Company Name: PG&E Corp.
Public Availability Date: February 4, 2004Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER [INQUIRY LETTER]
December 24, 2003 VIA FEDERAL EXPRESS
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, NW
Washington, DC 20549 Re: Shareholder Proposal of Patricia H. Buck
Ladies and Gentlemen: Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), we request confirmation that the staff of the Division of
Corporation Finance (the "Staff") of the Securities and Exchange Commission (the
"Commission") will not recommend any enforcement action if, in reliance on
certain provisions of Rule 14a-8, PG&E Corporation, a California corporation,
excludes the shareholder proposal and accompanying supporting statement
("Proposal") described below from the proxy statement, form of proxy and other
proxy materials for its 2004 Annual Meeting of Shareholders (the "2004 Proxy
Materials"). The Proposal was submitted by Ms. Patricia H. Buck.
We have enclosed six copies of this letter and the Proposal and attached all
other related correspondence. A copy of this letter is also being sent to Ms.
Buck as notice of the Corporation's intent to omit the Proposal from the
Corporation's 2004 Proxy Materials. For the reasons set forth below, PG&E Corporation intends to omit the Proposal
from the 2004 Proxy Materials. THE PROPOSAL
On August 13, 2003, PG&E Corporation received a letter dated August 11, 2003
from Ms. Buck, containing three proposals for consideration at PG&E
Corporation's 2004 Annual Meeting of Shareholders. By letter dated August 25,
2003, PG&E Corporation informed Ms. Buck of the one-proposal limit contained in
SEC Rule 14-8, and also informed Ms. Buck that she had neglected to include a
written statement of her intent to hold her shares through the date of the
annual meeting. On August 29, 2003, PG&E Corporation received correspondence
from Ms. Buck, dated August 28, 2003, that timely remedied those procedural and
eligibility deficiencies. Ms. Buck's August 28, 2003 Proposal reads as follows:
No one on the Board of Directors speaks for the shareholders and looks out for
the shareholders' interests. Board members are nominated by the Board itself and
by the Management. Shareholders can only vote for or withhold a vote for an
individual on the board or vote for or withhold a vote for the entire board. It
is understood that the board is not obliged to follow this vote. It seems only a
powerless courtesy which is meaningless. This creates a climate where PG&E
Corporation is a comfortable and in-bred piggy-bank for the board and top
management. The rate payers (customers) and the shareholders are outside this
equation, are powerless, and are not considered. I propose that one seat on the
board be reserved for a shareholder advocate. A committee of shareholders would
be formed to find and nominate such a person who would be identified as this
advocate. This person, if elected, would have the same voting privileges and
committee assignments as any other member of the board and would report to the
shareholders. (Emphasis in original.)
Although the language of the Proposal is somewhat vague, it appears that the
recommended shareholder advocate ("Shareholder Advocate") would be acting as a
director. This interpretation is bolstered by the Proposal's language stating
that one seat on the board be reserved for the Shareholder Advocate, and that
the Shareholder Advocate would have the same voting privileges and committee
assignments as any other member of the board. Although the Proposal is unclear regarding how the proposed shareholder
nominating committee would be formed or would function, the Proposal does appear
to provide that only the proposed shareholder committee may identify nominees
for the Shareholder Advocate director position. Therefore, the Proposal sets
forth a process in which the nominee selected by the shareholder committee
inevitably will be elected to the Board of Directors as the Shareholder
Advocate. Finally, it also is unclear whether the Proposal would require that information
regarding the designated nominee for Shareholder Advocate be included in the
Corporation's proxy statement. REASONS FOR OMISSION
1. The Proposal intrudes upon the Directors' exercise of responsibilities and
duties to the Corporation and may be excluded pursuant to Rule 14a-8(i)(1).
