Company Name: Procter & Gamble Co.
Public Availability Date: August 3, 2004Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER [INQUIRY LETTER]
July 2, 2004: P&G just does NOT want ME NOR the SEC to see their language, which
means they are up to no good, unlike theother cos. which did agree to discuss
the wording with ME BEFOREHAND. Do not make any judgments BEFORE YOU SEE THEIR PROPOSED WORDING, then you will
NOTE that their resolution in NOWAYS implements mine, but to the contrary has
just negative words re ending the stagger system. IT IS DIFFERENT from
Wyerhauser., NOT at all similar. June 6, 2004
Mrs. Evelyn Y. Davis
Highlights and Lowlights
Watergate Office Building
2600 Virginia Ave. N. W. Suite 215
Washington, DC 20037 Dear Ms. Davis:
You recently called my office requesting a copy of the language we will include
in this year's proxy concerning the potential reinstatement of the annual
election of all Directors. During our recent call, I suggested we would provide a draft of this language to
you in the near future. We are still fine-tuning the language. Our legal group
also advised me it would not be appropriate to share a draft until the Board's
Govemance & Nominating Committee has an opportunity to review the language and
provide their input. The next meeting of the Committee is on July 13, 2004. We
will need a week or so after the meeting to reflect the Committee's suggestions.
Consequently, we anticipate providing you with a copy of the proxy language in
the latter part of July. When we provide the language, we trust you will keep it
confidential until our proxy is published. I assure you the proxy language will appropriately acknowledge the fact you have
championed this issue for a number of years, including last year.
I am sorry we cannot share proposed proxy language with you sooner, but I trust
you can understand why the Governance Committee and full Board of Directors need
to approve the draft proxy first. Thank you.
Very truly yours, /s/
A. G. Latley [INQUIRY LETTER]
June 30, 2004 U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
460 Fifth Street, N.W.
Washington, D.C. 20549 Re: Shareholder Proposal Submitted by Evelyn Y. Davis for Inclusion in The
Procter & Gamble Company 2004 Proxy Statement Dear Sir or Madam:
This letter responds to Mrs. Evelyn Y. Davis' letter, dated June 16, 2004,
concerning The Procter & Gamble Company's ("P&G's") no action request to the
Staff, dated June 7, 2004. Mrs. Davis' proposal requests that "the Board of Directors take the necessary
steps to reinstate the election of directors ANNUALLY, instead of the stagger
system which was recently adopted." P&G has taken steps to substantially
implement Mrs. Davis' proposal by submitting the matter to a binding shareholder
vote. If the proposal receives more than a 50% vote of the outstanding shares,
it will become immediately effective. Accordingly, we believe Mrs. Davis'
proposal may be excluded pursuant to Rule 14a-8(?)(10). Mrs. Davis argues P&G has not substantially implemented her proposal, because
P&G's Board intends to recommend a vote against declassification. The Staff's
precedent makes clear the Board's recommendation makes no difference to the
analysis. As recently as March 8, 2004, the Staff concluded the Weyerhaeuser
Company could omit a shareholder proposal for declassification because the board
planned to submit to shareholders a binding declassification amendment to its
Articles of Incorporation, despite the board's recommendation to vote against
the amendment. See Weyerhaeuser Company (March 8, 2004). See also KeyCorp (Mar.
13, 2002). If you have any questions, please contact me at (513) 983-7854.
