Company Name: PfInc.
Public Availability Date: January 16, 2004Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
STAFF REPLY LETTER [INQUIRY LETTER]
December 17, 2003 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: Shareowner Proposal of Nick Rossi, Represented by Mr. John Chevedden
Securities Exchange Act of 1934Rule 14a-8 Dear Ladies and Gentlemen:
This letter is to inform you that it is the intention of Pfizer Inc., a Delaware
corporation ("Pfizer" or the "Company"), to omit from its proxy statement and
form of proxy for Pfizer's 2004 Annual Meeting of Shareholders (collectively,
the "2004 Proxy Materials") a shareholder proposal (the "Proposal") received
from Mr. Nick Rossi (the "Proponent"), who has appointed Mr. John Chevedden to
be his representative for all issues pertaining to the Proposal.
The Proposal requests that Pfizer's Board of Directors (the "Board"): (1) submit
the adoption, maintenance or extension of any poison pill to a shareholder vote;
and (2) once adopted, submit any removal or dilution of this policy to a
shareholder vote at the earliest possible shareholder election.1 See Exhibit A.
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), a copy of this letter
and its exhibits is being mailed on this date to the Proponent and Mr. Chevedden,
informing them of Pfizer's intention to exclude the Proposal from the 2004 Proxy
Materials. The Company presently intends to file its definitive 2004 Proxy
Materials on or after March 6, 2004. Accordingly, pursuant to Rule 14a-8(j),
this letter is being submitted to the staff of the Division of Corporation
Finance (the "Staff") not less than 80 days before the Company files its
definitive 2004 Proxy Materials with the Securities and Exchange Commission. I
am licensed to practice law in the States ofwith the Securities and Exchange
Commission. I am licensed to practice law in the States of New York and
Pennsylvania. While I am not licensed to practice law in the State of Delaware,
I am generally familiar with the Delaware General Corporation Law ("DGCL"), and
to the extent that the reasons supporting the omission of the Proposal are based
on matters of law, this letter also constitutes an opinion of counsel.
We believe that the Proposal may be properly excluded from the 2004 Proxy
Materials pursuant to the following rules:
Rule 14a-8(b) and rule 14a-8(f), because the Proponent did not provide the
requisite proof of continuous stock ownership in response to Pfizer's request
for that information; and
Rule 14a-8(i)(10), on the basis that Pfizer has already substantially
implemented the Proposal. I respectfully request that the Staff concur in my view that the Proposal is
excludable on either or both of these bases. ANALYSIS
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 Pfizer's stock transfer agent as a stockholder of
record. In addition, the Proponent did not include evidence demonstrating that
he satisfied Rule 14a-8(b) with his letters received by Pfizer on October 17,
2003 and November 11, 2003, respectively, accompanying his Proposal.2 See
Exhibit A. Accordingly, in a letter dated October 29, 2002, which was sent
within 14 days of Pfizer's receipt of the first version of the Proposal, Pfizer
informed the Proponent and Mr. Chevedden of the requirements of Rule 14a-8(b),
and indicated that the Proponent's responseSpecifically, Pfizer stated "please
provide us with proof of your ownership of Pfizer common stock, including
verification that, at the time you submitted your proposal, you continuously
held for at least one year at least $2,000 in market value of Pfizer's common
stock" See Exhibit B. Pfizer's October 29, 2003 letter was sent to the Proponent
via U.S. Postal Service Express Mail Delivery. Pfizer has confirmation from USPS
that the Proponent received the letter on October 31, 2003. Pfizer never
received a response from either Mr. Rossi or Mr. Chevedden to its letter.
After receiving no response from either the Proponent or Mr. Chevedden, Ms.
Kathy Ulrich, Pfizer's Corporate Counsel and Assistant Secretary, called Mr.
