Company Name: United Parcel Service, Inc.
Public Availability Date: February 23, 2004Document Sections:
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER [INQUIRY LETTER]
January 7, 2004 Direct Dial
(202) 955-8671
Fax No.
(202) 530-9569
Client No.
93024-03800 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 Mr. John Brownell Lynn
Securities Exchange Act of 1934Rule 14a-8 Dear Ladies and Gentlemen:
This letter is to inform you that it is the intention of our client, United
Parcel Service, Inc. ("UPS") to omit from its proxy statement and form of proxy
for UPS's 2004 Annual Meeting of Shareowners (collectively, the "2004 Proxy
Materials") a shareowner proposal and statement in support thereof, as revised,
(the "Proposal" and the "Supporting Statement," respectively) received from Mr.
John Brownell Lynn (the "Proponent"). The Proposal recommends that UPS's Board
of Directors "prepare or require preparation of a report to shareowners on the
UPS relationship with the International Brotherhood of Teamsters." The Proposal
is attached hereto as Exhibit A. On behalf of our client, we hereby notify the Division of Corporation Finance of
UPS's intention to exclude the Proposal and the Supporting Statement from the
2004 Proxy Materials on the bases set forth below, and we respectfully request
that the staff of the Division of Corporation Finance (the "Staff") concur in
our view that:
The Proposal may be excluded under Rule 14a-8(i)(7), because the Proposal
deals with matters related to UPS's ordinary business operations; and
The Proposal may be excluded in its entirety under Rule 14a-8(i)(3), because
the Proposal and the Supporting Statement contain numerous false and misleading
statements in violation of Rule 14a-9. Pursuant to Rule 14a-8(j), enclosed herewith are six copies of this letter and
its attachment. Also in accordance with Rule 14a-8(j), a copy of this letter and
its attachment are being mailed on this date to the Proponent, informing him of
UPS's intention to omit the Proposal and the Supporting Statement from the 2004
Proxy Materials. ANALYSIS I. The Proposal May Be Excluded under Rule 14a-8(i)(7) Because the Proposal
Deals With Matters Related to UPS's Ordinary Business Operations.
The Proposal properly may be omitted pursuant to Rule 14a-8(i)(7), which permits
the omission of shareowner proposals dealing with matters relating to UPS's
"ordinary business" operations. Specifically, the Proposal urges UPS's Board of
Directors to prepare a report on the UPS relationship with the International
Brotherhood of Teamsters (the "IBT"), including "in detail the costs, benefits,
and risks involved for UPS and its employees," and "any opportunities to reduce
or eliminate costs and risks and improve benefits." As more fully explained
below, there is strong precedent that shareowner proposals requesting
preparation of a report addressing a company's relationship with its labor
unions falls within the ambit of ordinary business operations.
Rule 14a-8(i)(7) permits the omission of shareowner proposals dealing with
matters relating to UPS's "ordinary business" operations. In the Commission's
Release accompanying the 1998 amendments to Rule 14a-8, the Commission reversed
the position taken in a no-action letter to Cracker Barrel Old Country Stores,
Inc. (avail. Oct. 13, 1992) that all proposals relating to general employment
policies and practices for the general workforce would be excludable, and
returned to its prior position of excluding such proposals if they do not raise
a significant social policy issue. Release No. 34-40018 (May 21, 1998) (the
"1998 Release"). The 1998 Release stated: Reversal of the Cracker Barrel no-action position will result in a return to a
case-by-case analytical approach. In making distinctions in this area, the
Division and the Commission will continue to apply the applicable standard for
determining when a proposal relates to "ordinary business." The standard,
originally articulated in the Commission's 1976 release, provided an exception
for certain proposals that raise significant social policy issues.... Going
forward, companies and shareholders should bear in mind that the Cracker Barrel
position relates only to employment-related proposals raising certain social
policy issues. Reversal of the position does not affect the Division's analysis
of any other category of proposals under the exclusion, such as proposals on
general business operations. In construing Rule 14a-8(i)(7), the Commission has indicated that where, as
here, a proposal would require the preparation of a special report on a
particular aspect of a registrant's business, the Staff will consider whether
the subject matter of the report relates to the conduct of ordinary business
operations. Where it does, the proposal, even though it requires only the
preparation of a report and not the taking of any action with respect to such
business operations, will be excludable. See Exchange Act Release No. 20091
(August 16, 1983). A. The Proposal Implicates Matters Involving the General Workforce.