The Commission has long recognized that a "mandatory" proposal may not be a
proper subject for shareholder action under state law, although such proposal
may be a proper subject for shareholder action if the proposal is precatory. The
Note to Rule 14a-8(i)(1) codifies this position. The Corporation is organized under the laws of the State of California. Under
the California General Corporation Law (the "CGCL"), it is the directors, not
the shareholders, who are responsible for the management of the corporation.
Section 300(a) of the CGCL provides that, subject to the provisions of the CGCL
and any limitation in a corporation's articles of incorporation relating to
actions requiring shareholder approval, the business and affairs of a
corporation are to be managed and all corporate powers shall be exercised under
the direction of the board. The Corporation's Articles of Incorporation contain
no such limitations on the Board's management powers and responsibilities. The
Staff has specifically expressed the view that, in the absence of limits on the
authority of the board of directors, a shareholder proposal which mandates
action by a California corporation may be omitted under Rule 14a-8(i)(1) and its
predecessor Rule 14a-8(c)(1). See SEC No-Action Letter, PG&E Corporation
(February 18, 2003); SEC No-Action Letter, Southern California Edison (January
21, 1994); SEC No-Action Letter, Mail Boxes, etc. (April 26, 1994); SEC
No-Action Letter, Pacific Gas and Electric Company (February 1, 1993.)
Because the Proposal is mandatory, its approval would intrude upon the
directors' exercise of their management powers and is improper under state law.
Based upon the foregoing, it is my opinion that the Proposal is excludable from
the Corporation's 2004 Proxy Materials under Rule 14a-8(i)(1).
2. The Proposal relates to an election for membership on the Corporation's Board
of Directors and may be excluded pursuant to Rule 14a-8(i)(8).
Rule 14a-8(i)(8) provides that a proposal may be excluded from a company's proxy
materials "if the proposal relates to an election for membership on the
company's board of directors." a. The Proposal calls for election of a particular person to the Board of
Directors. The Staff has in the past cited Rule 14a-8(i)(8) to permit exclusion of
shareholder proposals that have the effect of requiring that a particular person
become a member of the board of directors (see, e.g., SEC No-Action Letter, Dow
Jones & Company (January 31, 1996) (Staff noted that "because the proposal calls
for a particular person or person from a specified group to fill the new
position," the proposal relates to the election of such person and is properly
excluded)). The Staff has specifically cited Rule 14a-8(i)(8) to permit
exclusion of proposals that would have placed one or more "shareholder
designates" on the board of directors, as is requested in Ms. Buck's Proposal.
For example, in the SEC No-Action Letter for NetCurrents, Inc. (May 18, 2001),
Staff agreed that Rule 14a-8(i)(8) provided a basis to exclude a shareholder
proposal that would have permitted a sub-group of the company's shareholders to
nominate three new outside directors at the annual meeting, and for the common
shareholders at large to elect those directors at a subsequent meeting. See also
SEC No-Action Letter, CNA Financial Corporation (February 15, 1983) (predecessor
to Rule 14a-8(i)(8) permitted company to exclude a proposal demanding that three
non-management stockholders not presently serving on the board be appointed to
the board). The Proposal prescribes that one seat on the Corporation's Board of Directors be
reserved for the Shareholder Advocate and that nominees for the Shareholder
Advocate be determined by a committee of shareholders. Consistent with prior
Staff No-Action Letters, the Proposal should be excluded from the Corporation's
2004 Proxy Materials because it will have the effect of requiring that a
particular person become a member of the Board of Directors.
b. The Proposal may require access to the proxy statement.