Chevedden on December 16, 2003, to inquire about the Proponent's ownership
position. Mr. Chevedden replied that the Proponent did not own any shares of
Pfizer common stock, but was submitting the proposal as custodian for Katrina
Wubbolding. However, as is evident from the Proposal, it has clearly been
submitted by the Proponent on his own behalf; Ms. Wubbolding's name does not
appear on either the original or revised proposal sent to Pfizer by the
Proponent. Consequently, it appears from the conversation with Mr. Chevedden and
the lack of response to Pfizer's October 29, 2003 letter that the Proponent is
not a beneficial owner of any Pfizer common stock, and consequently pursuant to
Rule 14a-8(b)(1) is ineligible to submit a proposal for inclusion in the 2004
Proxy Materials. 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), but only if the company timely notifies
the proponent of the problem and the proponent fails to correct the deficiency
within the required time. Pfizer satisfied its obligation under Rule 14a-8
through its October 29, 2003 letter to the Proponent, which clearly stated the
ownership requirements of Rule 14a-8(b)(1), and that the Proponent's response
had to be postmarked within 14 days after his receipt of Pfizer's letter. In
addition, the Proponent's representative Mr. Chevedden has admitted that the
Proponent does not own any Pfizer common stock. 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). See, e.g.,
Telular Corp. (avail. Dec. 5, 2003); Lucent Technologies (avail. Nov. 26, 2003);
Cap Rock Energy Corp. (Aug. 4, 2003). In addition, the Staff has in the past
allowed exclusion of a stockholder proposal due in part the admission of theproponent. TRW, Inc. (avail. Jan. 24, 2001).3 Accordingly, I believe that the
Company may exclude the Proposal under Rule 14a-8(b) and Rule 14a-8(f)(1).
II. The Proposal May Be Excluded in Its Entirety under Rule 14a-8(i)(10) Because
the Proposal Has Been Substantially Implemented. Pfizer has adopted a policy regarding poison pills.
The Proposal requests that the Board: (1) submit the adoption, maintenance or
extension of any poison pill (also known as a "rights agreement") to a
shareholder vote; and (2) once adopted, submit any removal or dilution of this
policy to a shareholder vote at the earliest possible shareholder election. As
noted in more detail below, Pfizer has amended its current rights agreement so
that it will expire on December 31, 2003, and also has adopted a policy
regarding poison pills that substantially implements the Proposal.
The Board announced on October 30, 2003, that it had approved an amendment to
Pfizer's current Rights Agreement (the "Rights Agreement") to provide that the
Rights Agreement would expire on December 31, 2003. In the announcement, Pfizer
noted "Shareholder groups support the elimination of `poison pill' provisions as
consistent with corporate governance `best practice', an area in which Pfizer is
recognized for its leadership and advocacy." Pfizer takes its commitment to good
corporate governance seriously. In connection with amending the Rights Agreement, the Board also adopted the
following policy (the "Policy"): POLICY ON POISON PILL
The Board amended its Rights Agreement ("Poison Pill") so that the Poison Pill
expires on December 31, 2003. The Board has adopted a statement of policy that it shall seek and obtain
stockholder approval before adopting any poison pill; provided, however, that
this policy may be revised or repealed without prior public notice and the Board
may thereafter determine to act on its own to adopt a poison pill, if, under the
circumstances, the Board, in its exercise of its fiduciary responsibilities,
including the majority of the independent members of the Board, deems it to be
in the best interest of Pfizer's stockholders to adopta poison pill without the
delay in adoption that would come from the time reasonably anticipated to seek
shareholder approval. The Corporate Governance Committee will review this policy statement, including
the proviso, on an annual basis and report to the Board any recommendations it
may have concerning the policy. The Board sought to adopt a policy that would be in accord with best corporate
governance practices, consistent with its fiduciary duties under Delaware law.
In this regard, circumstances could arise where the Board's ability to adopt a
new poison pill without obtaining a shareholder vote would be crucial to the
Board's ability to act in the best interests of Pfizer shareholders.
Accordingly, the Board concluded that it should retain the discretion to act
without shareholder approval to adopt a poison pill in such circumstances.
The Pfizer Policy substantially implements the Proposal, and, accordingly,
pursuant to Rule 14a-8(i)(10), the Proposal can be omitted from the 2004 Proxy
Materials. In the proposing release for amendments to the proxy rules in 1997,
the Staff stated that "in order to have been `substantially implemented' the
company must have actually taken steps to implement the proposal. "Amendments to
Rules on Shareholder Proposals," Exchange Act Rel. No. 39093, at §III.A. (Sept.