The Proposal requests that UPS prepare a report on UPS's relationship with a
particular labor union, namely the IBT. The Proposal does not raise any
significant social policy issues, but instead seeks information on general
costs, benefits and risks of one aspect of UPS's ordinary business operations.
Both before and after the 1998 Release, the Staff has consistently permitted
exclusion of shareowner proposals that, like the Proposal, seek to address a
company's relationship with employee labor unions because they fall under the
category of ordinary business pursuant to Rule 14a-8(i)(7). See Walt Disney Co.
(avail. Oct. 28, 1998) (proposal requested a "review of all interaction between
the Labor Relations/Employee Relations department and Local unions and
associations"); Modine Manufacturing Co. (avail. May 6, 1998) (proposal
requested a corporate code of conduct to address the right to organize and
maintain unions); FPL Group, Inc. (avail. Mar. 9, 1993) (proposal requesting
company to establish a labor-management relations committee for the purpose of
evaluating the impact of hiring out-of-state workers and using certain
subcontractors excludable as ordinary business); Humana Inc. (avail. Oct. 17,
1990) (proposal relating to recognizing and bargaining collectively with a
particular union was excludable); Knight-Ridder, Inc. (avail. Jan. 19, 1989)
(proposal to improve the company's employee relations, including expediting
labor contract relations with unions, excludable as ordinary business); UAL,
Inc. (avail. Mar. 3, 1986) (proposal requested a review of "management's
handling of union negotiation"). Likewise, the Staff has consistently determined that employment policies and
practices for the general workforce of a company, including employee relations
and general compensation, are matters relating to the conduct of ordinary
business operations of a company. The Staff most recently reiterated this
position in Labor Ready, Inc. (avail. Apr. 1, 2003). In that letter, the
proposal urged the board of directors to resolve disputes with the Building &
Construction Trades Division of the AFL-CIO including: (1) disclosing certain
information regarding workers' compensation expense; (2) initiating a corporate
moratorium on providing labor to job-action work sites; and (3) adopting pay
policies that generate full pay for workers. The Staff stated that the Company
could exclude the proposal under Rule 14a-8(i)(7), "as relating to its ordinary
business operations (i.e., general compensation matters and employee
relations)." The Labor Ready letter continues a long line of letters concurring
that proposals relating to these matters may be omitted from a company's proxy
materials under Rule 14a-8(i)(7). See Release 34-40018 (May 21, 1998); Wal-Mart
Stores, Inc. (avail. Apr. 2, 2002) (proposal seeking specified changes involving
employee discounts, company contributions to employee purchases of stock, hourly
pay, the use of company gift cards, stock option grants and employee control of
displaying of merchandise in stores excluded under Rule 14a-8(i)(7)); The TJX
Companies, Inc. (avail. Mar. 24, 1998) (proposal to make all possible lawful
efforts to implement or increase activity on certain employment policy
principles); General Electric Corporation (avail. Jan. 28, 1997) (proposal
requiring company to dismiss employees responsible for new program);
Price/Costco, Inc. (avail. Oct. 21, 1996) (proposal to adopt a policy to avoid
hiring or retaining a director, officer or employee who has been adjudged or
convicted of insider trading, or has entered into a consent decree with respect
to alleged insider trading); Niagara Mohawk Power Corporation (avail. Feb. 22,
1996) (proposal to abolish nepotism in company's employment practices); CBS Inc.
(avail. Mar. 23, 1993) (proposal requiring certain job performance criteria for
managers be eliminated and that the company's affirmative action programs be
revised); Duke Power Company (avail. Mar. 4, 1992) (proposal to establish
employee advisory council which would meet and discuss issues of concern related
to board decisions and policies omitted under ordinary business exclusion (i.e.,
employee relations)); GTE Corporation (avail. Feb. 4, 1992) (same).
B. The Proposal Requests a Report on Costs, Benefits, And Risks.
In addition, the Proposal focuses on the evaluation of "costs, benefits, and
risks" involved in UPS' relationship with the IBT. The Staff recently has
concurred that proposals relating to reports on the "risks" and "benefits" of
aspects of ordinary business operations are excludable under Rule 14a-8(i)(7).
