Company Name: Pfizer Inc.
Public Availability Date: January 7, 2004Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER [INQUIRY LETTER]
October 29, 2003 VIA HAND DELIVERY Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549 Re: Shareholder Proposal of Mr. Ravi Rozdon Securities Exchange Act of 1934Rule
14a-8 Dear Ladies and Gentlemen: This letter is to inform you that Pfizer Inc., a Delaware corporation ("Pfizer"
or the "Company"), intends to omit from its proxy statement and form of proxy
for its 2004 Annual Meeting of Shareholders (collectively, the "2004 Proxy
Materials") a shareholder proposal (the "Proposal") and supporting statement
(the "Supporting Statement") received from Ravi Rozdon (the "Proponent"). The
Proposal seeks to require the Company's board of directors and management to
"supply all the information when asked by shareholders whether available to the
public or not." If the board and management "feel that there is good cause" for
not supplying such information to shareholders, "then they must explain the
reason for not doing so." Moreover, "the information sought must be provided
within thirty days of the receipt of the request." The Proposal and the
Supporting Statement, which the Company received on November 6, 2002, are
attached hereto as Exhibit A.1 On behalf of the Company, I hereby notify the Division of Corporation Finance of
the Company's intention to exclude the Proposal and the Supporting Statement
from the 2004 Proxy Materials on the bases set forth below. I respectfully
request that the staff of the Division of Corporation Finance (the "Staff")
concur in my view that the Proposal and the Supporting Statement are excludable,
or, in the alternative, require substantial revision. Pursuant to Rule 14a-8(j), enclosed herewith are six 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 Proponent, informing him
of the Company's intention to omit the Proposal and the Supporting Statement
from the 2004 Proxy Materials. The Company presently intends to file its
definitive 2004 Proxy Materials on or about March 13, 2004. Accordingly,
pursuant to Rule 14a-8(j), this letter is being submitted not less than 80
calendar days before the Company files its definitive 2004 Proxy Materials with
the Securities and Exchange Commission (the "Commission").
BASES FOR EXCLUSION The Proposal and the Supporting Statement may be excluded from the 2004 Proxy
Materials pursuant to the following rules: I. Rule 14a-8(i)(4), because the Proposal relates to the redress of a personal
grievance against the Company; II. Rule 14a-8(i)(7), because the Proposal deals with matters relating to the
Company's ordinary business operations; and III. Rule 14a-8(i)(1), because the Proposal concerns matters that are not proper
subjects for shareholder action. In Staff Legal Bulletin No. 14 ("SLB No. 14"), the Staff stated that "when a
proposal and supporting statement will require detailed and extensive editing in
order to bring them into compliance with the proxy rules, [the Staff] may find
it appropriate for companies to exclude the entire proposal, supporting
statement, or both, as materially false and misleading." As set forth below, the
Proposal has numerous elements that violate the Commission's proxy rules.
Therefore, the entire Proposal, including the Supporting Statement, is
excludable. ANALYSIS I. The Proposal Relates to the Redress of a Personal Grievance and Thus May Be
Excluded under Rule 14a-8(i)(4). The Proposal should be excluded from the 2004 Proxy Materials pursuant to Rule
14a-8(i)(4) because it relates to the redress of the Proponent's personal
grievance against the Company, the Company's board of directors and its
officers. As noted above, another proposal submitted by the Proponent at the
same time as this Proposal was properly excluded from the 2003 Proxy Materials
pursuant to Rule 14a-8(i)(4). In a letter dated February 5, 2003, and attached
as Exhibit C, the Staff concurred that Pfizer could exclude that proposal "as
relating to the redress of a personal claim or grievance, or designed to result
in a benefit to the proponent or further a personal interest, which benefit or
interest is not shared with other security holders at large." See Pfizer Inc.
(avail. Feb. 5, 2003). As explained in detail below, this Proposal relates to
the same personal grievance against the Company as the proposal excluded in
2003. Rule 14a-8(i)(4) permits exclusion of a proposal if it "relates to the redress
of a personal claim or grievance against the company or any other person." The
purpose of this rule, according to the Commission, is to prevent shareholders
from abusing the shareholder proposal process in order to achieve personal ends
that are not necessarily in the common interest of a company's shareholders
generally. See Release No. 34-20091 (avail. Aug. 16, 1983).