Very truly yours, /s/
Chris B. Walther
Associate General Counsel
The Procter & Gamble Company CBW:jmh
cc: Evelyn Y. Davis [INQUIRY LETTER]
June 8, 2004 Mrs. Evelyn Y. Davis, Editor
Highlights and Lowlights
Watergate Office Building
2600 Virginia Ave. N. W. Suite 215
Washington, DC 20037
(via fax: 202-737-7755) Dear Everyn:
This letter follows up on the status of your shareholder proposal requesting
that the P&G Board take the actions necessary to move to the annual election of
all Directors. Since the 2003 shareholders meeting, the Governance & Nominating Committee, led
by Chairman Charles Lee, conducted an extensive analysis of P&G's classified
Board structure. This included advice and counsel from outside experts with both
the Committee and full Board. The final deliberations took place today and the Board came to a unanimous
decision to include in the Company's 2004 proxy a binding resolution to
declassify the Board, but to recommend a vote AGAINST the resolution. On the one
hand, P&G's Board wants to be responsive to your and other shareholder concerns
on important governance subjects, including the election of Directors. On the
other hand, the Board strongly believes P&G and its shareholders have benefited,
and will continue to benefit, from the classified Board structure.
P&G's classified Board has served the Company well for the past 19 years. We
have been able to attract and retain Directors with strong business,
organization, public policy and technical backgrounds. The continuity and
stability provided by this structure have contributed significantly to the
remarkable value created by the Company during this period. Importantly, the
classified Board structure does not prevent a hostile takeover, nor does the
annual election of all Directors result in a more independent or responsive
Board, as some have argued. Since we will include a binding resolution to declassify the Board in our proxy
materials, we have filed a no-action request with the SEC seeking permission to
exclude your non-binding proposal of November 21, 2003. As required by the
applicable rules, we have enclosed with this letter a copy of our submission to
the SEC. Notwithstanding our request to the SEC, we would appreciate your voluntary
agreement to withdraw your proposal. We are, of course, very willing to
recognize your championship of the annual election of all Directors. After all,
the Board's action responds to your initiative on this issue. Please let me know
if you would be willing to do so. Very truly yours,
/s/ A. G. Lafley
AGL:kbk (1155) attachments
P.S. Evelyn, I am traveling the next four days. However, I will step out of a
meeting to call on this important subject. Please advise Kathy King in my office
the best time for me to call you. Thank you. [INQUIRY LETTER]
June 7, 2004 U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Shareholder Proposal Submitted by Evelyn Y. Davis for Inclusion in The
Procter & Gamble Company 2004 Proxy Statement Dear Sir or Madam:
The Procter & Gamble Company ("P&G") has received from Mrs. Evelyn Y. Davis a
proposal and supporting statement for inclusion in P&G's proxy materials to be
distributed in connection with its 2004 annual meeting of shareholders. Mrs.
Davis' proposal requests that "the Board of Directors take the necessary steps
to reinstate the election of directors ANNUALLY, instead of the stagger system
which was recently adopted." P&G has taken steps to substantially implement Mrs. Davis' proposal.
Accordingly, we request confirmation that the staff will not recommend
enforcement action, if P&G excludes Mrs. Davis' proposal pursuant to Rule
14a-8(i)(10). Background Mrs. Davis has previously submitted to P&G non-binding shareholder proposals
calling for declassification of P&G's Board of Directors ("Board"). After the
2003 annual meeting of shareholders at which Mrs. Davis submitted such a
proposal, P&G undertook a comprehensive analysis of its classified Board
structure. As a result of this analysis, P&G's Board adopted a resolution
pursuant to which the Board will submit to shareholders a binding resolution to
declassify P&G's Board at P&G's 2004 annual meeting ("Board Proposal").
Declassification requires an amendment to P&G's Code of Regulations, which, in
turn, requires an affirmative vote of a majority of P&G's outstanding shares.
This latter requirement stems from P&G's Code of Regulations, as well as Ohio
law. The Board will recommend that shareholders vote against the Board Proposal
because it believes retaining the classified board structure is in the best
interests of shareholders. Basis for Exclusion Pursuant to Rule 14a-8(i)(10): P&G has Already Substantially
Implemented Mrs. Davis' Proposal. Rule 14a-8(i)(10) permits a company to exclude a shareholder proposal from its
proxy statement if the proposal has already been substantially implemented by
the company. If the Board Proposal is approved by the shareholders, the
appropriate P&G personnel must takes the steps necessary to change P&G's Code of
Regulations and declassify the Board. The result will be the same result
requested by Mrs. Davis' proposal. Therefore, Mrs. Davis' proposal has been
substantially implemented. There is ample precedent supporting our request to exclude Mrs. Davis' proposal.