See Xcel Energy Inc (avail. Apr. 1, 2003) (proposal requested a report
disclosing the risks of the company's emissions on global warming and the
benefits of a reduction in those emissions); Mead Corporation (avail. Jan. 31,
2001) (proposal requested a report essentially outlining the liability
methodology and evaluation of risk relating to the company's environmental
issues). In each case, the Staff concurred that the company could exclude the
proposal under (i)(7) "as relating to its ordinary business operations (i.e.
evaluation of risks and benefit)." The Proposal seeks to make UPS report on the risks and benefits of a specific
aspect of the company's ordinary business operationsits labor and employee
relations. Monitoring of these risks and benefits are integral to UPS's
operations and, accordingly are best left within the purview of UPS's Board of
Directors and management. Therefore, we believe that the Proposal also is
excludable pursuant to the reasoning of the foregoing no-action letters.
For the reasons set forth above, we believe that the Proposal may be omitted
from the 2004 Proxy Materials pursuant to Rule 14a-8(i)(7), and accordingly
request the Staff to concur in our view. II. The Proposal May Be Excluded In Its Entirety Under Rule 14a-8(i)(3) Because
the Proposal And the Supporting Statement Contain Numerous False And Misleading
Statements in Violation of Rule 14a-9. A shareholder proposal may be excluded under Rule 14a-8(i)(3) where it is
"contrary to any of the Commission's proxy rules, including Rule 14a-9, which
prohibits materially false or misleading statements in proxy soliciting
materials." The Proposal may be excluded in its entirety under Rule 14a-8(i)(3)
because many statements contained in the Proposal are inflammatory, impugn
character, are unsubstantiated or cast opinions as facts. As discussed below,
the sheer number of statements that must be omitted or substantially revised
renders the Proposal false and misleading as a whole. Staff Legal Bulletin No. 14 ("SLB 14"), published on July 13, 2001, states that
"when a proposal and supporting statement will require detailed and extensive
editing in order to bring them into compliance with the proxy rules, [the Staff]
may find it appropriate for companies to exclude the entire proposal, supporting
statement, or both, as materially false or misleading." Requiring the Staff to
spend large amounts of time reviewing proposals "that have obvious deficiencies
in terms of accuracy, clarity or relevance ... is not beneficial to all
participants in the [shareholder proposal] process and diverts resources away
from analyzing core issues arising under Rule 14a-8." See also Dow Jones &
Company, Inc. (avail. Mar. 9, 2000) (permitting the exclusion of a shareholder
proposal under Rule 14a-8(i)(3)). As set forth below, this Proposal contains the
number and type of obvious deficiencies and inaccuracies that make Staff review
unproductive. In sum, the Proposal must be completely excluded due to the need
for detailed and extensive editing to eliminate or revise its false and
misleading statements. While we strongly believe that there is ample support for exclusion of the
Proposal on the foregoing basis, we believe that if the Staff were to depart
from the above statements in SLB 14 in responding to this letter, the Proposal
nonetheless would have to be substantially revised pursuant to Rule 14a-8(i)(3)
before it could be included in UPS's 2004 Proxy Materials. Thus, in the
alternative, if the Staff is unable to concur with our conclusion that the
Proposal should be excluded in its entirety because of the numerous
unsubstantiated, false and misleading statements contained therein, we
respectfully request that the Staff recommend exclusion of the statements
discussed in Section A below. A. The Proposal Contains Numerous False And/Or Misleading Statements.
Note (b) to Rule 14a-9 states that, where "[m]aterial ... 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," such material is false and misleading in violation
of the proxy rules. The Staff consistently has concurred that statements that impugn character,
integrity or reputation or make charges concerning improper, illegal or immoral
conduct without factual foundation are misleading and may be excluded under Rule
14a-8(i)(3). See Philip Morris Cos. Inc. (avail. Feb. 7, 1991). In Philip
Morris, the proposal at issue contained a resolution that the company
"immediately cease contributing money or aiding in any way politicians,
individuals, or organizations that advocate or encourage bigotry and hate." The
Staff stated that it would not recommend enforcement action if the proposal was
omitted because, among other things, the supporting statement contained
statements that impugned character. In Standard Brands, Inc. (avail. Mar. 12,
1975), the Staff concluded that it would not recommend enforcement action if a
proposal was excluded from the company's proxy materials. The Staff explained
that the supporting statement contained a reference to "economic racism" and
noted that this reference "would seem to impugn the character, integrity and
reputation of the company by implying, without the necessary factual support
required by Rule 14a-9, that the company is one of those entities which would be
prohibited under [a lawsuit] from further practicing economic racism."