18, 1997). In explaining the meaning of "substantially implemented," the Staff stated in
1983 amendments to the proxy rules that [i]n the past, the staff has permitted the exclusion of proposals under Rule
14a-8(c)(10)4 only in those cases where the action requested by the proposal has
been fully effected. The Commission proposed an interpretative change to permit
the omission of proposals that have been "substantially implemented by the
issuer." While the new interpretative position will add more subjectivity to the
application for the provision, the Commission has determined the previous
formalistic application of this provision defeated its purpose.
"Amendments to Rule 14a-8 Under the Securities Exchange Act of 1934 Relating to
Proposals by Security Holders," Exchange Act Release No. 20091, at §II.E.5.
(Aug. 16, 1983). The 1998 amendments to the proxy rules reaffirmed this position
when the current Rule 14a-8(i)(10) was put in place. See "Amendments to Rules on
Shareholder Proposals," Exchange Act Release No. 40018 at n.30 and accompanying
text (May 21, 1998) (the release notes that the revisions to Rule 14a-8(i)(10)
reflect the "substantially implemented" interpretation adopted in
1983).Consequently, in order to be excludable under Rule 14a-8(i)(10), a
shareholder proposal need only be "substantially implemented," not implemented
exactly as proposed. By allowing its current Rights Agreement to expire and
adopting the Policy, Pfizer has complied with this standard.
Delaware law requires that the Board retain the ability to exercise its
fiduciary duties. Delaware statutory and common law require that the Board retain the ability to
take action when required to comply with its fiduciary duties. As a result, the
Pfizer Policy implements the Proposal subject only to the ability of the Board
to "act on its own to adopt a poison pill ... if, under the circumstances then
existing, the Board in the exercise of its fiduciary responsibilities, including
a majority of the independent members of the Board, deems it to be in the best
interest of Pfizer and its shareholders." Section 141 (a) of the DGCL provides that:
The business and affairs of every corporation organized under this chapter shall
be managed by or under the direction of a board of directors, except as may be
otherwise provided in this chapter or in its certificate of incorporation. If
any such provision is made in the certificate of incorporation, the powers and
duties conferred or imposed upon the board of directors by this chapter shall be
exercised or performed to such extent and by such person or persons as shall be
provided in the certificate of incorporation. 8 Del. C. §141(a).
In Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946, 953 (Del. 1985), the
Delaware Supreme Court noted that a board of directors has a "fundamental duty
and obligation to protect the corporate enterprise, which includes stockholders,
from harm reasonably perceived, irrespective of its source." Id. at 954. The
Unocal opinion goes on to state that the board's response to a threat to the
corporation cannot be a passive one. Id. at 954, 955 n.10 ("It has been
suggested that a board's response to a takeover threat should be a passive one.
However, that clearly is not the law of Delaware...." (citation omitted)). See
also Ivanhoe Partners v. Newmont Mining Corp., 535 A.2d 1334, 1345 (Del. 1987)
(a board of directors has "both the duty and responsibility to oppose threats"
presented by takeover bids). The Delaware courts have also consistently held that the board of director's
duty to manage the affairs of the corporation under Section 141(a) of the DGCL
cannot be delegated, including to shareholders, unless such delegation is done
pursuant to the corporation's certificate of incorporation. See, e.g., Grimes v.
Donald, 673 A.2d 1207, 1214 (Del. 1996) (directors may not delegate duties that
"lay at the heart of the management of the corporation"); Paramount
Communications Inc. v. QVC Network Inc., 637 A.2d 34, 51 (Del. 1993) (contract
that "purportsto require a board to act or not act in such a fashion as to limit
the exercise of fiduciary duties, ... is invalid and unenforceable"); Smith v.
Van Gorkom, 488 A.2d 858, 887-888 (Del. 1985) (under Section 251 of the DGCL,
the board could not "take a neutral position and delegate to the stockholders
the unadvised decision as to whether to accept or reject the merger."); Lehrman
v. Cohen, 222 A.2d 800, 808 (Del. 1966) (directors may not delegate duty to
manage corporate enterprise, but that such "delegation" may be effected by
certificate of incorporation); Adams v. Clearance Corp., 121 A.2d 302, 305 (Del.