See Weyerhaeuser Company (March 8, 2004) (permitting the company to omit a
shareholder proposal to declassify the board based on the company's argument
that the proposal had been substantially implemented because the board planned
to submit for shareholder approval an amendment to its Articles of Incorporation
to declassify its board, despite the board's recommendation to vote against the
amendment); SBC Communications Inc. (Jan. 9, 2004) (permitting the company to
omit a shareholder proposal to declassify the board based on the company's
argument that the proposal had been substantially implemented because the board
had approved an amendment to the company's bylaws to eliminate the classified
structure and would be submitting such amendment to the company's shareholders
at the annual meeting, as required by the company's Certificate of
Incorporation); KeyCorp (Mar. 13, 2002) (permitting the company to omit a
shareholder proposal to declassify the board based on the company's argument
that the proposal had been substantially implemented because the company itself
would be including a binding proposal to declassify the board in the company's
proxy statement, despite the board's recommendation that shareholders vote
against the company's proposal). Conclusion
Mrs. Davis' proposal may be properly excluded from P&G's 2004 proxy materials
because it has been substantially implemented by the Board Proposal. P&G is
placing the issue before the shareholders, rendering Mrs. Davis' proposal moot.
We, therefore, request that the staff confirm it will not recommend enforcement
action, if Mrs. Davis' proposal is not included in P&G's 2004 proxy materials.
Pursuant to Rule 14a-8(j), we are including six copies of this letter, as well
as Mrs. Davis' proposal. There is no other correspondence related to this
matter. A copy of this letter is also being simultaneously sent to Mrs. Davis.
We anticipate printing P&G's 2004 proxy materials on or about August 12, 2004.
Accordingly, your prompt review of this matter would be greatly appreciated. If
you have any questions, please contact me at (513) 983-7854.
Very truly yours, /s/
Chris B. Walther
Associate General Counsel
The Procter & Gamble Company CBW:jmh
Attachments cc: Evelyn Y. Davis [INQUIRY LETTER]
November 21, 2003. A.G. [text illegible]afly, Chairman and CEO P&G
Cincinnati, Ohio Dear A.G.:
This is a formal notice to the management of P&G ***** that Mrs. Evelyn Y.
Davis, who is the owner of 400 shares of common stock plans to introduce the
following resolution at the forthcoming Annual Meeting of 2004. I ask that my
name and address be printed in the proxy statement, together with the text of
the resolution and reasons for its introduction. I also ask that the substance
of the resolution be included in the notice of the meeting:
RESOLVED: "That the stockholders of P&G ***** recommend that the Board of
Directors take the necessary steps to reinstate the election of directors
ANNUALLY, instead of the stagger system which was recently adopted."
REASONS: "Until recently, directors of P&G ***** were elected annually by all
shareholders." "The great majority of New York Stock Exchange listed corporations elect all
their directors each year." "This insures that ALL directors will be more accountable to ALL shareholders
each year and to a certain extent prevents the self-perpetuation of the Board."
"Last year the owners of........*shares, representing approximately 56% of
shares voting, voted FOR this proposal." "If you AGREE, please mark your proxy FOR this resolution."
Sincerely, .....*Please fill in correct figure.
/s/ Mrs. Evelyn Y. Davis
CC: SEC in D.C. P.S. A.S: As WE discussed, of course, IF the Board plans to FORMALLY recommend
to the shareholders to adopt MY proposal, then I would be willing to withdraw
this proposal, subject to a follow-up phone chat with YOU.
