Company Name: Intel Corp.
Public Availability Date: January 29, 2004Document Sections:
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER [INQUIRY LETTER]
January 9, 2004 Direct Dial
(202) 955-8671
Fax No.
(202) 530-9569 VIA HAND DELIVERY
Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Stockholder Proposal of Mr. Robert D. Morse Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen: This letter is to inform you that our client, Intel Corporation ("Intel" or the
"Company"), intends to omit from its proxy statement and form of proxy for its
2004 Annual Stockholders Meeting (collectively, the "2004 Proxy Materials") a
stockholder proposal and supporting statement (the "Proposal") received from Mr.
Robert D. Morse (the "Proponent"). The Proposal, which the Company received on
August 27, 2003, and as revised on September 17, 2003, are attached hereto as
Exhibit A. The Proposal requests that the Company consider revising its executive
compensation policy with respect to its "Top Management." On behalf of our
client, we hereby notify the Division of Corporation Finance of Intel's
intention to exclude the Proposal from its 2004 Proxy Materials on the bases set
forth below, and we respectfully request that the staff of the Division of
Corporation Finance (the "Staff") concur in our view that the Proposal is
excludable on the bases set forth below. Pursuant to Rule 14a-8(j), enclosed herewith are six (6) copies of this letter
and its exhibits. Also in accordance with Rule 14a-8(j), we are mailing on this
date a copy of this letter and its exhibits to the Proponent, informing him of
the Company's intention to exclude the Proposal from the 2004 Proxy Materials.
Intel intends to file its definitive 2004 Proxy Materials with the Securities
and Exchange Commission (the "Commission") on or about April 1, 2004.
Accordingly, pursuant to Rule 14a-8(j), this letter is being submitted not less
than 80 days before Intel intends to file its definitive proxy statement and
form of proxy with the Commission. BASES FOR EXCLUSION
We believe that the Company may exclude the Proposal from the 2004 Proxy
Materials pursuant to the following rules:
Rule 14a-8(b) and Rule 14a-8(f)(1), because the Proponent did not provide the
requisite proof of continuous stock ownership in response to Intel's request for
that information;
Rule 14a-8(i)(3), because the Proposal is vague and indefinite and therefore
potentially misleading; and
Rule 14a-8(i)(4), because the Proponent has repeatedly submitted proposals for
the last three years in which he has failed each and every time to provide
evidence of continuous beneficial ownership of Intel stock.
I. The Proposal May Be Excluded under Rule 14a-8(b) and Rule 14a-8(f)(1) Because
the Proponent Failed to Establish the Requisite Eligibility to Submit the
Proposal. The Company believes that it may exclude the Proposal under Rule 14a-8(f)(1)
because the Proponent did not substantiate his eligibility to submit the
Proposal under Rule 14a-8(b). Rule 14a-8(b)(1) provides, in part, that "[i]n
order to be eligible to submit a proposal, [a stockholder] must have
continuously held at least $2,000 in market value, or 1%, of the company's
securities entitled to be voted on the proposal at the meeting for at least one
year by the date [the stockholder submits] the proposal." The Proponent does not
appear on the records of Intel's stock transfer agent as a stockholder of
record. The Proponent did not include evidence demonstrating that he satisfied
Rule 14a-8(b) with his August 21, 2003 letter to Intel accompanying the
Proposal. See Exhibit A. Accordingly, in a letter dated September 4, 2003, which
was sent within 14 days of Intel's receipt of the Proposal, Intel informed the
Proponent of the requirements of Rule 14a-8(b), stated the type of documents
that constitute sufficient proof of eligibility, and indicated that the
Proponent's response had to be postmarked within 14 days of his receipt of
Intel's letter. See Exhibit B. Intel's September 4 letter was sent to the
Proponent via overnight delivery, and Intel has confirmation from the courier
company that the Proponent received the letter on September 5, 2003. See Exhibit
C. The Proponent's response to Intel, which was forwarded to Intel by facsimile
by TD Waterhouse Investor Services, Inc., the Proponent's broker, was received
more than 14 days after the Proponent received Intel's September 4 letter. See
Exhibit D. Furthermore, this purported substantiation of ownership was deficient
in several respects as Staff Legal Bulletin No. 14 (avail. July 13, 2001) states
in Section C.1.(c)(3) that "A shareholder must submit proof from the record
holder that the shareholder continuously owned the securities for a period of
one year as of the time the shareholder submits the proposal." The broker's
letter verified the Proponent's ownership as of September 19, 2003 and not as of
August 27, 2003, the date on which the Proponent submitted the Proposal.
