adopting a shareholder rights plan without shareholder approval.
For the reasons discussed above, proposals relating to shareholder rights plans
are substantively different from proposals relating to executive compensation.
The bylaw amendment proposed in Cell Pathways, Inc. (April 4, 2003) would have
required shareholder approval of option grants to, and option repricings
involving, named executive officers. The registrant sought to exclude the
proposal under Rules 14a-8(i)(2) and (6), but not Rule 14a-8(i)(1). Accordingly,
the Staff did not address the excludability of the proposal under Rule
14a-8(i)(1). Finally, Commonwealth Energy Corporation (Nov. 15, 2002) involved multiple
proposals, only one of which related to executive compensation. The executive
compensation proposal would have required that executive bonuses be based on
performance criteria and that every $1 contributed to the bonus pool for
managers be matched with a contribution of at least $10 for dividends. The Staff
permitted the registrant to exclude the proposal under Rule 14a-8(i)(13), as
relating to dividends, and did not address Rule 14a-8(i)(1). Another proposal
involved a bylaw amendment relating to the compensation and indemnification of
non-employee directors, not executive compensation, and the Staff declined to
permit exclusion of the proposal under Rule 14a-8(i)(1). The California statute
at issue was one that related to the authority of directors to set their own
compensation, and was not a provision, like Section 13.1-673(B) of the Virginia
Code, that granted general management authority to the board of directors.
Accordingly, Commonwealth Energy has little relevance to the excludability of
the Proposal. Conclusion Based on the foregoing analysis, we believe that the Proposal may be omitted
from Dominion's proxy materials in reliance on Rule 14a-8(i)(1).
As required by Rule 14a-8(j)(2), we are enclosing six copies of this letter. In
accordance with Rule 14a-8(j)(1), a copy of this letter is being sent
simultaneously to the Proponent. If you should have any questions regarding the matters set forth in this letter,
please contact me at (202) 637-5737 or Tom Morey at (202) 637-6868.
Sincerely, /s/
Alan L. Dye Enclosures
ccs: James F. Stutts
Patricia A. Wilkerson
Dominion Resources, Inc.
Mark Brooks
Donald E. Wightman, President, Utility Workers Union of America
-----FOOTNOTES----- 1 Dominion has supported its position with a legal opinion of Virginia counsel
of national reputation. The Proponent has provided the views of a
Tennessee-licensed attorney, which are not supported by any demonstrated
expertise on matters of Virginia corporate law. In Staff Legal Bulletin No. 14,
the Staff stated that "[i]n determining how much weight to afford these
opinions, one factor we consider is whether counsel is licensed to practice law
in the jurisdiction where the law is at issue."
[STAFF REPLY LETTER]
January 25, 2004 Response of the Office of Chief Counsel
Division of Corporation Finance
Re: Dominion Resources
Incoming letter dated December 11, 2003
The proposal would amend the bylaws to provide that no officer of the
corporation receive annual compensation in excess of the limits established by
U.S. Internal Revenue Code without shareholder approval. We are unable to conclude that Dominion Resources has met its burden of
establishing that Dominion Resources 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 Dominion Resources 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 Dominion Resources may exclude the
proposal under rule 14a-8(i)(3). Accordingly, we do not believe that Dominion
Resources may omit the proposal from its proxy materials in reliance on rule
14a-8(i)(3). We are unable to concur in your view that Dominion Resources may exclude the
entire proposal under rule 14a-8(i)(8). Accordingly, we do not believe that
Dominion Resources may omit the proposal from its proxy materials in reliance on
rule 14a-8(i)(8). Sincerely, /s/
Michael R. McCoy
Attorney-Advisor |