Under Rule 14a-8(i)(4), the Staff has permitted companies to exclude proposals
dealing with alleged company mistreatment of shareholders. In U S WEST, Inc.
(avail. Feb. 22, 1999), for example, the company sought to exclude a proposal
mandating that the board be censured for certain actions relating to the
company's transfer agent and its treatment of shareholders. The company argued
that the proponent was upset that the transfer agent had not backdated his
purchase of company stock, and that the proposal was based on this personal
grievance. Although the proposal was drafted in such a way that it appeared to
concern a matter of general interest to shareholders, the Staff concurred that
the company could exclude the proposal under Rule 14a-8(i)(4) as relating to the
redress of a personal grievance. Similarly, in SCANA Corp. (avail. Mar. 8,
2000), the Staff permitted the exclusion of a proposal mandating that the
company and its transfer agent "not show antagonism" to shareholders applying
for nonresident alien status and aid shareholders in filling out specified tax
forms, where the company provided evidence that the proponent had an outstanding
dispute with the company concerning the subject of the proposal.
In the instant case, the Proponent's grievance stems from the Company's handling
of his requests for information concerning a decision to not provide free
product samples at the Company's 2002 annual meeting. The Proponent wrote a
letter to the Company on March 25, 2002, expressing his opinion that the
Company's decision to donate the money it would have spent on product samples
was "a poor one" and requesting information concerning: (1) samples distributed
at previous annual meetings; and (2) the Company's decision not to hold its 2002
annual meeting in New York. The Proponent's March 25 letter is attached as
Exhibit D. The Company responded in a letter dated May 3, 2002 (attached as
Exhibit E). The Proponent sent a subsequent letter, dated June 10, 2002 and attached as
Exhibit F. The Proponent's June 10 letter: (1) stated that the Proponent was
"surprised" that the Company did not respond earlier; (2) requested additional
information regarding the Company's charitable donations, the number of
shareholders who attended the Company's 2000, 2001 and 2002 annual meetings, and
the items included in "gift bags" distributed to shareholders in 2000 and 2001;
and (3) asking the Company's Vice President for Corporate Governance to
distribute the Proponent's March 25 letter to the Company's directors and inform
the Proponent when this was done. The Company responded on July 8, 2002 (Exhibit
G), answering the Proponent's questions in a general manner and indicating that
the Proponent's views would be shared with the Company's management.
The Proponent responded with a third letter on July 31, 2002 (Exhibit H),
expressing "dismay" at the Company's "irreverent responses" and accusing the
Company of "writing insolently." In addition, the July 31 letter requested
responses to the Proponent's earlier questions, stating, "Now I am more inclined
to find the information." The Proponent also requested that the Company either:
(1) respond to the Proponent's specific questions; or (2) explain why it would
not, send a copy of the Company's annual report, and send "the procedure on
including stockholders' proposals in next year's annual report." Based on this
language, it appears that the Proponent was attempting to compel the Company to
meet his demands by threatening to submit a shareholder proposal in retaliation
for an unsatisfactory response. This interpretation is further strengthened by
the language at the end of the July 31 letter, requesting "advice on
stockholders' rights" and "how to overcome corporations who refuse
transparency." The Company responded to the Proponent's letter on September 25,
2002 (Exhibit I), attempting to answer his specific questions.
Apparently still dissatisfied with the Company's response, the Proponent drafted
two shareholder proposals and enclosed them in a letter dated November 5, 2002.