Moreover, the broker's letter provided ownership information only as of a single
day, and failed to establish that the Proponent owned the requisite amount of
Intel securities for at least one year prior to August 27, 2003. Thus, Intel
never received sufficient evidence of the Proponent's continuous beneficial
ownership of Intel stock. Rule 14a-8(f) provides that a company may exclude a stockholder proposal if the
proponent fails to provide evidence that he has satisfied the beneficial
ownership requirements of Rule 14a-8(b), provided that the company timely
notifies the proponent of the problem and the proponent fails to correct the
deficiency within the required time. Intel satisfied its obligation under Rule
14a-8 through its September 4 letter to the Proponent, which clearly stated:
the ownership requirements of Rule 14a-8(b)(1),
the type of documentation necessary to demonstrate beneficial ownership under
Rule 14a-8(b)(2)(i) and (ii), and
that the Proponent's response had to be postmarked within 14 days after his
receipt of Intel's letter. On numerous occasions, the Staff has taken a no-action position concerning a
company's omission of stockholder proposals based on a proponent's failure to
provide evidence of his eligibility under Rules 14a-8(b) and (f)(1). In fact,
the Proponent submitted proposals for inclusion in Intel's 2002 and 2003 Proxy
Materials and at those times the Proponent also failed to satisfy the
requirement that he show proof of continuous ownership, notwithstanding Intel's
correspondence in which Intel explained those requirements. The Staff granted
no-action relief in both cases. See Intel Corp. (avail. Mar. 10, 2003) and Intel
Corp. (avail. Feb. 15, 2002). See also Motorola, Inc. (avail. Sept. 28, 2001);
Target Corp. (avail. Mar. 12, 2001); Saks Inc. (avail. Feb. 9, 2001); Johnson &
Johnson (avail. Jan. 11, 2001). The Staff has extended a proponent's correction
period beyond 14 days upon finding deficiencies in the company's communication.
See, e.g., Sysco Corp. (avail. Aug. 10, 2001); General Motors Corp. (avail.
April 3, 2001) (extending the correction period because the company's notice did
not adequately describe the documentation required under Rule 14a-8(b)). In the
present case, we do not believe that an extension of the response period is
warranted because Intel's September 4 letter notifying the Proponent of his need
to present satisfactory evidence supporting his beneficial ownership of Intel's
stock fully complied with the requirements of Rule 14a-8(f)(1): (1) Intel
furnished the Proponent with all relevant information (including the
requirements for eligibility, the required documentation and the deadline for
response) in the notice of deficiency; and (2) provided the notice in a timely
fashion. In addition, the Proponent should be well aware of the need to satisfy
the beneficial ownership requirements through his past attempts to avail himself
of the stockholder proposal rules. Despite Intel's notification to him, the
Proponent still failed to provide Intel with satisfactory evidence of the
requisite beneficial ownership. We believe that the Company's repeated
experiences with the Proponent, in which he submits a proposal but never
demonstrates sufficient proof of beneficial ownership, suggests that the
Proponent harbors some type of personal grudge against the Company. Accordingly,
we believe that the Company may exclude the Proposal under Rule 14a-8(b) and
Rule 14a-8(f)(1). II. The Proposal Is Vague and Indefinite And Thus It May Be Excluded Both Under
Rule 14a-8(i)(3) for Violating Rule 14a-9 and Under Rule 14a-8(i)(6).
The Proposal properly may be omitted from the 2004 Proxy Materials pursuant to
Rule 14a-8(i)(3), which allows the exclusion of a stockholder proposal where the
proposal or supporting statement are contrary to any of the Commission's proxy
rules and regulations. The Proposal is so vague and indefinite that they violate
Rule 14a-9's prohibition on false and misleading statements in proxy
solicitation materials. In addition, because the Proposal is vague, they also
may be omitted from the 2004 Proxy Materials under Rule 14a-8(i)(6) because the
Company would be unable to determine what actions are required to be taken and
thus lacks the power to implement the Proposal. The Staff has consistently taken the position that stockholder proposals that
are vague and indefinite are excludable under Rule 14a-8(i)(3) as inherently
misleading because neither the stockholders nor the company's board would be
able to determine, with any reasonable amount of certainty, what action or
measures would be taken if the proposal were implemented. See, e.g., Proctor &
Gamble Co. (avail. Oct. 25, 2002), Philadelphia Electric Co. (avail. Jul. 30,
1992). The Staff has applied this long line of precedent to stockholder
proposals concerning executive compensation. See, e.g., Woodward Governor Co.
