Company Name: Intel Corp.
Public Availability Date: March 19, 2004Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
APPENDIX 3
INQUIRY LETTER
APPENDIX 4
STAFF REPLY LETTER [INQUIRY LETTER]
January 9, 2004 Direct Dial (202) 955-8671
Fax No. (202) 530-9569
Client No. C 42376-00006 VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Stockholder Proposal of SouthWest Organizing Project et al Securities
Exchange Act of 1934Rule 14a-8 Dear Ladies and Gentlemen:
This letter is to inform you that it is the intention of our client, Intel
Corporation (the "Company"), to omit from its proxy statement and form of proxy
for the Company's 2004 Annual Meeting of Stockholders (collectively, the "2004
Proxy Materials") a stockholder proposal (the "Proposal") received from the
proponents identified on Exhibit A to this letter (the "Proponents"). The
Proposal requests that the Company "undertake a comprehensive review to study
and evaluate how the adoption of Supercritical Carbon Dioxide technology
[("SCCO2")] and other new advanced technologies and approaches could result in
significantly reduced water consumption and cleaner air, and report to
shareholders - within six months." The Proposal specifies that "such a review
would include a thorough assessment of the SCCO2 technology, and other
technologies and processes and how they could be incorporated into [the
Company's] research, development and production processes." The Proposal further
requests that the Company "report to investors, and employees and communities
surrounding [Company] facilities on the process of continuous assessment and
implementation of the SCCO2 technology and others." A copy of the Proposal is
attached hereto as Exhibit B. On behalf of our client, we hereby notify the Division of Corporation Finance of
the Company'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 (the "Staff") concur in our view that the Proposal is excludable
pursuant to: I. Rule 14a-8(i)(10), because the Company has substantially implemented the
Proposal; II. Rule 14a-8(i)(7), because the Proposal deals with matters related to the
Company's ordinary business operations; and III. Rule 14a-8(i)(3), because the Proposal contains false and misleading
statements in violation of Rule 14a-9. In addition, as discussed in part IV below, we believe that certain of the
Proponents did not satisfy the requirements of Rule 14a-8.
Pursuant to Rule 14a-8(j), enclosed herewith are six (6) copies of this letter
and its attachments. Also in accordance with Rule 14a-8(j), a copy of this
letter and its attachments is being mailed on this date to the Proponents,
informing them of the Company's intention to omit the Proposal from the 2004
Proxy Materials. The Company intends to file its definitive 2004 Proxy Materials
on or after March 31, 2004. Accordingly, pursuant to Rule 14a-8(j), this letter
is being submitted not less than 80 days before the Company files its definitive
materials and form of proxy with the Securities and Exchange Commission.
BACKGROUND SCCO2 technology is a process that involves exposing carbon dioxide (CO2) to
high pressures and heat resulting in a conversion to super critical carbon
dioxide. In a super critical phase, the gas becomes liquid but carries some
physical properties of both a gas and a liquid. In the semiconductor
manufacturing industry, SCCO2 technology has been suggested as having possible
application in cleaning residue from silicon wafers. The super critical carbon
dioxide would not be used as a cleaning agent by itself, but would be utilized
with some form of cosolvent(s) and the silicon wafers would then be exposed to
the mixture. In this regard, SCCO2 technology remains in the research and
development phase; the Company believes that SCCO2 technology is not presently
being used in the process of commercial manufacture of semiconductor wafers
anywhere in the world. ANALYSIS I. The Proposal May Be Excluded under Rule 14a-8(i)(10) Because the Company Has
Substantially Implemented the Proposal. Already, the Company has undertaken an extensive review of SCCO2 technology to
evaluate whether that technology could be implemented in the Company's
processes. The Company published the results of its research in a paper that was
presented at the Electro Chemical Society meeting in October 2003. In addition,
the Company also has set forth its position on a number of issues relating to
its evaluation and implementation of SCCO2 technology in a question and answer
report. Intel recently has posted copies of both the Intel research paper and
its Q&A on SCCO2 technology on the Environmental, Health and Safety section of
the Company's web site, at www.intel.com\go\ehs. Both of these documents reflect
the Company's conclusion that SCCO2 is not at present sufficiently developed to
be implemented in its manufacturing process.1 However, consistent with the
request in the Proposal that the Company engage in "continuous assessment" of
SCCO2 and other technologies, the Company's Q&A states, "Intel will continue to
study this technology, as we would other potential enabling technologies...." In
addition, the Company has informed us that it will furnish these materials upon
request to investors, employees, local communities and others who request them,
and that it would have conveyed this information to any of the Proponents if the
Proponent had communicated their interest in SCCO2 to the Company prior to
submitting the Proposal.2 In addition, the Company conducts extensive on-going research and development in
which the Company studies and evaluates existing, emerging and in-research
technologies for introduction at multiple and various points in current and
future manufacturing technologies. These reviews incorporate a philosophy of
"Design for Environment" under which environmental impacts and improvements are
considered along with technical advancements. The Company has provided extensive
public disclosure regarding its "Design for Environment" approach to researching
other advanced technologies and approaches that could address a full range of
environmental issues. See, for example:
ftp://download.intel.com/research/silicon/Jim%20Harrison%20082103.pdf
ftp://download.intel.com/research/silicon/McManusIDFJapan041702.pdf
ftp://download.intel.com/research/silicon/McManus%20IDF%20091603.pdf,
and others at http://www.intel.com/research/silicon/wafers.htm.