Furthermore, the Staff also has permitted proposals that do not include
sufficient citations or factual support to be excluded as false and misleading.
For example, in Kmart Corporation (avail. Mar. 28, 2000), the Staff concluded it
would not recommend enforcement action for exclusion of a proposal. There, the
company noted that the proposal contained purported factual statements and
quotations presented as facts or applicable law, many with obscure references or
no citations to source materials. The Staff also has concurred that similar
unsubstantiated statements are false or misleading in contravention of Rule
14a-9 absent revision. See, e.g., Hewlett Packard Co. (avail. Dec. 17, 2002)
(requiring citations and support for unsubstantiated statements). In Standard
Brands, Inc. (avail. Mar. 12, 1975), the Staff also concurred that there was a
basis under Rule 14a-8(i)(3) for excluding a proposal from the company's proxy
materials. The proposal, among other things, cited statistics without providing
factual support. The Staff, noting that statements made in shareholder proposals
should be accompanied by factual support so that shareholders are not misled,
specifically took issue with an assertion by the proponent that "gross corporate
profits before taxes [ranged] from 8 to 14%," noting that it was unclear whether
the phrase included all corporate profits or just the company's profits.
The Staff also has required substantiation of statements in situations where
proponents cast opinions as facts or fail to provide factual support for
statements. See, e.g., Boeing Co. (avail. Feb. 7, 2001) (requiring the proponent
to recast numerous statements as opinions and to provide factual support for
several of its assertions); R.J. Reynolds Tobacco Holdings, Inc. (avail. Mar. 7,
2000) (requiring the proponent to provide citations to a "report" and an
"experiment" before such references could be included).
Based on the foregoing precedent, we believe that the following statements in
the Proposal are false and/or misleading: 1. Numerous Statements Regarding "UPS Revenue" and Union Dues That UPS "Docks"
from Its Employees' Pay Are False and Misleading. The Proposal makes numerous false and misleading references to the manner in
which union member dues are paid to the IBT and inaccurately states that these
payments reduce UPS's revenue. First, contrary to the Proponent's statements,
UPS "revenue" is not paid to IBT. In fact, such direct payments from companies
to unions are generally illegal and subject to criminal penalties under federal
labor law. UPS instead deducts dues from wages or salaries that otherwise would
be paid to UPS employees. It is false and misleading to mischaracterize
membership dues that are deducted from an employee's compensation as UPS's
"revenue" because it suggests that such payments directly affect the level of
UPS's revenues and profits. Thus, the statements in the second and last
paragraphs of the Supporting Statement that UPS revenue funds various IBT
expenses is false and misleading. Second, UPS does not "dock" any employee's pay, as the Proponent repeatedly
states in the Proposal. Instead, pursuant to a collective bargaining agreement,
UPS deducts membership dues from compensation otherwise payable to those UPS
employees who (1) voluntarily joined the union, and (2) signed a dues checkoff
card authorizing UPS to deduct and transfer the dues. Thus, the repeated
references in the fourth and fifth paragraphs of the Supporting Statement1 to
UPS "docking" employees' salaries are false and misleading, because they imply
that all union dues are paid through forced reductions in employees'
compensation. The statement that "IBT `dues' are a minimum of 2.5 hours pay per
month," also is inaccurate, as union dues for certain of UPS's part-time
employees who have joined their local unions are less than that amount.
Finally, the Proposal repeatedly states that member dues are paid to the IBT. In
fact, however, dues are paid over to local union chapters. Thus, the statements
that various payments are made to the IBT and support various activities of the
IBT are misleading, because no amounts are paid to the IBT. Moreover, these
statements are unsubstantiated, because the Proponent has no basis to
demonstrate the source of funds that are expended by the IBT. For example, the
Proponent states that a "large share of this continuing cost of millions of
dollars each year since 1989 [amounts paid by the IBT to the federal government]
is from UPS revenue." (Paragraph 2). As explained above, this statement is false
and misleading because no amount of UPS revenue is being paid to IBT. This
statement also is unsubstantiated, as the Proponent does not provide any factual
basis (and we do not believe that it is possible for the Proponent to provide
substantiation) demonstrating the extent to which dues paid by UPS union member
employees to local union chapters affect specific amounts expended by IBT. Given
the Proponent's inability to document the source of IBT funding, this statement
likewise is false and misleading in its assertion that a "large share" of IBT's
payments are funded by UPS. The Proponent simply makes a vague statement without
providing any numerical data to support it. Presenting such a statement as fact
will likely lead shareowners to place undue reliance on the unsupported
statement, thereby materially misleading them. Accordingly, the statements
should be omitted, or the Proponent should identify (with supporting numerical
data and supporting documentation) the source of such data. Likewise, these same
faults exist in the statements in the seventh paragraph that "IBT uses UPS
revenue to lobby for a political climate harmful to UPS and its employees," and
that "IBT uses UPS revenue to unionize businesses in other industries." The
moneys that IBT expends on its activities are not properly characterized as UPS
revenue, and the Proponent has no factual basis for asserting that UPS is the
source of amounts that the IBT expends on various activities. Thus, these
statements are false and misleading, and should be omitted.