(avail. Nov. 26, 2003) (proposal requesting that "compensation" for the
"executives in the upper management (that being plant managers to board
members)" be based on stock growth); Pfizer Inc. (avail. Feb. 13, 2003)
(proposal requesting that the board make all stock options to management and the
board of directors at no less than the "highest stock price"); General Electric
Co. (avail. Feb. 5, 2003) (proposal requesting board to seek stockholder
approval "for all compensation for Senior Executives and Board members not to
exceed more than 25 times the average wage of hourly working employees");
General Electric Co. (avail. Jan. 23, 2003) (proposal seeking "an individual cap
on salaries and benefits of one million dollars for G.E. officers and
directors"). The Proposal would discontinue "all rights, options, SAR's and possible
severance payments to top 5 of Management after expiration of existing plans or
commitments" but "does not apply to plans for lesser Managers or employees whom
are offered reasonable employee options or bonuses." As with the proposals at
issue in Woodward Governor, Pfizer and the two GE letters, it would be
impossible for the Company to implement the Proposal or for the Company's
stockholders to understand what they would be voting for, because the Proposal
is impossibly vague. Specifically:
The Proposal would require that the Company discontinue "rights." No other
language in the Proposal (including the Supporting Statement) elaborates on what
type of "rights" are referred to, other than the fact that the context suggests
that the Proponent intends to address some type of compensation right. Thus, the
term "rights" is so broad and vague that shareholders would not know the scope
of arrangements that the Proposal seeks to discontinue, and the Company would
not know how to implement the Proposal.
The Proposal would require the Company to discontinue "possible severance
payments." Again, the scope of this term is unclear, as neither shareholders nor
the Company would know whether this provision calls for the elimination of
retirement benefits.
The Proposal addresses certain arrangements for "top 5 of Management" but has
an exception for "plans for lesser Managers or employees." As with the proposal
in Woodward Governor Co., the contraposition of these two categories makes it
unclear how the Proposal is to be applied. It is unclear whether the exception
is intended to mean that some of the "top 5 of Management" are not to be
affected by the Proposal if they are either "lesser Managers" or "employees"
(and it should be noted that each of the Company's named executive officers is
also an employee). Alternatively, the exception may be interpreted as meaning
that the "top 5 of Management" may continue to participate in plans providing
"rights, options, SARs and possible severance payments" as long as those plans
also offer "reasonable employee options or bonuses" to "lesser Managers or
employees" (in which case it is unclear how to determine whether the level of
employee options and bonuses available under such plans are "reasonable").
As a result of these vague and indefinite provisions in the Proposal, it is
excludable under Rule 14a-8(i)(3) as misleading "because any actions(s)
ultimately taken by the Company upon implementation of this proposal could be
significantly different from the actions(s) envisioned by shareholders voting on
the proposal." Occidental Petroleum Corp. (avail. Feb. 11, 1991). In addition,
the Proposal may also be properly excluded pursuant to Rule 14a-8(i)(6) since it
is vague and ambiguous, with the result that a company "would lack the power to
implement" the Proposal. A company "lack[s] the power or authority to implement"
a proposal when the proposal "is so vague and indefinite that [the company]
would be unable to determine what action should be taken." Int'l Business
Machines Corp. (avail. Jan. 14, 1992); Dyer v. SEC, 287 F.2d 773, 781 (8th Cir.
1961) ("it appears to us that the proposal as drafted and submitted to the
company, is so vague and indefinite as to make it impossible for either the
Board of Directors or the shareholders at large to comprehend precisely what the
proposal would entail."). III. The Proposal May Be Excluded Under Rule 14a-8(i)(4) Because The Proponent's
Behavior is Indicative of a Personal Grievance. We also believe that the Company is entitled to prospective relief under Rule
14a-8(i)(4) because the Proponent has repeatedly submitted proposals for the
last three years in which he has failed each and every time to provide evidence
of continuous beneficial ownership of Intel stock.1 The Commission has
recognized that where a proponent has a long-standing history of confrontation
with a company, that history is indicative of a personal claim or grievance
within the meaning of current Rule 14a-8(i)(4) and that a proposal may be
excludable on this ground even though, on its face, it does not reveal the
underlying dispute or grievance. See Unocal Corporation (avail. Jan. 14, 1999)
(same proposal submitted for three years by proponent, excluded each time by the
Commission, seen as personal grievance); Cabot Corporation (avail. Nov. 4, 1994;
Nov. 29, 1993; Dec. 3, 1992; Nov. 15, 1991; Sept. 13, 1990; Nov. 24, 1989; Nov.