Rule 14a-8(i)(10) permits exclusion of a stockholder proposal "if the company
has already substantially implemented the proposal." According to the
Commission, this provision "is designed to avoid the possibility of shareholders
having to consider matters which have already been favorably acted upon by the
management." See Exchange Act Release No. 34-12598 (July 7, 1976). Furthermore,
a 1998 Release notes that this paragraph merely reflects the interpretation
adopted in Exchange Act Release No. 20091 (Aug. 16, 1983) under former Rule
14a-8(c)(10). Pursuant to the 1983 interpretation, the Staff has stated that "a
determination that the company has substantially implemented the proposal
depends upon whether its particular policies, practices and procedures compare
favorably with the guidelines of the proposal." Texaco, Inc. (avail. Mar. 28,
1991). Consequently, a stockholder proposal does not have to be implemented
exactly as proposed; it merely needs to be "substantially implemented."
When a company can demonstrate that it already has taken actions to address each
element of a stockholder proposal, the Staff has concurred that the proposal has
been "substantially implemented" and may be excluded as moot. In this respect,
the Proposal is much like the situation addressed in Exxon Mobil Corp. (avail.
Jan. 24, 2001). In Exxon Mobil, the proposal requested that the company review a
specific pipeline project, develop criteria for the company's involvement in the
project and publish a report on the results of the foregoing actions. There, the
company argued that its previous disclosures (made in part in response to an
identical proposal that the company had received the previous year)
substantially implemented the proposal. Exxon Mobil specifically noted that the
proponents' disagreement with the company's decisions regarding the pipeline
project did not prevent the prior disclosures from substantially implementing
the proposal. The Staff concurred that the proposal could be omitted as
substantially implemented. As in the case in Exxon Mobil, it is not clear what
more the Company could do beyond what it already has accomplished. Specifically,
the Company has conducted an extensive scientific evaluation of SCCO2 (and it
evaluates other potential technologies), it has reported on its assessment of
whether SCCO2 should be implemented into its processes, and it has stated that
it will continue to study the technology. Moreover, as noted above, the Company
has a well publicized program in place, known as Design for the Environment,
which evaluates applicable new technologies for potential environmental
improvements. See also Nordstrom, Inc. (avail. Feb. 8, 1995) (proposal that the
company commit to a code of conduct for its overseas suppliers that was
substantially covered by existing company guidelines was excludable as moot).
The Gap, Inc. (avail. Mar. 8, 1996). We believe that the actions and disclosures described above, when compared to
the actions that the Proposal specifically addresses, demonstrate that the
Company has substantially implemented the Proposal. The fact that the Company's
conclusion regarding whether SCCO2 technology currently is appropriate for
adoption may differ from the view advocated by the Proponents does not mean that
the Company has failed to substantially implement the Proposal. Exxon Mobil
Corporation (avail. Jan. 24, 2001); E. I. Du Pont de Nemours and Company (avail.
Feb. 14, 1995); The Boeing Company (avail. Feb. 7, 1994); Houston Industries
Inc. (avail. Apr. 21, 1988); Houston Industries Inc. (avail. Apr. 10, 1987).
Accordingly, we believe that the Proposal may be excluded under Rule
14a-8(i)(10). II. The Proposal May Be Excluded in Its Entirety Under Rule 14a-8(i)(7) Because
the Proposal Involves Matters Relating to the Company's Ordinary Business
Operations. Under Rule 14a-8(i)(7), a company may omit a proposal if it "deals with a matter
relating to the company's ordinary business operations." As explained by the
Staff in 1998, the ordinary business exclusion under Rule 14a-8(i)(7) rests on
two central considerations: The first relates to the subject matter of the proposal. Certain tasks are so
fundamental to management's ability to run a company on a day-to-day basis that
they could not, as a practical matter, be subject to direct shareholder
oversight. Examples include the management of the workforce, such as the hiring,
promotion, and termination of employees, decisions on production quality and
quantity, and the retention of suppliers. However, proposals relating to such
matters but focusing on sufficiently significant social policy issues (e.g.,
significant discrimination matters) generally would not be considered to be
excludable, because the proposals would transcend the day-to-day business
matters and raise policy issues so significant that it would be appropriate for
a shareholder vote. The second consideration relates to the degree to which the proposal seeks to
"micro-manage" the company by probing too deeply into matters of a complex
nature upon which shareholders, as a group, would not be in a position to make
an informed judgment. This consideration may come into play in a number of
circumstances, such as where the proposal involves intricate detail, or seeks to
impose specific time-frames or methods for implementing complex policies.
Exchange Act Release No. 40,018 (avail. May 21, 1998) ("The 1998 Release").
The Company believes that the Proposal implicates both of the underlying
concerns of the ordinary business rule and thus is excludable.