2. Numerous Unsubstantiated Assertions in the Supporting Statement That Impugn
UPS's Status Are False and Misleading. The Proponent makes a number of unsubstantiated assertions regarding the alleged
impact on UPS of its employees' union membership. These statements are presented
as factual assertions but are unsubstantiated and, at most, are statements of
opinion. For example, the second paragraph of the Supporting Statement states,
"Because of IBT involvement, UPS is considered a less reliable service provider
and a poorer investment than non-union FedEx." The Proponent does not provide
any support for this assertion regarding how UPS is viewed and does not
attribute the views to any person or source. Likewise, the Proponent does not
attempt to demonstrate how these alleged views of UPS are attributable to "IBT
involvement." The next sentence in the Supporting Statement, which cites a
source ranking UPS and FedEx on the basis of "best companies to work for,"
However, this citation does not substantiate the preceding statements regarding
purported views on UPS's reliability of service or investment attractiveness,
and has no clear connection to whether or not the respective companies' labor
forces are unionized. As such, all of the statements in the third paragraph of
the supporting statement are unsubstantiated statements masked as truths or
uncorrelated statements that should be omitted as misleading to shareowners.
Likewise, in the fifth paragraph of the Supporting Statement the Proponent's
states that "UPS status as a good citizen is harmed by its handling of the IBT
involvement." This statement impugns the status and character of UPS and,
without any factual basis or substantiation, improperly suggests that there is a
correlation between UPS's standing as a good citizen and the fact that UPS's
employee work force is unionized. 3. The Statement That UPS Sends Money To "a Number Of Multiemployer Benefit
Trust Plans Administered By IBT" Is False And Misleading.
The Proponent makes a statement that "UPS sends money (more than a billion
dollars during 2002) to a number of multiemployer benefit trust plans
administered by IBT." (Paragraph 6). This statement is false and misleading
because the multi-employer benefit plans are not administered by the IBT.
Rather, they are jointly trusteed by representatives of the union and employers
pursuant to the multi-employer provisions of ERISA. Later in the paragraph, the
Proponent accuses the IBT of violating the law by stating that the IBT has
misused pension funds, but the Proponent provides no basis for this allegation.
It is well established that statements accusing persons of illegal activity
without factual support violate Rule 14a-9. Finally, the Proponent asserts that
the presence of multiple employee benefit plans "involve[s] unnecessary
administrative costs." The Proponent provides no factual support for this
assertion, and yet presents the statement as a statement of fact.
B. The Extensive Number of Omissions And Revisions Required To the Proposal
Render It False And Misleading As a Whole. SLB 14 states that "[t]here is no provision in [R]ule 14a-8 that allows a
shareholder to revise his or her proposal and supporting statement."
Nevertheless, it is the Staff's practice to permit proponents to "make revisions
that are minor in nature and do not alter the substance of the proposal" to deal
with proposals that "contain some relatively minor defects that are easily
corrected." In SLB 14, the Staff announced that "when a proposal and supporting
statement will require detailed and extensive editing in order to bring them
into compliance with the proxy rules, [the Staff] may find it appropriate for
companies to exclude the entire proposal, supporting statement, or both, as
materially false or misleading." In this regard, the Staff indicated that it is
not beneficial to devote its resources to "detailed and extensive edits."