1956) (stating "well settled" general principle that directors may not delegate
duty to manage corporate enterprise). The Delaware Supreme Court recently reaffirmed its views with respect to a
Board's duties and responsibilities. In a case decided this year, Omnicare, Inc.
v. NCS Healthcare, Inc.,
818 A.2d 914 (Del. 2003), the NCS board had entered
into a lock-up agreement in connection with an acquisition. In holding that the
NCS board of directors did not fulfill their fiduciary duties to accept a better
offer, the Supreme Court noted the following about a board's fiduciary duties:
The directors of a Delaware corporation have a continuing obligation to
discharge their fiduciary responsibilities, as future circumstances develop....
[T]he NCS board was required to negotiate a fiduciary out clause to protect the
NCS stockholders if the Genesis transaction became an inferior offer. By
acceding to Genesis' ultimatum for complete protection in futuro, the NCS board
disabled itself from exercising its own fiduciary obligations at a time when the
board's own judgment is most important, i.e. receipt of a subsequent superior
offer. Id. at 938 (citing Malone v. Brincat, 722 A.2d 5, 10 (Del. 1998) (directors'
fiduciary duties do not operate intermittently)). Importantly, the Court also
stated that "[t]he stockholders of a Delaware corporation are entitled to rely
on the board to discharge its fiduciary duties at all times. The fiduciary
duties of directors are unremitting and must be effectively discharged in the
specific context of the actions that are required with regard to the corporation
or its stockholders as circumstances change." Id. (citations omitted and
emphasis added). While Omnicare does not deal specifically with poison pills,
the holding of the Supreme Court with respect to a board's fiduciary duties goes
beyond the immediate context of the facts of Omnicare, and also applies with
equal force to a board considering a poison pill as a potential response to an
unfair hostile takeover attempt. Clearly, a board cannot contractually or
otherwise disable its ability to exercise its fiduciary obligations.
Poison pills have been consistently recognized as a powerful and effective
defense on the part of a board of directors to hostile tender offers. See, e.g.,
Malpiede v. Townson,
780 A.2d 1075, 1089 (Del. 2001) (adopting a poison pill is
a "routine strategy" for fending off unsolicited advances and negotiating for a
better transaction); In re Gaylord Container Corp. ShareholdersLitig.,
753 A.2d 462, 481 (Del. Ch. 2000) ("The primary purpose of a poison pill is to enable the
target board of directors to prevent the acquisition of a majority of the
company's stock through an inadequate and/or coercive tender offer. The pill
gives the target board leverage to negotiate with a would-be acquirer so as to
improve the offer as well as the breathing room to explore alternatives to and
examine the merits of an unsolicited bid.").5 Consequently, since the Board cannot delegate its duties of managing the
corporate enterprise, it must reserve the right to use all of the tools
available to it to respond to hostile takeover attempts, including the ability
to adopt a poison pill. Delaware law clearly indicates that a board of directors
cannot abrogate its duties and delegate to stockholders its power to adopt a
poison pill to defend against an unfair tender offer. If the Board were required
to present a poison pill to stockholders in every instance without exception,
the delay that would ensue from calling and holding a stockholder meeting would
essentially remove the utility of a poison pill as a takeover defense, and
constitute an impermissible delegation of the Board's duties. As a result, the
provision in the Policy that allows the Board to exercise its fiduciary duties
is required by Delaware law to allow the Board to exercise its fiduciary duties.
In light of the fact that the proviso in the Pfizer Policy adopted by the Board
is required by Delaware law, Pfizer has implemented the Proposal to the maximum
extent permitted by law, and, as a result, has "substantially implemented" the
Proposal. See Masco Corp. (avail. Mar. 29, 1999) and General Motors (avail. Mar.
4, 1996), in which the Staff previously has concurred that a proposal could be
omitted from proxy materials under Rule 14a-8(i)(10) even though the proposal
was not implemented exactly as proposed. Accordingly, I believe that Pfizer may
omit the Proposal in its entirety pursuant to Rule 14a-8(i)(10).
My conclusion that the Proposal may be excluded under Rule 14a-8(i)(10) is
buttressed by the no-action letter the Staff issued last year to AutoNation,
Inc. ("AutoNation") permitting the exclusion of a similar poison pill proposal
from Mr. Chevedden on the grounds that it had been substantially implemented.
AutoNation, Inc. (avail. Mar. 5, 2003). The policy adopted by AutoNation reads
as follows: "The Board of Directors will not adopt or extend any poison pill
unless such adoption or extension has been submitted to a shareholder vote." In
response to Mr.Chevedden's argument that AutoNation's policy could be revoked at
any time by AutoNation's board of directors, AutoNation responded as follows:
The revocability of the Policy is consistent with other Company policies and the
well-settled principal [sic] of corporate governance that current directors may
not irreversibly bind future directors from discharging their fiduciary duties.