A. The Proposal Involves Ordinary Business Operations Because It Relates to the
Company's Choice of Technologies. The Proposal requests that the Company review, evaluate and report on how
specific technologies may be integrated into the Company's operating activities.
Decisions involving a company's choice of technologies are a matter of that
company's ordinary business operations. On numerous occasions the Staff has allowed omission of a proposal under Rule
14a-8(i)(7) because the proposal relates to a company's choice of technologies.
For example, in WPS Resources Corporation (avail. Feb. 16, 2001) the Staff
permitted the exclusion of a stockholder proposal requesting, inter alia, that a
utility company develop new cogeneration facilities and improve energy
efficiency. The Staff concurred that the proposal could be excluded on the
grounds that the proposal dealt with "ordinary business operations (i.e., the
choice of technologies)." Similarly, the Staff concluded in Union Pacific
Corporation (avail. Dec. 16, 1996) that a stockholder proposal requesting a
report on the status of research and development of a new safety system for
railroads was excludable because it concerned the development and adaptation of
new technology for Union Pacific's operations. The Staff also has allowed
exclusion of stockholder proposals regarding the use of specific technologies in
the preparation of food products. In Borden, Inc. (avail. Jan. 16, 1990), a
stockholder requested a report detailing a company's use of food irradiation
processes and irradiated food supplies. The Staff stated that the use of
irradiated food was related to ordinary business operations because it involved
the choice of processes and supplies used in the preparation of the company's
products. See also The Kroger Co. (avail. Mar. 23, 1992) (permitting exclusion
of a proposal regarding the choice of processes and supplies used in the
preparation of its products). The Company is a global, diversified manufacturer of semiconductors and related
computer systems. As stated on the Company's website, the Company is committed
to achieving high standards of environmental quality and strives to conserve
natural resources and reduce the environmental burden of waste generation and
emissions to the air, water and land. See Principles for Responsible Business,
at http://www.intel.com/intel/finance/prin resp bus.htm. Such efforts are
continuously reshaped by management's evaluation of the availability of new
technology and the relative costs and benefits of meeting or exceeding
environmental standards and goals. Therefore, the Company's determinations
regarding the specific technologies incorporated into its production processes
is so fundamental to the Company's day-to-day operations that, in the words of
the 1998 Release, management's business determinations about this issue "could
not, as a practical matter, be subject to direct shareholder oversight."
Decisions as to which technologies are economically viable for the Company to
pursue properly rest with the Company's management and should not be the subject
of a stockholder proposal. These decisions involve operational and business
matters that require the judgment of experienced management and scientists. Such
matters are properly within the purview of management, which has the necessary
skills, knowledge and resources to make informed decisions. These issues are
inappropriate for decision at the stockholder level. The Proposal is distinguishable from stockholder proposals that require a
company to study the effects of switching from one technology in use by the
company to another technology that the company already uses at its other
facilities. In Northern States Power Company (avail. Dec. 9, 1998), a
stockholder proposed that the board commission a study on the economic
feasibility of converting a specific power generation plant from nuclear power
to natural gas power. The company argued that the proposal would require a
comparison of the operating costs of the nuclear power plant to the operating
costs of the company's existing natural gas generation facilities. The Staff
concluded that the proposal was not excludable under Rule 14a-8(i)(7). See also
Dominion Resources, Inc. (avail. Mar. 13, 2002) (proposal on switching to solar
and wind powered generating facilities). In contrast to the foregoing proposals, the Proposal would require the Company
to address SCCO2 technology and other "new advanced technologies" that are not
otherwise currently being used by the Company in its manufacturing process and
that no other semiconductor manufacturer in the world currently uses in
commercial production. Any determination regarding the substitution of
altogether new technologies into the Company's production line will require a
highly technical analysis and complex business judgments that are critical to
management's ability to run the Company's ordinary business. The process by
which the Company selects new technologies is based on a complex analysis of a
broad spectrum of scientific, engineering and technical matters that impact the
Company's production processes. For example, more research is needed on what
other chemicals (co-solvents) must be mixed with SCCO2 to adequately clean
semiconductor wafers, and the impact of these co-solvents on the microchip must
be evaluated. In addition, the fact that SCCO2 technology requires the use of
very high temperature (90[degree]to 160[degree]F) and high pressure (1,000 to
10,000 psi) elements raises a wide variety of concerns. For example, the energy
consumption that these new processes would require would need to be evaluated,
together with the environmental implications of those higher energy demands.
Similarly, because SCCO2 technology requires high-pressure processes that are
not currently used in the applicable semiconductor manufacture processes, the
industry needs to become familiar with safely using very high pressure tools in
high volume semiconductor manufacturing; and more experience must be gained
preventing defects with high pressure manufacturing tools. Additionally, the
techniques necessary to incorporate this new technology into the Company's
manufacturing processes have not been fully developed. Thus, any determination
regarding the implementation of SCCO2 and related technologies would be the
result of a complicated and dynamic process involving varying degrees of input
from numerous Company scientists, technical specialists and business managers.