DO HAVE A WONDERFUL THANKSSTYING. [INQUIRY LETTER]
Re: Proctor & Gamble June 16, 2004
Att: Martin Dunn and Alan Bellen
Division of Corporate Finance
SEC
450 Fifth Street, N.W.
Washington, D.C. 20549 Gentlemen and Ladies:
I received a letter from P&G re MY resolution to end the stagger system. In NO
WAY are they implementing MY proposal. Their proposal is not substantially the
SAME as MINE, because they RECOMMEND A VOTE AGAINST abolishing the stagger
system. THEY ARE TRYING TO DOUBLE CROSS ME!!! At the 2003 annual meeting, they
implied they WERE ADOPTING MY PROPOSAL but they BACKED OUT, so I resubmitted my
proposal. If A. G. Lafley, CEO of P&G, will adopt my proposal, with wording to MY
satisfaction, including the language that THEY WILL RECOMMEND a VOTE FOR my
proposal, then of course I will be happy to withdraw my proposal, as I have at
many companies including BRISTOL MYERS SQUIBB. DOW JONES, CARR AMERICAN REALTY,
LUCENT, HOST MARRIOTT, MERCK, STARWOOD and others. But, if the changes do NOT
include a recommendation to vote for THE proposal, instead of AGAINST, then I
WILL NOT withdraw my proposal, because it is NOT the same proposal, but a DOUBLE
CROSS, Should the Division NOT agree with me, then I ASK for a review by the
FULL COMMISSION prior to P&G's filing of the 2004 proxy statement.
Sincerely, /s/
Mrs. Evelyn Y. Davis CC: A.G. Lafley, CEO, P&G [INQUIRY LETTER]
Re: Proctor & Gamble June 16, 2004
Att: Martin Dunn and Alan Bellen
Division of Corporate Finance
SEC
450 Fifth Street, N.W.
Washington, D.C. 20549 Gentlemen and Ladies:
I received a letter from P&G re MY resolution to end the stagger system. In NO
WAY are they implementing MY proposal. Their proposal is not substantially the
SAME as MINE, because they RECOMMEND A VOTE AGAINST abolishing the stagger
system. THEY ARE TRYING TO DOUBLE CROSS ME!!! At the 2003 annual meeting, they
implied they WERE ADOPTING MY PROPOSAL. but they BACKED OUT, so I resubmitted my
proposal. If A. G. Lafley, CEO of P&G, will adopt my proposal, with wording to MY
satisfaction, including the language that THEY WILL RECOMMEND a VOTE FOR my
proposal, then of course I will be happy to withdraw my proposal, as I have at
many companies including BRISTOL MYERS SQUIBB, DOW JONES, CARR AMERICAN REALTY,
LUCENT, HOST MARRIOTT, MERCK, STARWOOD and others. But, if the changes do NOT
include a recommendation to vote for THE proposal, instead of AGAINST, then I
WILL NOT withdraw my proposal, because it is NOT the same proposal, but a DOUBLE
CROSS, Should the Division NOT agree with me, then I ASK for a review by the
FULL COMMISSION prior to P&G's filing of the 2004 proxy statement.
Sincerely, /s/
Mrs. Evelyn Y. Davis CC: A.G. Lafley, CEO, P&G [INQUIRY LETTER]
June 9, 2004 U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Shareholder Proposal Submitted by Evelyn Y. Davis for Inclusion in The
Procter & Gamble Company 2004 Proxy Statement Dear Sir or Madam:
For your consideration, enclosed please find six copies of correspondence from
Mr. A. G. Lafley, The Procter & Gamble Company's Chairman of the Board,
President and Chief Executive Officer to Ms. Evelyn Y. Davis confirming the
filing of our no-action request dated Tuesday, June 8, 2004 with the U.S.