Of course, the Board would only revoke or change the Policy if, in the future in
the good faith exercise of its fiduciary duties, the Board determines that the
revocation or change of the Policy is in the best interests of the Company and
its shareholders. Proponent's argument is disingenuous in implying that
"substantial implementation" of the Proposal, which would not be binding on the
Company even if approved by the Company's stockholders, requires irrevocable
action by the Board. The fiduciary duty exception in the Pfizer Policy is virtually identical to
AutoNation's interpretation of its policy as containing an implicit fiduciary
duty exception. While we note that on two occasions the Staff did not permit the exclusion of
poison pill proposals where the company argued that the proposal had been
substantially implemented, see Sabre Holdings Corporation (avail. Mar. 20, 2003)
and 3M Company (avail. Jan. 28, 2003), in neither case did the company expressly
rely upon an opinion of counsel with respect to Delaware law. As noted above,
however, in my opinion a poison pill policy that does not reserve to the Board
the ability to exercise its fiduciary duties is inconsistent with Delaware
statutory and common law. Accordingly, Pfizer has come as close as it can under
applicable law to adopting the Proposal. In conclusion, based on the precedent of the AutoNation no-action letter and my
opinion that the Policy's fiduciary exception is required by Delaware law, I
believe that Pfizer may exclude the Proposal in its entirety because the
Proposal has been substantially implemented. * * *
Based upon the foregoing analysis, I respectfully request that the Staff of the
Securities and Exchange Commission take no action if Pfizer excludes the
Proposal from the 2004 Proxy Materials. I 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 setforth in this letter, I
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 (212) 733-4802 if I can be of any further assistance in this matter.
Sincerely, /s/
Margaret M. Foran
Vice President, Corporate Governance and Secretary
Attachments cc: Kathleen M. Ulrich, Pfizer Inc.
Nick Rossi
John Chevedden -----FOOTNOTES-----
1 As noted in Exhibit A, the Proponent sent in two proposals, and we are
assuming that the proposal dated November 7 is intended to supercede the
language of the first proposal. 2 While the language of the proposal is slightly modified, the language in the
cover letters relating to ownership is the same. In each case, the only mention
of ownership is the statement that "Rule 14a-8 requirements are intended to be
met including ownership of the required stock value until after the date of the
applicable shareholder meeting. 3 TRW involved a shareholder proposal submitted by a shareholder who in a
conversation with TRW admitted that he was simply a nominal proponent for Mr.
Chevedden. As a result of that conversation, the Staff allowed TRW to exclude
the proposal. 4 Rule 14a-8(c)(10) was the predecessor rule of the current Rule 14a-8(i)(10).
5 I should note that a board's ability to adopt and maintain a poison pill is
not without limits. See, e.g., Moran v. Household Int'l, Inc., 500 A.2d 1346,
1354 (Del. 1985) (right to keep a poison pill in place is not absolute); Revlon,
Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 181 (Del. 1986) (the
validity, in general, of the plan at issue was largely attributable to the fact
that the board retained the ability to redeem the rights, which would afford the
board the "flexibility to address any proposal deemed to be in the stockholders'
best interests."). [APPENDIX 1]
3Shareholder Input on a Poison Pill RESOLVED: Shareholders request that our Directors increase shareholder voting
rights and submit the adoption, maintenance or extension of any poison pill to a
shareholder vote. Also once this proposal is adopted, dilution or removal of
this proposal is requested to be submitted to a shareholder vote at the earliest
possible shareholder election. Directors have discretion to set the earliest
election date and in responding to shareholder votes. I do not see how our Directors object to this proposal because it gives our
Directors the flexibly to ignore our shareholder vote if our Directors seriously
believe they have a good reason. This topic won an overall 60% yes-vote at 79
companies in 2003. I believe majority shareholder votes are a strong signal of
shareholder concern. Nick Rossi, P.O. Box 249, Boonville, Calif. 95415 submitted this proposal.