Requiring the Company to consider a highly specific production process and to
report on the assessment and implementation of this technology extends deeply
into the Company's daily decision-making procedures about complex matters of
critical importance to the Company. Such analysis and judgments cannot be
supervised efficiently or effectively by stockholders and should not be subject
to stockholder oversight. B. The Proposal Involves Ordinary Business Operations Because It Relates to the
Company's Research and Development Efforts. The Proposal requests that the Company assess how "SCCO2, and other technologies
and processes ... could be incorporated into [the Company's] research,
development and production processes." The Staff has concurred that a proposal
involving a company's research and development operations may be excluded under
Rule 14a-8(i)(7) because such proposal relates to ordinary business operations.
For example, in Merck & Co., Inc. (avail. Jan. 23, 1997) a stockholder submitted
a proposal requesting that Merck "study ways to eliminate the use of human fetal
tissue obtained from elective abortions in the research, development, and
testing of the company's products." Merck sought to exclude the proposal because
it involved the company's ordinary business. The Staff permitted the exclusion,
noting that that "the proposal is directed at matters relating to the conduct of
the Company's ordinary business operations (i.e., product research, development,
and testing)." See also Chrysler Corporation (avail. Mar. 3, 1988) (allowing
exclusion of a proposal requesting study of the status of electrical vehicle
designs on the grounds that the proposal involved the "conduct of the Company's
ordinary business operations (i.e. determining to engage in product research and
development"); Arizona Public Service Company (avail. Feb. 27, 1984) (allowing
exclusion of a proposal seeking to place a moratorium on funding research and
development activities outside of Arizona). The Staff has concurred that such proposals are excludable even when they seek
to address general environmental or pollution concerns. For example, in Carolina
Power & Light Co. (avail. Mar. 30, 1988), the Staff concurred that a proposal
seeking a report providing the best factual and scientific information available
on the company's pollution control activities, including technologies and
practices used or under consideration by the company, was excludable because it
dealt with a matter related to the conduct of the company's ordinary business
operations, including compliance with regulations relating to the environmental
impact of power plant emissions. See also Pacific Telesis Group (avail. Feb. 21,
1990) (granting noaction relief where environmental proposal required certain
detailed steps with respect to operating matters). The Proposal directly implicates the Company's research and development efforts
because it would require the Company to analyze the possible integration of one
or more new technical systems into its research and production processes. By
requiring a "continuous assessment and implementation" of such systems, the
Proposal also would cause persistent interference in the Company's programs to
develop new products. Therefore, the Proposal is excludable because it deals
with the Company's ordinary business operations. C. The Proposal Involves Ordinary Business Operations Because It Micro-Manages
the Company's Activities. The thrust of the Proposal requests the evaluation of a specific
technologySCCO2and the issuance of reports on the assessment and
implementation of this specific technology in the Company's daily operations.
Consistent with the principles outlined in the 1998 Release, the Staff
consistently permits the exclusion of stockholder proposals that go beyond
addressing a policy issue and instead attempt to micro-manage a particular
aspect of a company's activities. As discussed in more detail below, the Staff
has recognized micro-management as a separate basis for exclusion under Rule
14a-8(i)(7) in a variety of contexts that touched on significant policy issues,
including in the context of corporate policies on environmental issues, when the
proposal mandates adoption of specific technological goals. Thus, although the
Proposal refers generally to the goals of promoting reduced water consumption
and cleaner air, we believe the Proposal should be excluded because it
impermissibly seeks to micro-manage the Company's ordinary business operations
in contravention of Rule 14a-8(i)(7) by mandating that the Company pursue one
specific technologySCCO2.3 For example, this distinction is evident where the Staff has concurred that a
company may exclude proposals that go beyond a particular policy issue and
interfere with a company's ability to make complex judgments by mandating
adoption of technologies that satisfy specific technological goals, essentially
micro-managing a company. For example, in Exxon Mobil Corp. (avail. Mar. 27,
2003), the Staff concurred that the company could exclude a proposal that would
have required the company to pursue all energy efficiency projects that
satisfied a certain "payback" standard described in the proposal. In Duke Energy
Corporation (avail. Feb. 16, 2001), the Staff permitted the exclusion of a
proposal recommending that a company take the necessary steps to reduce nitrogen
oxide emissions to levels specified in the proposal. Duke Energy argued that
"the specific strategies of a pollution program are properly within the purview
of management, which has the necessary capability and knowledge to evaluate the
particular facts and circumstances of its business operations and take
appropriate action." The Staff concurred that the proposal could be excluded
under Rule 14a-8(i)(7) as relating to Duke Energy's ordinary business
operations. See also E.I. du Pont de Nemours (avail. Feb. 13, 1990) (granting
no-action relief where an environmental proposal required the implementation of
specific reclamation and monitoring procedures in the conduct of uranium milling
and disposal activities). We are aware of instances in which stockholder proposals addressed concerns
regarding the environmental impact of a company's use of a particular
manufacturing process or ingredient, and the Staff did not concur that the
proposal could be excluded under Rule 14a-8(i)(7). In Baxter International Inc.