That letter, which is attached as Exhibit A, accuses the Company of
intentionally misplacing a letter the Proponent allegedly sent in September 2002
and using "ruses, legal or otherwise, to get by from including the proposals in
the material as I have desired." In that letter, the Proponent also states, "I
am not at all satisfied with the manner in which Pfizer handles it[s] relations
with stockholders, at least this one." Since November 5, the Company has received two additional letters from the
Proponent, one dated November 22, 2002, accusing the Company of misrepresenting
the Commission's regulations (attached as Exhibit B), and the other dated
December 11, 2002, requesting information on the Company's procedures for
ensuring that incoming mail is not "lost, misplaced or removed" (attached as
Exhibit J). In total, the Company and its officers have received six letters
from the Proponent since March 2002. The number, tone and content of the Proponent's six letters to the Company
clearly demonstrate the Proponent's personal grievance against the Company and
indicate that the Proponent filed the Proposal in an attempt to force the
Company to respond to his specific questions (to his satisfaction) and
distribute his letters to the Company's directors. Because the Proponent is
abusing the shareholder proposal process to achieve these personal ends, the
Proposal should be excluded in its entirety under Rule 14a-8(i)(4) as relating
to the redress of the Proponent's personal grievance against the Company.
II. The Proposal Deals with Matters Relating to the Company's Ordinary Business
Operations and Thus May Be Excluded under Rule 14a-8(i)(7).
The Proposal and the Supporting Statement also may be excluded under Rule
14a-8(i)(7) because they encompass matters relating to the Company's ordinary
business operations. Specifically, the Proposal seeks to require the Company's
board of directors and management to "supply all the information when asked by
shareholders whether available to the public or not." If the board and
management "feel that there is good cause" for not supplying such information to
shareholders, "then they must explain the reason for not doing so." Moreover,
"the information sought must be provided within thirty days of the receipt of
the request." Rule 14a-8(i)(7) permits the omission of shareholder proposals dealing with
matters "relating to the company's ordinary business operations." As the
Commission noted in 1998, the underlying policy of the ordinary business
exclusion is "to confine the resolution of ordinary business problems to
management and the board of directors, since it is impracticable for
shareholders to decide how to solve such problems at an annual meeting." Release
No. 34-40018 (May 21, 1998) (the "1998 Release"). According to the 1998 Release,
"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" and thus are not proper subjects for shareholder
proposals. A. The Proposal Does Not Limit the Nature of Communications to Other than
Ordinary Business. The Proposal is excludable under Rule 14a-8(i)(7) because it does not limit the
nature of the communications contemplated by the Proposal to other than ordinary
business matters. The Staff recently explained this distinction in the Staff's
report entitled "Review of the Proxy Process Regarding the Nomination and
Election of Directors" (the "Proxy Process Report"). See http://www.sec.gov/news/studies/proxyreport.pdf
(avail. July 15, 2003). * In The Kroger Co. (avail. Apr. 11, 2003), the Division of Corporation Finance
denied a no-action request to exclude a shareholder proposal seeking the
creation of a shareholder committee to communicate with the Kroger board about
the subject matter of shareholder proposals approved but not implemented. In a
footnote to the Proxy Process Report, the Staff noted that "the Division did not
grant a no-action position to Kroger regarding exclusion of the proposal under
the ordinary business exclusion, as the proposal limited the nature of the
communications to other than ordinary business matters." Proxy Process Report at
note 53 (emphasis added). * In contrast, the Division granted a no-action position in PeopleSoft, Inc.
(avail. Mar. 14, 2003) and Advanced Fibre Communications, Inc. (avail. Mar. 10,
2003), permitting the companies to exclude a shareholder proposal requesting
that their boards establish an Office of the Board of Directors to enable direct
communications between non-management directors and shareholders. According to
the Proxy Process Report, the staff granted no-action relief to PeopleSoft and
Advanced Fibre under the ordinary business exclusion because "the proposals did
not limit the nature of the communications to other than ordinary business
matters." Proxy Process Report at note 55 (emphasis added).