Poison Pill Negative The key negative of poison pills is that pills can preserve management deadwood
instead of protecting investors. Source: Moringstar.com
The Potential of a Tender Offer Can Motivate Our Directors
Hectoring directors to act more independently is a poor substitute for the
bracing possibility that shareholders could turn on a dime and sell the company
out from under its present management. Source: Wall Street Journal, Feb. 24, 2003
Diluted Stock An anti-democratic management scheme to flood the market with diluted stock is
not a reason that a tender offer for our stock should fail.
Source: The Motley Fool Akin to a Dictator
Poison pills are akin to a dictator who says, "Give up more of your freedom and
I'll take care of you. "Performance is the greatest defense against getting taken over. Ultimately if
you perform well you remain independent, because your stock price stays up."
Source: T.J. Dermot Dunphy, CEO of Sealed Air (NYSE) for more than 25 years
I believe our Directors could make a token response to this proposalhoping to
gain points in the new corporate governance rating systems. A reversible
response, which could still allow our directors to give us a poison pill on
short notice with no subsequent vote, would not substitute for this proposal.
Council of Institutional Investors Recommendation
The Council of Institutional Investors www.cii.org, an organization of 130
pension funds investing $2 trillion, called for shareholder approval of poison
pills. Based on the 60% overall yes-vote in 2003 many shareholders believe
companies should allow their shareholders a vote. Shareholder Input on a Poison Pill Yes on 3
Notes: The above format is the format submitted and intended for publication.
Please advise if there is any typographical question.
The company is requested to assign a proposal number (represented by "3" above)
based on the chronological order in which proposals are submitted. The requested
designation of "3" or higher number allows for ratification of auditors to be
item 2. References: The Motley Fool, June 13, 1997
Moringstar.com, Aug. 15, 2003 Mr. Dunphy's statements are from The Wall Street Journal, April 28, 1999.
IRRC Corporate Governance Bulletin, JuneSept. 2003
Council of Institutional Investors, Corporate Governance Policies, March 25,
2002 Please advise within 14 days if the company requests help to locate these or
other references. [APPENDIX 2]
Nick Ross:
P.O. Box 249
Boonville, CA 95415 Mr. Henry McKinnell
Chairman
Pfizer Inc. (PFE)
235 East 42nd Street
New York, NY 10017
PH: 212-573-2323
FX: 212-573-7851 Dear Mr. McKinnell,
This Rule 14a-8 proposal is respectfully submitted for the next annual
shareholder meeting. This proposal is submitted in support of the long-term
performance of our company. Rule 14a-8 requirements are intended to be met
including ownership of the required stock value until after the date of the
applicable shareholder meeting. This submitted format, with the
shareholder-supplied emphasis, is intended to be used for definitive proxy
publication. This is the proxy for Mr. John Chevedden and/or his designee to act
on my behalf in shareholder matters, including this shareholder proposal for the
forthcoming shareholder meeting before, during and after the forthcoming
shareholder meeting. Please direct all future communication to Mr. Chevedden at:
2215 Neison Ave., No. 205
Redondo Beach, CA 90278
PH: 310-371-7872 Your consideration and the consideration of the Board of Directors is
appreciated. Sincerely, /s/
Oct 2-23 cc: Charles Hardwick
Corporate Affairs [INQUIRY LETTER]
6 Copies
7th copy for date-stamp return December 27, 2003
Via Airbill Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
Mail Stop 0402
450 Fifth Street, NW
Washington, DC 20549 Pfizer Inc. (PFE)
Response to No Action Request
Nick Rossi Ladies and Gentlemen:
The number preceding the brackets below correspond to the pages of the company
letter. 2] The company fails to note that the submittal letter said. "Please direct all
future communication to Mr. Chevedden." Yet the company tellingly provides no
verification that it notified the undersigned that ownership verification was
requested. The company had 2 months (from October 17, 2003 to December 17, 2003)
to request ownership verification from the undersigned and failed. I do not
believe the company can ignore the instructions in the submittal letter. When
the company chose to ignore the instructions in the submittal letter it should
at least have informed Mr. Rossi. The company clearly did not notify Mr. Rossi
that it was ignoring instructions in the submittal letter.
The submittal letter for the revised proposal gave the same instructions to
contact the undersigned. The text was unequivocal. It did not say either/or.