Securities and Exchange Commission. This letter was not available when we filed
our no action request on June 8, 2004. Very truly yours,
/s/ Chris B. Walther
Associate General Counsel
The Procter & Gamble Company CBW:jmh
Attachments [INQUIRY LETTER]
July 13, 2004 Mrs. E. Y. Davis
Highlights and Lowlights
Watergate Office Building
2600 Virginia Ave., NW, Suite 215
Washington, D.C. 20037
(via fax: 202-338-7084) Dear Mrs. Davis,
Enclosed is the proxy proposal we have been discussing. As you will see, we have
credited you for initiating the proposal, recognized the results of the vote at
last year's Annual Meeting, and briefly summarized the case for the annual
election of Directors. The P&G Board and Management (including myself) have taken action to
substantially implement your proposal by submitting the matter to a binding
shareholder vote in this year's 2004 proxy statement. If the proposal receives
more than a 50% vote of outstanding shares, it will become effective
immediately. Howeven as both Chuck Lee and I have tried to explain to you, neither the P&G
Governance Committee nor the P&G Board nor P&G Management support adoption of
the proposal, because we believe, based on significant P&G and other company
experience, that a staggered board is in the best interests of all shareholders
because of the accountability, continuity, experience, and long-term perspective
such board members bring to the Company's strategy, governance and business
operations. Today, at the July Governance Committee meeting and again at the July Board of
Directors meeting, he Directors reaffirmed their unanimous support for a
staggered board for The Procter & Gamble Company. Mrs. Davis, we both believe strongly in our different points of view. In the
end, we must agree to disagree. We will submit the issue to Procter & Gamble
shareholders for a binding vote at the October meeting. As per your request, we are faxing this confidential (for your eyes only). In
addition, we are mailing a hard copy via FedEx overnight mail.
Very truly yours, /s/
A. G. Lafley AGL:kbk (119)
attachmert cc Mr. C. R. Lee [INQUIRY LETTER]
June 30, 2004 Office of Chief Counsel
Division of Corporation Finance
SEC, D.C. Gentlemen and Ladiss:
Froctor and GAMBLE has NOT and is NOT plannine to substantially IMPLEMENT my
proposal to end the stagger system. On the contrary By recommending a VOTE
AGAINST their proposal, it all but kills the elimination of the stagger system,
since USUALLY shareholders follow managements recommendationg.
Also, NO HERE in My resolution do I make any references to "hostile takeovers" I
merely note that directors will kecome or MAY become more responsival to
shareholders (just read MY resolution AGAIN). By the time that P&Gwill discuss this matter again with me (now the end of July)
MOST likely they will already have FILED their preliminary proxy statement.
Chuck Lee- the chairman of F&G's governance committee was the chairman of
VERICON which does HAVE amnual election of ALL directors, as does United
Technologies where he also is no the Board (I am also a shareholder in those
companies). Sincerely /s/
Mrs. Evelyn Y. Davis P.S. I reiterate
IF F&G's CED A.G. Lafley will discuss the WORDING with me, and WE agree and they
will make a recommendation FOR voting to declassify the Board, then I will be
happy to withdraw MY resolution, as I have done in the last two years at :
STARWOOD, MERCK, LUCENT, ROST MARRIOTT, C[text illegible] AMERICAN BRISTOL
EYE[text illegibel], DOW JONES and others. F&G should do the same.
CC A.G. LAFLEY, CEO P&B IF the Division does NOT agree, I do ask for a review by the FULL COMMISSION.
([text illegible] favoritism to just the AFL_CIO) [INQUIRY LETTER]
July 13, 2004 Martin P. Dunn
Deputy Director
U.S. Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
(Via Fax: 202-942-9525) Dear Marty:
This follows up on our conversation last week about The Procter & Gamble
Company's no-action request with respect to Mrs. Evelyn Y. Davis' shareholder
proposal concerning the annual election of directors. This letter re-confirms our Board's commitment to include a binding proposal in
the Company's 2004 proxy statement to amend the relevant section of the
Company's Code of Regulations to provide for the annual election of all
directors. If the proposal receives the affirmative vote of more than 50% of the
outstanding shares, then the classified Board structure will be eliminated.