Here, the Proposal does not limit the nature of the communications to other than
ordinary business matters. On the contrary, the Proposal requires the Company's
board and management to supply "all the information when asked by shareholders
whether available to the public or not" (emphasis added). The phrase "all the
information" is not qualified. Similarly, the Supporting Statement refers to
"information on matters related to the company"; it is not limited to matters
outside ordinary business operations. As a result, the Proposal could require
the board and management to supply information about any number of day-to-day
business decisions. Because the Proposal does not limit the nature of the
communications to other than ordinary business matters, it is excludable under
Rule 14a-8(i)(7). The Proposal is excludable even if some parts of the Proposal or Supporting
Statement could be viewed as touching on significant policy issues (which the
Company does not believe to be the case). The Staff repeatedly has concurred
that a proposal may be excluded if it relates in part to ordinary business
operations, even if it touches upon significant policy matters. For example, in
E*Trade Group, Inc. (avail. Oct. 31, 2000), the Staff concurred that under Rule
14a-8(i)(7) the company could exclude a proposal that recommended a number of
potential mechanisms for increasing shareholder value. The Staff concluded that
even though only two of the four mechanisms suggested by the proponent
implicated ordinary business matters, the entire proposal should be omitted. The
Staff expressly noted that "although the proposal appears to address matters
outside the scope of ordinary business, subparts `c' and `d' relate to E*TRADE's
ordinary business operations. Accordingly, insofar as it has not been the
Division's practice to permit revisions under rule 14a-8(i)(7), we will not
recommend enforcement action to the Commission if E*TRADE omits the proposal
from its Proxy Materials in reliance on rule 14a-8(i)(7)." See also Second
Bancorp Inc. (avail. Feb. 16, 2001); General Electric Company (avail. Feb. 10,
2000); M&F Worldwide Corp. (avail. Mar. 29, 2000); The Warnaco Group, Inc.
(avail. Mar. 21, 1999); Wal-Mart Stores, Inc. (avail. Mar. 15, 1999); Kmart
Corporation (avail. Mar. 12, 1999); Z-Seven Fund, Inc. (avail. Nov. 3, 1999).
Because the Proposal relates to ordinary business operations (improving
shareholder communications), it is excludable under Rule 14a-8(i)(7).
B. The Proposal Relates to General Shareholder Communications Procedures.
The main objective of the Proposal is not to address any particular policy or to
provide an avenue for shareholder feedback on matters before the Company's board
or management, but rather is to promote communication generally between the
board, management and shareholders. There is strong precedent that shareholder
proposals addressing general shareholder communications come within the ambit of
ordinary business operations. As noted above, the Staff concurred in PeopleSoft, Inc. (avail. Mar. 14, 2003)
and Advanced Fibre Communications, Inc. (avail. Mar. 10, 2003) that proposals
requiring the establishment of an Office of the Board of Directors to enable
communications between directors and shareholders could be excluded as relating
to ordinary business operations. See also Comverse Technology, Inc. (avail.
Sept. 8, 2003); CheckFree Corporation (avail. Sept. 8, 2003). In PeopleSoft, for
example, the Staff concluded that there was some basis for excluding the
proposal under Rule 14a-8(i)(7)" as relating to PeopleSoft's ordinary business
operations (i.e., procedures for enabling shareholder communications)."
Similarly, in Jameson Inns Inc. (avail. May 15, 2001), the Staff concurred in
the exclusion of a proposal urging the Jameson board of directors to "consider
new ideas for improving shareholder communications," including allowing
shareholders to ask questions during quarterly conference calls with management,
making prompt disclosure of significant corporate events, and setting up a forum
for shareholders to ask independent directors about conflicts of interest. In
permitting the company to exclude the proposal, the Staff indicated that there
was "some basis for [the] view that Jameson may exclude the proposal under Rule
14a-8(i)(7), as relating to its ordinary business operations (i.e., procedures
for improving shareholder communications)." Here, the Proposal requires the board and management to supply "all the
information" requested by shareholders. Like the proposals in PeopleSoft,
Advanced Fibre and Jameson Inns, the Proposal relates to general procedures for
enabling and improving shareholder communications.2 For this reason, it relates
to the Company's ordinary business operations and should be excluded under Rule
14a-8(i)(7). III. The Proposal Is Not An Appropriate Matter for Shareholder Action under
Delaware Law and Thus May Be Excluded under Rule 14a-8(i)(1).