While it is unclear whether the Proposal would require the Corporation to
include in its proxy statement information regarding the Shareholder Advocate
nominee, to the extent that the Proposal is interpreted to require shareholder
access to the proxy statement, the Staff has consistently permitted exclusion of
such proposals because they would establish a procedure that may result in
contested elections of directors, rather than establishing procedures for
nomination or qualification generally (see, e.g., SEC No-Action Letter,
Citigroup, Inc. (January 31, 2003)). The Proposal should be excluded from the Corporation's 2004 Proxy Materials on
those grounds to the extent that it requests shareholder access to the proxy
statement and as such would establish procedures that may result in contested
elections.1 3. The Proposal would cause the Corporation to violate state laws and stock
exchange listing standards, and thus the Corporation would lack the authority or
power to implement the Proposal. The Proposal may be excluded pursuant to Rule
14a-8(i)(2 and Rule 14a-8(i)(6). Rule 14a-8(i)(2) and (6) provide that an issuer may omit a shareholder proposal
from the issuer's proxy materials if the proposal would, if adopted, cause the
issuer to violate any state, federal or foreign law, or if the issuer would lack
the power or authority to implement the proposal. a. The Proposal, if implemented, would cause the Corporation to violate state
law regarding shareholders' rights to elect directors. Under the CGCL the power to elect directors is generally vested in the
shareholders, and in the case of a corporation having only one class of shares
(such as the Corporation), all the shares would have equal voting rights,
including for the election of directors. Section 301(a) of the CGCL provides that, at each annual meeting of
shareholders, directors shall be elected to hold office until the next annual
meeting. Sections 305 and 600 of the CGCL provide shareholders with processes in
which they may call special meetings to elect directors (or take other action),
including calling a special meeting if the annual meeting is not called in a
timely manner. Section 700 of the CGCL provides that each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote of shareholders, unless otherwise provided in the articles or for purposes
of cumulative voting. (The Corporation's Articles do not provide any class of
shares with the right to more than one vote, nor do they provide for cumulative
voting). Section 708(c) of the CGCL provides that directors are elected by a
plurality of the votes, i.e., the candidates receiving the highest number of
affirmative votes of the shares entitled to be voted for them, up to the number
of directors to be elected by such shares, are elected. Several other provisions
of the CGCL make it clear that directors may only be elected and removed by
shareholders, with the exceptions being that (a) newly created directorships and
vacancies in board membership may be filled by the remaining members of the
board (other than vacancies caused by removal of a director, unless the articles
or bylaws provide the directors with this right) and (b) the board may declare
the office of an incumbent director vacant when the director is either declared
of unsound mind by court order or convicted of a felony. In any event, any
director so elected by the board serves only until the next meeting of
shareholders for electing directors. As noted in the above section entitled "The Proposal," the Proposal sets forth a
process in which the nominee selected by the shareholder committee effectively
will be elected to the Board of Directors as the Shareholder Advocate. Neither
management, other shareholders, nor any other third party may nominate an
opposing candidate for the Shareholder Advocate position. By contrast,
shareholders currently have the right to propose candidates for any position on
the Board of Directors, either by submitting candidates to the Board's
Nominating, Compensation, and Governance Committee, by introducing candidates
during the annual meeting (subject to certain requirements set forth in the
Corporation's Bylaws), or by conducting an independent proxy solicitation for
alternate candidates, in conformance with Commission proxy rules.
Notably, the Staff previously has applied Rule 14a-8(c)(2) (the predecessor to
Rule 14a-8(i)(2)) to permit a company to exclude a proposal that also did not
provide all shareholders with the right to vote for all board members, as the
proposal violated parallel New York state corporate laws. See SEC No-Action
Letter, International Business Machines Corporation (January 19, 1996)
(permitting exclusion of a proposal that all employees who are current
shareholders vote for and be represented by a non-management member on a seat of
the board). Because the Proposal's effectively results in the shareholder committee's
nominee being elected to the Board of Directors as the Shareholder Advocate, the
Proposal dictates the results of the election and thus violates California state
law by improperly limiting the rights of shareholders to vote for the
corporation's directors. The Proposal would require the Corporation to violate
California state laws regarding shareholders' rights to elect the Corporation's
directors, and therefore is beyond the Corporation's authority to implement.