(avail. Mar. 1, 1999), for example, the Staff refused to permit the exclusion
under Rule 14a-8(i)(7) of a proposal requesting the adoption of a policy phasing
out the production of medical supplies containing plasticized polyvinyl chloride
or phthalate. See also Maxxam Inc. (avail. Mar. 26, 1998) (proposal seeking to
end a timber company's operations that involve cutting, damaging, removing or
milling old-growth redwood trees addresses "a major ecological and environmental
matter" and therefore was not excludable under Rule 14a-8(i)(7)); Time Warner
Inc. (avail. Feb. 19, 1997) (proposal to convert to the use of chlorine-free
paper in the publication of a magazine was not excludable under Rule
14a-8(i)(7)). These proposals involve requests that the company either eliminate
or reduce the use of particular production processes, or that the company
evaluate or issue a report on its plans to phase out such processes. The
Proposal, in contrast, advocates the evaluation and implementation of a specific
new technology (SCCO2). The identification and selection of new production
technologies is fundamental to management's ability to operate a company on a
daily basis. Thus, the Company believes these other no-action letters are
distinguishable from the Proposal. Because the Proposal would micro-manage the Company's decisions regarding
certain aspects of its day-to-day operations, the Proposal may be excluded under
the second prong of the Staff's analysis under Rule 14a-8(i)(7).
D. The Proposal Is Excludable Because It Requests a Report on Ordinary Business
Matters. The Staff has taken the position that a proposal requesting the dissemination of
a report does not prevent omission of the proposal under Rule 14a-8(i)(7) if the
substance of the report is within the ordinary business of the issuer. See
Release No. 34-20091 (Aug. 16, 1983). In addition, the Staff recently confirmed
that "where the subject matter of the additional disclosure sought in a
particular proposal involves a matter of ordinary business ... it may be
excluded under Rule 14a-8(i)(7)." Johnson Controls, Inc. (avail. Oct. 26, 1999).
In accordance with the precedent cited above, the Company should be permitted to
exclude the entire Proposal from its 2004 Proxy Materials because it deals with
matters related to ordinary business operations in contravention of Rule
14a-8(i)(7). III. The Proposal Should Be Excluded or Revised under Rule 14a-8(i)(3) Because
the Proposal Contains False and Misleading Statements in Violation of Rule
14a-9. A stockholder proposal may be excluded under Rule 14a-8(i)(3) where it 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." We believe that this basis of exclusion applies to the Proposal
because the Proposal contains false and misleading statements in violation of
Rule 14a-9. Certain statements in the Proposal are problematic under Rule 14a-9. In
particular, the Proposal creates the false impression that adoption of SCCO2
technology could reduce Intel's water consumption by as much as 90%. The second
paragraph of the Proposal's supporting statement states, "And whereas Intel
Corporation uses millions of gallons of water per day...." The third paragraph
states, "(SCCO2) technology ... could reduce current water consumption ... by as
much as 90%..." When read together, the second and third paragraphs of the
Proposal imply incorrectly that the implementation of SCCO2 by the Company could
reduce Intel's total water consumption by 90%. However, these two statements
omit information that is necessary to make them not misleading. Specifically,
the Proponents fail to disclose that SCCO2 technology is not adaptable to all of
the steps in the semiconductor wafer manufacturing process that require water.
The processes where SCCO2 is potentially applicable account for well less than
90% of the total water consumption required in the wafer manufacturing process.
Thus, even if SCCO2 technology completely eliminated the need for water in
processes where it may potentially be applied, Intel's water consummation could
not be reduced by 90%. For the foregoing reason, the Proposal should be omitted pursuant to Rule
14a-8(i)(3) because it contains unsubstantiated, false and misleading statements
that violate Rule 14a-9. In the alternative, even if the Staff concludes that
the Proposal is not properly excludable under Rule 14a-8(i)(7), (i)(10) or
(i)(3), we believe that the Staff should require the Proponents to make the
revisions necessary to bring the Proposal within the requirements of the proxy
rules. In the event that the Staff permits the Proponents to make the
substantial revisions necessary to bring the Proposal within the requirements of
Rule 14a-9, we respectfully request explicit confirmation from the Staff that
such revisions are subject to complete exclusion by the Company if they will
cause the Proposal to exceed the 500 word limitation set forth in Rule 14a-8(d).