Consistent with our prior correspondence on this matter, the Board will
recommend a vote against the measure, since it believes the advantages of a
classified Board outweigh the disadvantages. For your reference, I am attaching to this letter a copy of the draft language
we intend to include in our 2004 proxy statement. This was reviewed and approved
today by our Governance & Nominating Committee and entire Board. In separate
correspondence, a copy of which is also attached, Mr. A. G. Lafley, our CEO
shared this language with Mrs. Davis. We appreciate your consideration of our no-action request and look forward to
receiving formal confirmation that we may omit Mrs. Davis' proposal on the
grounds the Company has taken steps to substantially implement her proposal.
I will be out of the office the balance of this week. Please feel free to reach
me via cell phone at (513) 226-0925, if you have any questions or concerns.
Very truly yours, /s/
Chris B. Walther
Associate General Counsel
The Procter & Gamble Company CBW:jmh
Attachments [APPENDIX]
PROPOSAL TO AMEND THE COMPANY'S CODE OF REGULATIONS The following proposal will be presented for action at the annual meeting by
direction of the Board of Directors: RESOLVED, That ARTICLE III, Section 2 of the Company's Code of Regulations be
amended to read as set forth in Appendix A to the proxy statement.
P&G's current Code of Regulations ("Regulations") divides the Board of Directors
into three classes, each of which is elected for a three-year term. The action
described above would change the Regulations to provide for annual election of
all Directors. The Board recommends a vote AGAINST this amendment.
After careful consideration, the Board believes the current classified Board
structure has provided significant stability and continuity benefits to the
Company and its shareholders and should be retained. Nonetheless, the Board
believes shareholders should have a voice on this issue and is submitting this
matter for a binding vote. Background
In 1985, the shareholders overwhelmingly approved by a vote of 74% of the shares
outstanding (85% of the votes cast) amendments to the Regulations to eliminate
the annual election of all Directors and provide for the current classified
Board structure. At that time, a substantial majority of the shareholders
concurred with the Board that the classified structure would ensure continuity
of experienced Board members and effectively serve the long-term interests of
the shareholders. For a number of years, Mrs. Evelyn Y. Davis, Editor of Highlights and Lowlights,
has submitted non-binding shareholder proposals recommending that the Board
"take the necessary steps to reinstate the election of directors annually" based
largely on the argument that annual elections help insure "that all directors
will be more accountable to all shareholders." In 2003, 38% of the shares
outstanding (56% of the votes cast) voted in favor of Mrs. Davis' non-binding
shareholder proposal. Despite opposing the amendment, the Board acknowledges the
opinions of shareholders who support annual election of all Directors.
Accordingly, the Board is now submitting for shareholder consideration a binding
action to provide for annual election of all Directors. The proposed amendment
is attached as Appendix A. Approval requires the affirmative vote of a majority of the outstanding shares.
If this action is not approved, the current classified Board structure will stay
in place. If the action is approved, the Regulations would provide for the
annual election of all Directors after an initial phase-in period as follows:
a) current Directors, including those to be elected to three-year terms at the
2004 annual meeting, would continue to serve the remainder of their elected
terms; and b) starting with the annual meeting of shareholders in 2005, Directors would be
elected annually, so that by the annual meeting of shareholders in 2007, all
Directors would be elected annually. Board Position:
Following the 2003 shareholder vote, the Board conducted an in-depth review
including consultation with outside legal and governance experts. The Board
unanimously concluded a move to the annual election of all Directors is not in
the best interest of the Company or its shareholders and that the Company's
current classified board should be preserved. The Board believes:
Classified boards promote continuity and stability that create long-term
shareholder value. With three-year terms, Directors develop a more detailed
understanding of the Company's operations, maintain a longer-term perspective
and can help preserve long-term Company strategies. This is why over 50% of the
Standard & Poors 500 companies have classified boards.