Based on the foregoing, it is my opinion that the Proposal is excludable from
the Corporation's 2004 Proxy Materials under Rule 14a-8(i)(2) and Rule
14a-8(i)(6). b. The Proposal, if implemented, would cause the Corporation's Directors to
violate state law by abdicating their duties and responsibilities regarding
director nominees. As previously noted, under Section 300(a) of the CGCL, it is the directors, not
the shareholders, who are responsible for the management of the corporation.
Under California state law, directors of a corporation also owe a fiduciary duty
to the corporation and to the corporation's shareholders. Section 309(a) of the
CGCL provides that "A director shall perform the duties of a director, including
duties as a member of any committee of the board upon which the director may
serve, in good faith, in a manner such director believes to be in the best
interests of the corporation and its shareholders and with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position would use
under similar circumstances" (emphasis added). The Proposal would preclude the Board of Directors from nominating another
candidate directly in opposition to the shareholder committee's nominee for
Shareholder Advocate, even if the Board of Directors believed that nominee was
not qualified to be a director, or that it was not in the best interests of the
Corporation for that nominee to serve on the Board. Notably, the Staff previously has applied Rule 14a-8(c)(2) (the predecessor to
Rule 14a-8(i)(2)) to permit a company to exclude a similar proposal requiring
that a board of directors select two director nominees exclusively from a pool
of candidates selected by the employee-shareholders, because the proposal would
require the board of directors to abdicate its fiduciary duty under Delaware
state law to choose the best qualified candidates for nominees as directors. See
SEC No-Action Letter, Rockwell International Corporation (December 11, 1992).
Implementation of this Proposal would result in the Board's abdication of its
duties and responsibilities under California state law and the Corporation would
lack authorization to implement the Proposal. Therefore, it is my opinion that
the Proposal may properly be excluded from the Corporation's 2004 Proxy
Materials under Rule 14a-8(i)(2) and Rule 14a-8(i)(6). c. The Proposal, if implemented, could cause the Corporation to violate stock
exchange listing standards and the Corporation therefore would not have the
authority to implement the Proposal. PG&E Corporation's common stock is listed and traded on the New York Stock
Exchange (NYSE). As such, the Corporation is subject to the NYSE's new listing
standards which become effective with the 2004 annual meeting. These listing
standards are reviewed and approved by the Commission. i. Violation of NYSE listing standards regarding director independence and
qualifications. New NYSE corporate governance listing standards will require that a majority of
the Corporation's Board of Directors be "independent" as defined by the NYSE.
NYSE Rule 303A.01. The NYSE rules also will require that the Corporation's
committees responsible for audit, nominations and governance, and compensation
be comprised entirely of independent directors. NYSE Rules 303A.04, 303A.05, and
303A.07. The Proposal would require that the Shareholder Advocate be given the same Board
and committee responsibilities as the other members of the Board. Currently, all
of the Corporation's directors except the one representative from management
(the current Chairman, CEO, and President) serve on either the Audit Committee
or the Nominating, Compensation, and Governance Committee. Thus, the Proposal
would require that the Shareholder Advocate sit on one of these committees, even
if he or she did not meet the NYSE independence and other qualification
requirements. In such case, the Corporation would be in violation of NYSE
listing standards. ii. Violation of NYSE listing standards regarding which parties may nominate
directors for consideration at the annual meeting. The new NYSE listing standards also set forth specific duties for certain
committees of the board of directors, including the nominating and governance
committee. That committee is responsible for selecting, or recommending that the
board of directors select, nominees for the next annual meeting of shareholders
(unless the company legally is required, by contract or otherwise, to provide
third parties with the right to nominate director, e.g., pursuant to preferred
stock rights to elect directors upon a dividend default, shareholder agreements,
and management agreements). NYSE Rule 303A.04(b)(i). Because the Proposal requires that a committee of shareholdersnot the directors
- select the nominee for Shareholder Advocate, and because the Corporation is
under no contractual or other obligation to provide third parties (including the
proposed shareholder committee) with the right to nominate directors, the
Proposal's nominating procedures violate the new NYSE corporate governance
guidelines, and thus would be beyond the Corporation's authority to implement.