IV. Certain Proponents Failed to Satisfy Rule 14a-8.
The Company believes that it may exclude Mennonite Mutual Aid and The Needmor
Fund (the "Ineligible Co-Proponents") as co-proponents of the Proposal under
Rule 14a-8(f)(1) because the Ineligible Co-Proponents did not substantiate their
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
Company received the Proposal from each of the Ineligible Co-Proponents
individually December 4, 2003. See Exhibit C. The Ineligible Co-Proponents did
not appear on the records of Intel's stock transfer agent as stockholders of
record. The Ineligible Co-Proponents did not include evidence demonstrating that
they satisfied Rule 14a-8(b) with their letters to Intel accompanying the
Proposal. Accordingly, in individual letters dated December 8, 2003, which were
sent within 14 days of Intel's receipt of the Proposal, Intel informed the
Ineligible Co-Proponents individually of the requirements of Rule 14a-8(b),
stated the type of documents that constitute sufficient proof of eligibility,
and indicated that their response had to be postmarked within 14 days of their
receipt of Intel's letter. See Exhibit D. Intel's December 8, 2003, letters were
sent to the Ineligible Co-Proponents via overnight delivery, and Intel has
confirmation from the courier company that they received the letters on December
9, 2003, respectively. See Exhibit E. Intel has never received any evidence of
the continuous beneficial ownership of Intel stock from Mennonite Mutual Aid and
The Needmor Fund. 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 December 8, 2003, letters to the Ineligible Co-Proponents,
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 response of the Ineligible Co-Proponents had to be postmarked within
14 days after their 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 eligibility under Rules 14a-8(b) and (f)(1). See 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
December 8, 2003, letters notifying the Ineligible Co-Proponents of the need to
present satisfactory evidence supporting beneficial ownership of Intel's stock
fully complied with the requirements of Rule 14a-8(f)(1): (1) Intel furnished
the Ineligible Co-Proponents 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. Accordingly, we believe that the Company may exclude the Ineligible
Co-Proponents as co-proponents of the Proposal under Rule 14a-8(b) and Rule
14a-8(f)(1). *** 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. Please
do not hesitate to call me at (202) 955-8671, or Rachel Kosmal at (423)
765-2283, if we can be of any further assistance in this matter.
Sincerely, /s/
Ronald O. Mueller Attachments
cc: Rachel Kosmal, Intel Corporation
Robby Rodriguez, SouthWest Organizing Project -----FOOTNOTES-----
1 In particular, the Company's conclusion regarding SCCO2 technology, as
follows: SCCO2-based cleaning is still in its infancy, however, and has yet to find a
clear, enabling niche in the semiconductor cleaning space that cannot be
fulfilled by current cleaning technologies. The industry will adopt new tool and
process changes for enabling solutions when the data, scientific understanding,
and safety awareness surrounding the changes support the need for a disruptive
technology. The process tools are maturing, but still have obstacles to overcome
in order to meet the high-yield requirements of competitive production fabs. For
SCCO2 to successfully transition into the semiconductor fab environment, the
continuing scientific efforts by academia and industry need to provide
additional understanding into this novel application on the fronts of chemistry,
materials, and safety. 2 In fact, on March 27, 2003, a Company representative participated in a public
meeting of the Corrale Air Quality Task Force (which is sponsored by the New
Mexico State Environmental Department) at which a representative of the Los
Alamos National Laboratory discussed its work on a type of SCCO2 technology. The
Company's representative participated in a question and answer discussion that
was held as part of the presentation. 3 Although the Proposal also addresses researching other technologies, the Staff
has consistently held that a proposal can be excluded under Rule 14a-8(i)(7) if
any part of the proposal relates to a company's ordinary business. Here, the
fact that the Proposal requires the Company to pursue a specific technology,
SCCO2, permits exclusion of the whole proposal. [APPENDIX 1]
EXHIBIT A LIST OF PROPONENTS 1. South West Organizing Project Attn: Michael Leon Guerrero 211 10th St. S.W.
Albuquerque, NM 87102-2919 2. Patrick De Freitas 1117 East 600 South Salt Lake City, UT 84102
3. The Rose Foundation Attn: Jill Ratner, President 6008 College Ave., Suite 10
Oakland, CA 94618 4. Jessie Smith Noyes Foundation Attn: Victor De Luca, President Six East 39th
St., 12th Fl. New York, NY 10016 5. The Benedictine Sisters Charitable Trust Sr. Susan Mika, Corporate
Responsibility Program 285 Oblate Dr. San Antonio, TX 78213
6. Arlene Bird Represented by Jim Madden Portfolio Manager Progressive
Investment Management 721 N.W. 9th Ave. Suite 250 Portland, OR 97209
7. Domini Social Investments Attn: Adam Kanzer, General Counsel and Director of
Shareholder Advocacy 536 Broadway, 7th Floor New York, NY 10012-3915
8. Leslie Grace Attn: Bruce T. Herbert, President Newground Investment Services
1326 N. 76th St., Ste. 100 Seattle, WA 98103 9. Congregation of the Sisters of Charity of the Incarnate Word Attn: Sr.
Lillian Anne Healy, Director of Corporate Responsibility 6510 Lawndale Houston,
TX 77223-0969 10. Solidago Foundation, W. David Rosenmiller Attn: Michael Lent, Financial
Advisor Progressive Asset Management 150 Broadway, Suite 1813 New York, NY 10038
11. Mary DuPree Attn: Steve Lippman, Senior Social Research Analyst Trillium
Asset Management 4233 Thackeray Place NE, #A Seattle, WA 98105
12. Jamie Moran Attn: Steve Lippman, Senior Social Research Analyst Trillium
Asset Management 4233 Thackeray Place NE, #A Seattle, WA 98105
13. Ethical Funds Inc. 1441 Creekside Dr., 8th Floor Vancouver, BC V6J4S7 Canada
INELIGIBLE PROPONENTS Mennonite Mutual Aid
Attn: Mark A. Regier
1110 North Main St.
Goshen, IN 45627 The Needmor Fund
Attn: Daniel S. Stranahan, Chairman, Finance Committee
1270 N. Wolcott
Chicago, IL 60622 [APPENDIX 2]
November 25, 2003 Mr. Craig Barrett
Chief Executive Officer
Intel Corporation
2200 Mission College Boulevard
Santa Clara, CA 95052-8119 Dear Mr. Barrett:
The SouthWest Organizing Project holds 68.2 shares of Intel Corporation stock.