P&G's current classified Board structure has served P&G shareholders well for
the past 19 years. During this period, earnings have doubled every 5-6 years;
sales have doubled nearly every 10 years; and a $1,000 investment at that time
with dividends reinvested is now worth almost $20,000. Over the past three
years, earnings are up xx%; sales are up xx%; and P&G's share price has almost
doubled. There is no reason to risk this kind of financial and business success
or damaging the Board's continuity and stability with a move to annual election
of all Directors.
Annual elections do not guarantee long-term success for any company. Annual
elections may encourage Directors to focus on shorter-term issues and may even
encourage Directors to submit to short-term pressures. Special interests trying
to exert such short-term pressures often act inconsistently with the long-term
well-being of the Company and its shareholders.
The classified Board structure does not preclude an unsolicited takeover.
Classified boards do provide greater shareholder protection in the event of a
takeover attempt for less than fair value. They help ensure the necessary time
and perspective to determine if the bid is adequate and fair, negotiate fairer
value or seek more beneficial alternatives that maximize shareholder value.
P&G has been in operation for more than 167 years. Continuity, stability and
long-term focus have been hallmarks of P&G's success, and should continue to be.
The Company has benefited from Directors who have a depth of history and
experience with P&G. There is no good reason to change a system that is working
well. The Directors believe that shareholders and the Company are best served by
maintaining the current classified Board structure. As such, the Board of
Directors recommends a vote AGAINST this amendment. Appendix A
ARTICLE III, Section 2 of the Regulations of the Company shall be amended in its
entirety to read as follows: ARTICLE III
Board of Directors Section 2. Election and Term. Except as otherwise provided by law, the Articles
of the Company or these Regulations, Directors shall be elected at the annual
meeting of shareholders to serve one-year terms and until their successors are
elected and qualified; provided, however, that Directors serving on the date of
the annual meeting of shareholders in 2004, including those elected at such
meeting, shall continue to serve the remainder of their elected terms. The
number of Directors of the Company shall be fixed from time to time in
accordance with these Regulations and may be increased or decreased as herein
provided.
[SECTION 2. Election and Term. Except as otherwise provided by law, the Articles
of the Company or these Regulations, Directors shall be elected at the annual
meeting of shareholders to serve until the end of the term to which they are
elected and until their successors are elected and qualify. The number of
Directors of the Company shall be fixed from time to time in accordance with
these Regulations and may be increased or decreased as herein provided. The
Board of Directors shall be divided into three classes, as nearly equal in
number as the then total number of Directors constituting the whole Board
permits, it not being required that each class have the same number of members
if such is mathematically impossible, with the term of office of one class
expiring each year. At the annual meeting of shareholders in 1985, Directors of
the first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, Directors of the second class shall be elected to
hold office for a term expiring at the second succeeding annual meeting and
Directors of the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Thereafter, at each annual meeting of
shareholders the successors to the class of Directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting after such election. In the event of any increase in
the number of Directors of the Company, the additional Director or Directors
shall be so classified that all classes of Directors shall be as nearly equal as
may be possible. In the event of any decrease in the number of Directors of the
Company, all classes of Directors shall be decreased as nearly equally as may be
possible.] [INQUIRY LETTER]
July 13, 2004 Mrs. E Y. Davis
Highlights and Lowlights
Watergate Office Building
2600 Virginia Ave., NW, Suite 215
Washington, D.C. 20037
(via fax: 202-338-7084) Dear Mrs. Davis,
Enclosed is the proxy proposal we have been discussing. As you will see, we have
credited you for initiating the proposal, recognized the results of the vote at
last year's Annual Meeting, and briefly summarized the case for the annual
election of Directors. The P&G Board and Management (including myself) have taken action to
substantially implement your proposal by submitting the matter to a binding
shareholder vote in this year's 2004 prexy statement. If the proposal receives
more than a 50% vote of outstanding shares, it will become effective
immediately. However, as both Chuck Lee and I have tried to explain to you, neither the P&G
Governance Commitee nor the P&G Board nor P&G Management support adoption of the
proposal, because we believe, based on significant P&G and other company
experience, that a staggered board is in the best interests of all shareholders
because of the accountability, continuity, experience, and long-term perspective
such board members bring to the Company's strategy, governance and business
operations. Today, at the July Governance Committee meeting and again at the July Board of
Directors meeting, the Directors reaffirmed their unanimous support for a
staggered board for The Procter & Gamble Company. Mrs. Davis, we both believe strongly in our different points of view. In the
end, we must agree to disagree. We will submit the issue to Procter & Gamble
shareholders for a binding vote at the October neeting. As per your request, we are faxing this confidential (for your eyes only). In
addition, we are mailing a hard copy via FedEx overnight mail.