The Proposal may be excluded pursuant to Rule 14a-8(i)(1) because it is phrased
in mandatory (rather than precatory) language and thus is not a proper subject
for shareholder action under Delaware law. In this regard, the Proposal states
that "the Board and Management is directed to supply" information when asked by
shareholders (emphasis added). The Proposal is phrased in such a way that it
would impose upon the board and management a mandatory obligation, not a
recommendation or request.3 Rule 14a-8(i)(1) permits the exclusion of shareholder proposals that are "not a
proper subject for action by shareholders under the laws of the jurisdiction of
the company's organization." The Company is organized under the laws of the
State of Delaware. Section 141(a) of the Delaware General Corporation Law (the
"DGCL") provides that the business and affairs of every corporation organized
under the DGCL must be managed by or under the direction of a board of
directors, except as otherwise provided in the DGCL or the company's certificate
of incorporation. Here, the Proposal would remove from the board any discretion to determine which
information to supply to shareholders. Neither the DGCL nor the Company's
certificate of incorporation removes this discretion from the board. The
Proposal, therefore, would contravene the requirements of Delaware law.
Moreover, it would infringe unlawfully upon the directors' responsibility under
Delaware law to manage the business of the Company. Accordingly, it is my
opinion that the Proposal is an improper matter for shareholder action under
state law within the meaning of Rule 14a-8(i)(1). In the past, the Staff has permitted the exclusion of proposals phrased as
binding on companies and their boards. In Triarc Companies, Inc. (avail. Apr.
22, 1999), for example, the Staff concluded that a proposal requiring the board
of directors to engage a brokerage firm to investigate the sale of a company
could be excluded under Rule 14a-8(i)(1). Alternatively, in SLB No. 14, the
Staff stated that "[w]hen a proposal would be binding on the company if approved
by shareholders, [the Staff] may permit the shareholder to revise the proposal
to a recommendation or a request...." As noted above, however, the Company
already has notified the Proponent of this deficiency and has suggested that the
Proponent revise the Proposal to comply with Delaware law. To date, the
Proponent has not done so. ***** In conclusion, the Proposal and the Supporting Statement contain numerous
violations of the Commission's proxy rules. Many of these deficiencies are
related to key elements of the Proposal and would not be easy to revise in order
to bring the Proposal into compliance with the proxy rules.
Based on the foregoing analysis, I respectfully request that the Staff confirm
that it will not recommend enforcement action if the Proposal is excluded from
the 2004 Proxy Materials. I would be happy to provide you with additional
information and answer any questions that you may have regarding this subject.
Should you disagree with the conclusions set forth in this letter, I
respectfully request the opportunity to confer with you prior to the
determination of the Staff's final position. If I can be of any further
assistance in this matter, please do not hesitate to call me at (212) 733-4802.
Sincerely, /s/
Margaret M. Foran, Esq. Attachments
cc: Ravi Rozdon -----FOOTNOTES-----
1 The Proponent initially submitted two proposals to the Company for inclusion
in the Company's proxy statement and form of proxy for its 2003 Annual Meeting
of Shareholders (the "2003 Proxy Materials"). After the Company explained to the
Proponent that Rule 14a-8(c) permits shareholders to submit no more than one
proposal for a particular shareholders' meeting, the Proponent directed the
Company to "include the first of the two proposals for printing next year. Keep
the second one for printing in the following year's annual meeting." See Letter
from the Proponent, dated November 22, 2002 (attached as Exhibit B). As
discussed below, the Proponent's first proposal was properly omitted from 2003
Proxy Materials, as the Staff concurred that it related to the redress of a
personal grievance. In accordance with the Proponent's request, the Company
reserved consideration of the second proposal for the 2004 Proxy Materials and
refers only to the second proposal herein. 2 The Proposal makes no reference to representing the interests of shareholders
on matters under consideration by the board. In this regard, it is
distinguishable from a line of Staff no-action letters denying relief under Rule
14a-8(i)(7) where the shareholder proposals explicitly concerned policy issues
and specific matters before the board of directors. See, e.g., The Kroger Co.