We are a community-based membership organization located in Albuquerque, New
Mexico whose mission is to empower communities to realize racial and gender
equality, and social and economic justice. For the past decade we have developed
a relationship with Intel Corporation, encouraging greater transparency and
accountability to communities neighboring the Intel factories on water, health,
and environmental issues. We are submitting the enclosed shareholder proposal for inclusion in the 2004
proxy statement, in accordance with Rule 14a-8 of the General Rules and
Regulations of the Securities Exchange Act of 1934. We are the beneficial owner,
as defined in Rule 13d-3 of the Securities Exchange Act of 1934, of the
above-mentioned number of Intel shares. The resolution calls for Intel Corporation to undertake a study to analyze the
feasibility of incorporating Supercritical Carbon Dioxide technology into the
company's wafer fabrication process. This new, promising development could lead
to major reductions in hazardous chemical and water use. We have been a shareholder for more than one year and verification of our
ownership is available upon request. We will continue to be an investor through
the stockholder meeting. A representative of the filers will attend the
stockholders' meeting to move the resolution as required by SEC rules.
SWOP looks forward to dialogue on this issue and seeks a mutually agreeable
solution with Intel. We will be joined by a number of other co-filers in this
petition and will be glad to coordinate dialogue through our office.
Please copy correspondence to either of us at SouthWest Organizing Project. We
look forward to your response. Sincerely,
/s/ Michael Leon Guerrero SouthWest Organizing Project
Robby Rodriguez SouthWest Organizing Project [APPENDIX 3]
Resolution Urging Intel Corporation to Review Its Production Processes to
Protect Health and the Environment, Especially Water 1. Whereas we face a global environmental crisis, where many communities
throughout the world are facing challenges obtaining safe drinking water
supplies due to contamination and increasing use of potable water resources, and
where clean air is necessary for the health and sustainability of all
communities, and in addition synthetic chemicals are contributing to the
destruction of the ozone layer, poisoning of food supplies, and increasing
levels of life threatening ailments among human and animal populations,
2. And whereas Intel Corporation uses millions of gallons of water per day and
hundreds of tons of hazardous chemicals in each of its semiconductor
manufacturing facilities, and because Intel Corporation is the largest
semiconductor manufacturing company, controlling up to 80% of the global
semiconductor market, and because it is recognized as the industry leader in the
semiconductor field, it can influence manufacturing and environmental practices
throughout the industry, 3. And whereas Los Alamos National Laboratory (LANL) and other research teams
have developed a semiconductor cleaning process for the industry which uses
Supercritical Carbon Dioxide (SCCO2) technology that could reduce current water
consumption and airborne emissions by as much as 90% thus saving billions of
gallons of water for communities throughout the world annually, as well as
prevent thousands of tons of extremely harmful chemicals from being released
into the environment. 4. And whereas the SCCO2 technology offers a unique and creative solution for
the integrated circuit industry such that a LANL research team was awarded the
2002 Presidential Green Chemistry Challenge which recognizes the development of
a new and cost effective, environmentally friendly technology that could enable
the global integrated circuit industry to achieve its goal of producing
increasingly higher-density microchips, 5. Therefore be it resolved that shareholders request Intel Corporation to
undertake a comprehensive review to study and evaluate how the adoption of
Supercritical Carbon Dioxide technology and other new advanced technologies and
approaches could result in significantly reduced water consumption and cleaner
air, and report to shareholders - within six months -such a review would include
a thorough assessment of the SCCO2 technology, and other technologies and
processes and how they could be incorporated into Intel's research, development
and production processes. Be it further resolved that Intel will report to investors, and Intel employees
and communities surrounding Intel facilities on the process of continuous
assessment and implementation of the SCCO2 technology and others. [INQUIRY LETTER]
March 17, 2004 VIA FEDERAL EXPRESS Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Securities Exchange Act of 1934, Rule 14a-8; Withdrawal of January 9, 2004
Request on Stockholder Proposal of the SouthWest Organizing Project, et al
Ladies and Gentlemen: On January 9, 2004, our counsel, Gibson Dunn & Crutcher, requested that the
staff of the Division of Corporation Finance concur with our view that pursuant
to Rule 14a-8, we could properly exclude from our proxy statement and form of
proxy for our 2004 Annual Stockholders' Meeting a stockholder proposal and
statement in support thereof received from the SouthWest Organizing Project and
13 other proponents (collectively, the "Proponents"). The proposal requested
that Intel "undertake a comprehensive review to study and evaluate how the
adoption of Supercritical Carbon Dioxide technology and other new advanced
technologies and approaches could result in significantly reduced water
consumption and cleaner air, and report to shareholderswithin six months..."