Based on the foregoing, it is my opinion that implementation of the Proposal
could cause the Corporation to violate several of the applicable NYSE listing
standards and be beyond the Corporation's power to implement. As such, the
Proposal may be omitted from the Corporation's 2004 Proxy Materials.
4. The Proposal contains false and misleading statements and therefore must be
amended, pursuant to Rule 14a-8(i)(3) and Rule 14a-9. PG&E Corporation believes that significant portions of the Proposal are false
and misleading in violation of Rule 14a-9 and therefore portions of this
Proposal may be omitted pursuant to Rule 14a-8(i)(3). Rule 14a-8(i)(3) allows the exclusion of a shareholder proposal that is contrary
to any of the Commission's proxy rules and regulations, including Rule 14a-9,
which specifically prohibits materially false or misleading statements in proxy
solicitation materials. The Note to Rule 14a-9 states that "misleading"
materials include "[m]aterial which directly or indirectly impugns character,
integrity or personal reputation, or directly or indirectly makes charges
concerning improper, illegal or immoral conduct or associations, without factual
foundation." The Staff has consistently recognized that supporting statements
which are unrelated or irrelevant to the subject matter of the proposal may be
confusing and misleading to shareholders in violation of Rule 14a-9 and are
excludable pursuant to Rule 14a-8(i)(3) or its predecessor, Rule 14a-8(c)(3).
See e.g., SEC No-Action Letter, Freeport-McMoRan Copper & Gold Inc. (February
22, 1999); SEC No-Action Letter, Cigna Corp. (February 16, 1988).
PG&E Corporation believes following sections of the Proposal are false and
misleading in the following respects: a. "No one on the Board of Directors speaks for the shareholders and looks out
for the shareholders' interests." As noted above, Section 309(a) of the CGCL requires each director to perform the
duties of a director, including duties as a member of any committee of the board
upon which the director may serve, in good faith, in a manner such director
believes to be in the best interests of the corporation and its shareholders and
with such care, including reasonable inquiry, as an ordinarily prudent person in
a like position would use under similar circumstances."
Each member of the Board of Directors has a legal fiduciary obligation to look
out for the interests of both the Corporation and the shareholders. The
statement should be excluded as false. b. "Board members are nominated by the Board itself and by the Management."
Nominating power does not reside only with the Board of Directors, and while
management may communicate recommendations to the Board of Directors, management
does not itself have the power to select director nominees.
Shareholders have numerous methods to set forth nominees for the Board of
Directors. The Commission's proxy rules provide a process whereby third parties
may undertake a proxy solicitation and separately nominate candidates for the
Corporation's Board of Directors. Shareholders also may introduce director
nominees from the floor during the annual meeting, subject to certain
requirements set forth in the Corporation's Bylaws. In addition, shareholders
may submit director candidates to the Corporation's Nominating, Compensation,
and Governance Committee, in the manner set forth in the Corporation's proxy
statement. The statement incorrectly suggests that the Board of Directors and management
are the sole parties with authority to put forth director nominees. This
mischaracterization could lead shareholders to believe that they currently have
no means of participating in the director nomination process, which may persuade
such shareholders to support this Proposal even though the shareholder might not
choose to support the Proposal if he or she had a more complete picture of the
nominating process. This sentence is both false and misleading and should be
excluded from the Proposal. c. "Shareholders can only vote for or withhold a vote for an individual on the
board or vote for or withhold a vote for the entire board. It is understood that
the board is not obliged to follow this vote. It seems only a powerless courtesy
which is meaningless." As stated earlier, Section 708(c) of the CGCL requires that in any election of
directors, the candidates receiving the highest number of affirmative votes of
the shares entitled to be voted for them up to the number of directors to be
elected by such shares are elected. The Board, the company, and management have
no ability to ignore the voting results. These statements should be excluded as false.
d. "This creates a climate where PG&E Corporation is a comfortable and in-bred
piggy-bank for the board and top management." This statement is an attempt to "impugn the character, integrity and personal
reputation" of the Corporation and its directors, without factual foundation.