(avail. Apr. 11, 2003); TRW Inc. (avail. Feb. 12, 1990). 3 The Company twice has notified the Proponent of this deficiency, in letters
dated November 8, 2002 and November 15, 2002. In both letters, the Company
explained the mandatory/precatory distinction and suggested that the Proponent
revise the Proposal to comply with Delaware law. To date, the Proponent has not
done so. The November 8 and November 15 letters are attached as Exhibit K and
Exhibit L, respectively. [INQUIRY LETTER]
November 8, 2002 VLA FEDERAL EXPRESS Mr. Ravi Rozdon
121 West 72 Street, Apt. 6D
New York, NY 10023 Dear Mr. Rozdon:
Re: Sharcholder Proposals Dear Mr. Rozdon:
This is to acknowledge receipt of your undated proposals to Pfizer Inc., which
were received by us on November 7, 2002. We are sending this letter in
accordance with the requirements of SEC Rule 14a-8, which governs shareholder
proposals. Rule 14a-8 requires that we notify you in writing of any procedural or
eligibility deficiencies in your letter, as well as the time frame for your
response. Accordingly, we wish to advise you of the following:
We have verified that you are a record holder of Pfizer stock. However, Rule
14a-8 also requires that you provide us with a written statement that you intend
to continue to hold at least $2,000 in market value of the Company's Common
Stock through the date of our 2003 Annual Meeting of Shareholders.
As required by Rule 14a-8, we also wish to advise you that your response to
this letter must be postmarked, or transmitted electronically, no later than 14
calendar days from the date you receive this letter.
With respect to the resolutions, the mandatory manner in which they are
phrased ("neither the Board nor Management shall propose..." "The Board and
Management is directed...") could be deemed to be improper under state law since
it impinges on the discretionary authority granted to the Board under Section
141 of the Delaware General Corporation Law. To avoid this consequence, the
resolutions should be in the form of a request or a recommendation to the Board
of Directors (e.g. "The shareholders request that the Board of Directors...").
We have corresponded with you over the past several months regarding the
concerns that you express in the proposals, and we thought that we had addressed
these concerns. We would very much like the opportunity to have a constructive
dialogue with you to try to respond to any remaining questions that you may have
regarding these matters. Please call me at (212) 733-2076 or, in my absence,
Margaret M. Foran at (212) 733-4802 so that we may arrange a time for such
discussion. Sincerely, /s/
Kathleen Ulrich Cc: Peggy Foran [APPENDIX]
Dear Mr. Jack McCreery, Kindly forward the accompanying letter to Mr. Martin P. Dunn, Dy. Dir., Div. of
Corp. Finance, as I do not have his e-mail. Thanks. Dear Mr. Dunn,
I wrote to you on November 8, 2003. I have not heard from you. I am hoping that
I will have the support of SEC in requiring Pfizer to meet its obligation and
publish my proposal. Anticipating a possible rejection of the request this time, V.P. Margaret M.
Foran of Pfizer has reguested a personal meeting presumably to convince SEC to
reverse itself. If this request is entertained then I should request a similar
opportunity. I look forward to hearing soon from you, by mail.
Thank you. Yours truly,
Ravi Rozdon.
[STAFF REPLY LETTER]
January 7, 2004 Response of the Office of Chief Counsel Division of Corporation Finance
Re: Pfizer Inc.
Incoming letter dated October 29, 2003 The proposal directs the board and management "to supply all the information
when asked by shareholders whether available to the public or not [and if] they
feel that there is good cause for not supplying it to them then they must
explain the reason for doing so." There appears to be some basis for your view that Pfizer may exclude the
proposal under rule 14a-8(i)(7), as relating to its ordinary business operations
(i.e., communications with the board and management on matters related to
Pfizer's ordinary business operations). Accordingly, we will not recommend
enforcement action to the Commission if Pfizer omits the proposal from its proxy
materials in reliance on rule 14a-8(i)(7). In reaching this position, we have
not found it necessary to address the alternative bases for omission upon which
Pfizer relies. Sincerely, /s/
Grace K. Lee
Special Counsel
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