Enclosed are copies of communications from each of the Proponents voluntarily
withdrawing the Proposal. We note that these communications constitute
documentation that each of the Proponents has withdrawn the Proposal. In
reliance on these letters, we wish to withdraw our request that the staff concur
in our position on our ability to exclude the Proposal pursuant to Rule 14a-8
under the Securities Exchange Act of 1934. Please do not hesitate to call me at (408) 765-2283 if you have any questions
relating to this matter. Sincerely, /s/
Rachel E. Kosmal
Sr. Attorney Enclosures [APPENDIX 4]
March 5, 2004 Dave Stangis, Director
Corporate Responsibility
Intel Corporation
Via e-mail: dave.stangis@intel.com Dear Mr. Stangis:
On behalf of the SouthWest Organizing Project we would like to thank you for
your responsiveness and cooperation in the matter of our recent shareholder
resolution. We feel that Supercritical Technology (SCORR) could provide wide
ranging benefits for communities, workers and other stakeholders worldwide. We
were pleased to see that Intel has made some investment into research of the
potential use of this technology. SWOP has decided to withdraw our shareholder resolution, but we expect to
continue to build our relationship with Intel based on a foundation of
cooperation and greater understanding. Intel's Environmental Health and Safety Principles are very clear:
"We will be a responsible member of the communities in which we live and work.
We will continue to expand our knowledge and understanding of the effect of our
operations on safety, health and the environment. We are committed both to
continuous improvement in our operations and to sharing the knowledge that we
gain with our employees, customers, suppliers, the communities in which we live
and work, the scientific community, government and industry."
It was through the initial organizing and shareholder efforts of SWOP that the
concept of "communities" was included in this important statement. Based on the
spirit of this principle we ask for the following: 1. That Intel report back to the Corrales community on the status of its
research and development of the SCORR technology. The Power Point presentation
provided for the shareholder call on February 12, 2004 was a fairly detailed
description of Intel's work on this topic to date. This would be a very useful
presentation to the Corrales community. 2. That Intel participate in a facilitated series of meetings with the SouthWest
Organizing Project to review environmental and water issues in depth,
particularly the SCORR process. Discussions between SWOP and local Intel
representatives have already begun to develop the details of the process.
3. Intel establish a system of regular reporting to Corrales residents,
shareholders and other communities surrounding other facilities on the company's
progress in research and development of SCORR and/or other water and chemical
reducing technologies. 4. That Intel adhere to its environmental values as stated in the Design for the
Environment Principles. We are looking forward to continuing to work with you and others at Intel on
this very important matter Please feel free to call us if you have any
questions. Sincerely, Michael Leon Guerrero, Co-Director SouthWest Organizing Project
Robby Rodriguez, Co-Director SouthWest Organizing Project
Cc: Dave Stangis Intel Corporation
Rachel Kosmal, Intel Corporation
Cary Klafter, Intel Corporation
Steve Lippman, Trillium Asset Management/Mary Dupree/Jamie Moran
Patrick De Freitas
Jill Ratner, The Rose Foundation
Vic de Luca, Jessie Smith Noyes Foundation
Jim Madden, Progressive Investment Management/Arlene Bird
Sr. Lillian Anne Healy, Congregation/Sisters of Charity of the Incarnate Word
Sr. Susan Mika, Benedictine Sisters Charitable Trust
Kimberly Gladman/Adam Kanzer, Domini Fund
Bruce T. Herbert/Leslie Grace, Newground Investment Services
Michael Lent, David Rosenmiller, Solldago Foundation
Robert Walker, Ethical Funds
Mark Regier, Mennonite Retirement Trust
Daniel Stranahan, The Needmor Fund
Fred Marsh, Corrales Citizens for Clean Air and Water
Steve Viederman
[STAFF REPLY LETTER]
March 19, 2004 Rachel E. Kosmal
Senior Attorney
Intel Corporation
2200 Mission College Blvd.
P.O. Box 58119
Santa Clara, CA 95052-8119 Re: Intel Corporation
Dear Ms. Kosmal: This is in regard to your letter dated March 17, 2004 concerning the shareholder
proposal submitted by the Southwest Organizing Project, Patrick De Freitas, the
Rose Foundation, the Jessie Smith Noyes Foundation, the Benedictine Sisters
Charitable Trust, Arwen Bird, Domini Social Investments LLC, Leslie Grace, the
Congregation of the Sisters of Charity of the Incarnate Word, Houston, the
Solidago Foundation, Inc., Trillium Asset Management Corporation, The Ethical
Funds, Inc., the MMA Praxis Mutual Funds, The Mennonite Foundation, the
Mennonite Retirement Trust, the MMA Trust Company, and The Needmor Fund for
inclusion in Intel's proxy materials for its upcoming annual meeting of security
holders. Your letter indicates that the proponents have withdrawn the proposal,
and that Intel therefore withdraws its January 9, 2004 request for a no-action
letter from the Division. Because the matter is now moot, we will have no
further comment. Sincerely, /s/
Grace K. Lee
Special Counsel cc: Michael Leon Guerrero
Robby Rodriguez
Co-Directors
Southwest Organizing Project
211 10th Street SW
Alburquerque, NM 87102-2919
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