The directors have a fiduciary duty to act in the best interest of the
corporation and its shareholders. The above statement suggests that the
directors are not fulfilling these duties, and this is just the type of
statement that is considered per se "misleading" under the Notes to Rule 14a-9.
The type of unfounded assertion and inflammatory statement contained in the
above-mentioned sentence has long been viewed as excludable under Rule
14a-8(c)(3). See SEC No-Action Letter, PG&E Corporation (January 31, 2003)
(proposal implying that the fictional Hollywood film "Erin Brockovich"
demonstrates that PG&E Corporation shows a "disregard of human health and
life"); SEC No-Action Letter, Philip Morris Companies Inc. (February 7, 1991)
(proposal implying that company "advocates or encourages bigotry and hate"
excludable under former Rule 14a-8(c)(3)); SEC No-Action Letter, The Detroit
Edison Company (March 4, 1983) (statements implying company engaged in improper
"circumvention of ... regulation" and "obstruction of justice" without factual
foundation provided a basis for excluding the proposal under former Rule
14a-8(c)(3)); SEC No-Action Letter, Standard Brands, Inc. (March 12, 1975)
(references to a company engaging in "economic racism" made proposal excludable
under former Rule 14a-8(c)(3)). The above sentence should be excluded from the Proposal.
e. "The rate payers (customers) and the shareholders are outside this equation,
are powerless, and are not considered." The presentation of an opinion in factual form is misleading and impermissible
under Rule 14a-9. See, e.g. SEC No-Action Letter, Watts Industries, Inc. (July
10, 1998) (requiring the proponent to label two sections of the supporting
statement as his opinion). At a minimum, these statements should be revised to label them as an opinion
statement. CONCLUSION For the foregoing reasons, PG&E Corporation believes, and it is my legal opinion
as an attorney registered with the California State Bar that, the Corporation
may properly omit Ms. Buck's Proposal from its 2004 Proxy Materials.
We respectfully request confirmation that the Staff will not recommend any
enforcement action if Ms. Buck's Proposal is excluded. If the Staff does not
concur with this position, we would appreciate an opportunity to confer with the
Staff concerning these matters before the Staff issues its Rule 14a-8 response.
PG&E Corporation intends to release definitive copies of its 2004 Proxy
Materials to its shareholders on or about March 17, 2004, and plans to submit a
draft of the 2004 Proxy Materials to its printer by March 3, 2004. Accordingly,
we would appreciate the Commission's response as promptly as possible.
If you have any questions or would like any additional information regarding the
foregoing, please do not hesitate to call me at (415) 817-8201, or Frances Chang
at (415) 817-8207. If possible, I would appreciate it if the Staff would send a
copy of its response to this request to me by fax at (415) 817-8225 when it is
available. Please confirm this filing by returning a receipt-stamped copy of this letter.
An extra copy of this letter and a pre-addressed postage paid envelope are
enclosed. Thank you for your attention to this matter.