Additionally rule 14a-8 allows the company 14 days to notify the shareholder
party of any issue with ownership. This 14-days period expired and rule 14a-8
does not say that the company has a second chance to meet this requirement. The
company's own quote from rule 14a-8 addresses this point, "but only if the
company timely notifies the proponent of the problem."
The probability is high that if the submittal letter said this proposal was for
the 2003 annual meeting that the company would demand that the letter be
followed and thereby exclude the proposal for 2004. In a similar manner the
instructions in the shareholder letter should be followed.
If the company had timely notified the undersigned the proper information would
have been delivered to the company. The company now has no issue now with the
holdings of Katrina Wubbolding, with Nick Rossi as custodian.
The company admission that it did not become aware of the stock ownership
verification issue until December 16, 2003 does not support any assumption of
diligence on the part of the company. Contrary to the company insistence allowing a non-binding vote would have no
impact on the board "exercising its fiduciary duty."
4] The company "Policy on Poison Pill" has a blatant loophole, "this policy may
be revised or repealed without prior public notice and the Board may thereafter
determine to act on its own to adopt a poison pill." The shareholder proposal
calls for a shareholder vote if total policy termination is planned.
The company "Policy" completely fails to address a key part of the proposal:
"Also once this proposal is adopted, dilution or removal of this proposal is
requested to be submitted to a shareholder vote at the earliest possible
shareholder election." Without this key part the proposal is subject to
manipulation at the expense of shareholders. Under the text of the policy it appears that the policy could be "repealed"
before the company 2004 annual meeting "without prior public notice."
5] Written into this policy is an annual review which could be the segue to
repealing the policy in less than a year: "The Corporate Governance Committee
will review this policy ... on an annual basis and report to the Board any
recommendations it may have concerning the policy." Contrary to the company argument there is no text in the shareholder proposal
stating that the complete proposal is intended to be in effect for one-year.
6] A non-binding shareholder vote does not interfere with the board's ability to
exercise its fiduciary duty: "Also once this proposal is adopted, dilution or
removal of this proposal is requested to be submitted to a shareholder vote at
the earliest possible shareholder election." The text "submitted to a
shareholder vote" is clearly non-binding. The company presents lengthy moot arguments on non-interference with the board's
ability to exercise its fiduciary duty when the board can already ignore the
non-binding vote which the proposal calls for. The company would first need to
establish that a non-binding vote interferes with the board's ability. The
company failed to do so. 8] Contrary to the company claim the company has not shown how the board would
purportedly "delegate its duties of managing the corporate enterprise" by
allowing a non-binding shareholder vote. The company claims that if a vote were called there could be a delay that could
interfere with fiduciary duty. However the company fails in the necessity to
establish that according to this shareholder proposal a vote would be mandatory
before a pill was adopted. The company failed to note that the AutoNation proposal did not have the text:
"Also once this proposal is adopted, dilution or removal of this proposal is
requested to be submitted to a shareholder vote at the earliest possible
shareholder election." Not licensed to practice in Delaware
The company letter on page 9 regarding "an opinion of counsel with respect to
Delaware law" fails to repeat the statement on page 2: "I am not licensed to
practice in the State of Delaware." I do not believe the company has met its burden of proof according to rule
14a-8. For the above reasons this is to respectfully request non-concurrence with the
company no action request on each point. Sincerely,
/s/ John Chevedden
cc: Nick Rossi
Henry McKinnell
[STAFF REPLY LETTER]
January 16, 2004 Response of the Office of Chief Counsel Division of Corporation Finance
Re: Pfizer Inc. Incoming letter dated December 17, 2003
The proposal requests that the board seek shareholder approval for the adoption,
maintenance, or extension of any current or future poison pill at the earliest
subsequent shareholder election and further requests that once adopted, removal
or dilution of the proposal be submitted consistently to a shareholder vote at
the earliest subsequent shareholder election. The proposal clarifies that
directors have discretion in responding to shareholder votes.
There appears to be some basis for your view that Pfizer may exclude the
proposal under rule 14a-8(f). We note that that the proponent appears not to
have responded to Pfizer's request for documentary support indicating that the
proponent has satisfied the minimum ownership requirement for the one-year
period required by rule 14a-8(b). Accordingly, we will not recommend enforcement
action to the Commission if Pfizer 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 basis for omission upon which
Pfizer relies. Sincerely, /s/
Grace K. Lee
Special Counsel
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