Very truly yours, /s/
A. G. Lafley AGL:kbk (11[text illegible]7)
attachment cc Mr. C. R. Lee [INQUIRY LETTER]
July 20, 2004 Attn Grace Lee
Office of Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549 Dear Ms. Lee:
This is to confirm that we withdraw our request for a No Action letter in
connection with a proxy proposal by Mrs. Evelyn Y. Davis, simultaneously with.
and contingent upon, your receipt of a notification from Mrs. Davis that she has
withdrawn her proxy proposal. Very truly yours,
/s/ Chris B. Walther
Associate General Counsel
The Procter & Gamble Company CBW:janh [INQUIRY LETTER]
July 20, 2004 Mrs. E. Y. Davis
Highights and Lowlights
Watergate Office Building
2600 Virginia Ave., NW. Sulte 215
Washington, D.C. 20037 (via fex: 202-338-7084)
Dear Mrs. Davis. This is to confirm that we will withdraw our request for a no action letter in
connection with the withdrawal of your proxy proposal. We will coordinate our mutual withdrawals with the SEC.
I have attached a copy of the letter we propose sending to the SEC to confirm
our agreement to simultaneously withdraw our proposals, These actions should resolve the issue you and I have been working together.
Thank you very much. Very truly yours.
/s/ A.G. Lafley
AGL:kbk (1[text illegible]13) [INQUIRY LETTER]
July 20, 2004 A.G. Lafley, CEO
PLG
Cincinnati, Ohio45202
Dear A.G., I am hereby withdrawing my proposal re ending the stagger system for P&G's 2004
annual meeting. Ny withdrawal is contingent on YOUR hereby withdrawing P&G's
request for a no-action metter. I am delighted we are able to come to an amicable agreement.
I am sending hereby a copy of this letter to Alan Beller, Director Division of
Corporate Finance SEC and Martin Dunn the Deputy Director It is also my understanding YOU will use the SAME language in the wording of
your resolution (including the POSITIONING of the CREDIT due me re my years of
prodding on the issue) which you send me yesterday Sincerely
/s/ Mrs. Evelyn Y. Davis
CC Alan Beller, Director Division of Corporate Finance SEC
CC Martin Dunn, Deputy Director Division of Corporate Finance.
P.S. A.G. DO send me NOW your letter of withdrawal of P&G's no action letter
request. [STAFF REPLY LETTER]
August 3, 2004 Chris B. Walther
Assistant Secretary and Associate General Counsel
The Procter & Gamble Company
1 Procter & Gamble Plaza
Cincinnati, OH 45202-3315 Re: The Procter & Gamble Company
Dear Mr. Walther: This is in regard to your letter dated July 20, 2004 concerning the shareholder
proposal submitted by Evelyn Y. Davis for inclusion in Proctor & Gamble's proxy
materials for its upcoming annual meeting of security holders. Your letter
indicates that the proponent has withdrawn the proposal, and Proctor & Gamble
therefore withdraws its June 7, 2004 request for a no-action letter from the
Division. Because the matter is now moot, we have no further comment.
Sincerely, /s/
Graoe K. Lee
Special Counsel Enciosures cc: Evelyn Y. Davis
Editor
Highlights and Lowlights
Watergate Office Building
2600 Virginia Avenue, NW, Suite 215
Washington, DC 20037
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