9, 1988; and Oct. 30, 1985) (eight separate proposals by disgruntled former
employee to limit indemnification of directors and officers determined by the
Staff as properly excludable). In its 1994 no-action letter to Cabot
Corporation, the Staff specifically permitted Cabot to apply its response to any
future submissions to Cabot of a same or similar proposal by the proponent. See
also Texaco, Inc. (avail. Feb. 15, 1994) (staff allowed omission of proposal
relating to executive compensation under Rule 14a-8(c)(4). The Staff also
permitted Texaco to apply ruling to any future submissions of the same or
similar proposals by the same stockholder). Accordingly, we believe the Company
is entitled to exclude any future proposals authored by the Proponent.
* * * Based upon the foregoing analysis, we respectfully request that the Staff of the
Securities and Exchange Commission take no action if Intel excludes the Proposal
of Robert D. Morse from its 2004 Proxy Materials. We would be happy to provide
you with any additional information and answer any questions that you may have
regarding this subject. Should you disagree with the conclusions set forth in
this letter, we respectfully request the opportunity to confer with you prior to
the determination of the Staff's final position. If we can be of any further
assistance in this matter, please do not hesitate to call me at (202) 955-8671,
or Rachel Kosmal from the Intel Legal Department at (408) 765-2283.
Sincerely, /s/
Ronald O. Mueller cc: Rachel Kosmal, Intel Corporation
Robert D. Morse Attachments -----FOOTNOTES-----
1 The Staff has excluded every proposal the Proponent has submitted to Intel for
the same reasonthe Proponent's failure to supply, within 14 days of receipt of
Intel's request, documentary support sufficiently evidencing that he
continuously held Intel's securities for the required one year period. See Intel
Corp. (avail. Mar. 10, 2003); Intel Corp. (avail. Feb. 15, 2002). [INQUIRY LETTER]
Robert D, Morse 212 Highland Avenue Moorestown, NJ. 08057-2717
Ph: 856 235 1711 August 21, 2003
Intel Corporation
PO Box 58119
2200 Mission College Boulevard
Santa Clara, CA 95052-8119
Office of The Secretary: I, Robert D. Morse, of 212 Highland Avenue, Moorestown, NJ 08057-2717, holder of
over $2000.00 value in Company stock over one year, wish to enter the following
proposal for the Year 2004 Proxy Material. I intend to hold stock until beyond
the meeting, as required, and to be represented at the Meeting, as required..
PROPOSAL Management and Directors are requested to consider deleting all rights, options,
SAR's, and severance payments to top Management after expiration of existing
plans or commitments. This does not apply to plans for lesser Managers or
employees whom are offered reasonable options bonuses. REASONS:
It is noted that Shareowners are only allowed to make "requests" for Directors
actions in this proposal, therefore the recourse is by voting "Against" when
considering their election or re-election to office. Management is allowed to
publish "reasons" to vote "Against", therefore this Proponent has the same
privilege in their election or re-election requests. "Abstain" is a non-vote and "Except" only a partial choice, if made to delete
certain Nominees. Since most may be unknown to the majority of Shareowners,
there is little accomplished in using that vote. Since about 1975, the States of
DE,MD,NJ,NY, and VA have enacted laws, [Rules] which were accomplished after
pressure from lobbyists which automatically guarantee that all Company offered
nominees for Director will always be elected, there being only that number of
names required, and there are no opponents. This is known as "Plurality" voting,
a process whereby the ones receiving the greater amount of votes always are
elected.. The word "Against" is deleted under the explanation that: "the
shareowners might be confused into thinking that voting "Against", would win,
when that is actually "unlawful" in those States of incorporation. Is this not a
violation of the Constitution and/or The Bill of Rights? Federal law should
supercede State Law whenever conflicting. Thank You, and please vote YES for this Proposal.
Robert D. Morse. /s/
[STAFF REPLY LETTER]
January 29, 2004 Response of the Office of Chief Counsel
Division of Corporation Finance
Re: Intel Corporation
Incoming letter dated January 9, 2004 The proposal relates to discontinuing all rights, options, SARs and possible
severance payments. There appears to be some basis for your view that Intel may exclude the proposal
under rule 14a-8(f). We note that the proponent appears to have failed to
supply, within 14 days of receipt of Intel request, documentary support
sufficiently evidencing that he satisfied the minimum ownership requirement for
the one-year period as of the date that he submitted the proposal as required by
rule 14a-8(b). Accordingly, we will not recommend enforcement action to the
Commission if Intel omits the proposal from its proxy materials in reliance on
rules 14a-8(b) and 14a-8(f). In reaching this position, we have not found it
necessary to address the alternative bases for omission upon which Intel relies.
Sincerely, /s/
Keir D. Gumbs
Special Counsel
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