Very truly yours, /s/
Gary P. Encinas Enclosures
cc: Patricia H. Buck
Linda Y.H. Cheng -----FOOTNOTES-----
1 The Corporation notes that the Commission is considering proposed rules
regarding shareholder access that would require public companies, under limited
circumstances, to include in their proxy materials shareholder nominees for
election as directors. The Commission's proposal is based on the results of an
extensive Commission staff report, and the proposal has raised many policy and
legal issues, and has garnered over 5,000 comment letters, as well as responses
from institutions such as the U.S. Chamber of Commerce, the American
Shareholders Association, Americans for Tax Reform, the Business Roundtable,
Minority Business Roundtable, the New York State Comptroller, and the President
of CalPERS. Until the various issues regarding shareholder proxy access are
resolved in the Commission's final proxy access rules, we urge the Staff to
continue to follow the long line of precedent supporting the Staff's decision in
the Citigroup No-Action Letter and agree that the Corporation may exclude the
Proposal on these grounds. [INQUIRY LETTER]
August 28, 2003 Ms. Linda Y.H. Cheng
Corporate Secretary
PG & E Corporation
One Market, Spear Tower
Suite 2400
San Francisco, CA 94105 Dear Ms. Cheng,
Thank you for your prompt reply to my letter and share proposals of August 11,
2003. The enclosed documents address all of the issues brought forth in you letter.
The pertinent parts of these documents have been highlighted. I am also
enclosing a copy of your letter of August 25. I am resubmitting the third proposal for the shareholders' meeting of 2004. This
is also enclosed in this packet. Because in your letter you also suggested that
some other defect may arise in any of these proposals because of
non-satisfaction of SEC eligibility and/or procedural requirements which are
unclear to me at this time, I am confident that I will be able to resubmit any
of my other proposals for the shareholders' meeting. Please contact me if there is any further information or clarification that
needs to be done on my part. If there is none, I assume that this proposal will
appear in the next proxy statement mailed out to the shareholders for the 2004
meeting. Sincerely, /s/
PATRICIA H. BUCK Attachments:
Resubmitted Proposal
Copy of letter, August 25, 2003
PG&E Account Status, August 25, 2003
PG&E Account Status, Nov. 15, 2000
Statement of Intent to hold these Securities, August 28, 2003 [APPENDIX]
August 28, 2003 Ms. Linda Y.H. Cheng
Corporate Secretary
PG & E Corporation
One Market, Spear Tower
Suite 2400
San Francisco, CA 94105 Re: Proposal for inclusion in the PG&E Proxy Statement, 2004
As a stockholder of PG&E Stock, holding over 1,800 shares worth over $40,000, I
am asking that the following proposal be included in the proxy statement for
next year 2004 and be considered and voted on by the shareholders.
No one on the Board of Directors speaks for the shareholders and looks out for
the shareholders' interests. Board members are nominated by the Board itself and
by the Management. Shareholders can only vote for or withhold a vote for an
individual on the board or vote for or withhold a vote for the entire board. It
is understood that the board is not obliged to follow this vote. It seems only a
powerless courtesy which is meaningless. This creates a climate where PG&E
Corporation is a comfortable and in-bred piggy bank for the board and top
management. The rate payers (customers) and the shareholders are outside this
equation, are powerless, and are not considered. I propose that one seat on the
board be reserved for a shareholder advocate. A committee of shareholders would
be formed to find and nominate such a person who would be identified as this
advocate. This person, if elected, would have the same voting privileges and
committee assignments as any other member of the board and would report to the
shareholders. I intend to attend the shareholders meeting in 2004 to introduce this proposal.
Sincerely, /s/
PATRICIA H. BUCK
[STAFF REPLY LETTER]
February 4, 2004 Response of the Office of Chief Counsel Division of Corporation Finance
Re: PG&E Corporation Incoming letter dated December 24, 2003
The proposal seeks to have one seat on the board of directors reserved for a
"shareholder advocate" who would have the same voting privileges and committee
assignments as any other member of the board and who would be nominated by a
committee of shareholders. There appears to be some basis for your view that PG&E may exclude the proposal
under rule 14a-8(i)(8), as relating to an election for membership on its board
of directors. Accordingly, we will not recommend enforcement action to the
Commission if PG&E omits the proposal from its proxy materials in reliance on
rule 14a-8(i)(8). In reaching this position, we have not found it necessary to
address the alternative bases for omission upon which PG&E relies.
Sincerely, /s/
Anne Nguyen
Attorney-Advisor
|