The Proposal is a prime example of the situation identified above where
"extensive editing" of the proposal is necessary to bring it "into compliance
with the proxy rules." Because of the extensive deletions and revisions
necessary to correct the numerous unsubstantiated false and misleading
statements, and the lack of substance remaining when those statements are
removed, we believe it is necessary and proper under the proxy rules to exclude
the Proposal in its entirety from UPS's 2004 Proxy Materials.
If the statements outlined in Section A above are omitted or revised, only one
short paragraph out of seven paragraphs in support of the Proposal would remain
intact; the Staff's concurrence with our analysis would cause the Proponent to
delete or revise almost all of the Proposal in their entirety. The elimination
or revision of almost all of the words supporting the Proposal is "the type of
extensive editing" that SLB 14 indicates is justification for excluding an
entire proposal as materially false or misleading. Accordingly, we respectfully
request the Staff's concurrence that the entire Proposal may be omitted.
In addition to the Staff's position set forth in SLB 14, the Staff has
consistently permitted the exclusion of proposals that are vague and indefinite
in violation of Rule 14a-8(i)(3). See also Northeast Utilities Service Co.
(avail. Jan. 19, 2000); Dow Jones & Company, Inc. (avail. Mar. 9, 2000);
Tri-Continental Corp. (avail. Mar. 14, 2000) (each no-action letter permitting
the exclusion of a shareholder proposal under Rule 14a-8(i)(3)). If the
provisions listed in Section A above are omitted or revised, the original
proposal and the lone supporting statement that is not deleted or revised would
be so disconnected and unsupported by substantive arguments that the Proposal
would be vague and misleading in direct contravention of the proxy rules.
Therefore, the Proposal should be completely excluded from UPS's 2004 Proxy
Materials. C. Any Revision to the Proposal Submitted by the Proponent in Response to the
Staff's Instruction Must Comply with Rule 14a-8(d). In the event that the Staff permits the Proponent to make the substantial
revisions necessary to bring the Proposal within the requirements of the proxy
rules, we respectfully request explicit confirmation from the Staff that such
revisions are subject to complete exclusion by UPS if they will cause the
Proposal to exceed the 500-word limitation set forth in Rule 14a-8(d). We
believe it is important to request this confirmation in advance in order to
avoid the issue arising at a time when UPS is attempting to finalize its proxy
statement. *** UPS originally received a proposal from the Proponent on November 26, 2003, the
deadline for submitting proposals for the 2004 Proxy Materials. The original
proposal and supporting statement greatly exceeded the 500-word limit of Rule
14a-8(d). At that time, UPS sought to discuss the original proposal with the
Proponent and, within 14 days of its receipt of the original proposal, UPS
notified the Proponent that his proposal exceeded the 500 word limit. UPS
received the Proposal on December 26, 2003, the last date that the Proponent
could timely submit a revised proposal in response to UPS's Rule 14a-8(d)
notice. Although shorter than the original, the Supporting Statement
accompanying the Proposal was significantly changed from the original,
particularly with respect to numerous of the statements that we believe are
false and misleading as described in part II.A above. Accordingly, we are
submitting this letter to the SEC within 6 business days after UPS's receipt of
the revised proposal. Although in the past UPS has mailed its proxy statement
late in March, UPS has informed us that it may file its definitive 2004 Proxy
Materials as early as March 18, 2004. If it were to do so, the deadline for
filing this letter would have been only one business day after UPS received the
Proposal. In light of the foregoing, we hereby request that the Staff waive Rule
14a-8(j) for good cause. We believe that both the circumstances and the timing
here are substantially identical to the situation in National Semiconductor
Corporation (avail. July 19, 2002) (waiving Rule 14a-8(j) where no-action letter
was submitted six business days after receipt of the Proposal where 80-day
period ended one business day after receipt of the Proposal). See also Dresdner
RCM Global Strategic Income Fund, Inc. (avail. Sept. 13, 2000) (waiving Rule
14a-8(j) where registrant's request was sent to the Staff eleven business days
after receipt of a proposal). Based upon the foregoing analysis, we respectfully request that the Staff of the
Securities and Exchange Commission take no action if UPS excludes the Proposal
from its 2004 Proxy Materials. We would be happy to provide you with any
additional information and answer any questions that you may have regarding this
subject. Please do not hesitate to call me at (202) 955-8671, or Jeff Firestone,
of UPS's corporate legal department, at (404) 828-6022 if we can be of any
further assistance in this matter. Sincerely,
/s/ Ronald O. Mueller
Attachment cc: Jeffrey Firestone, United Parcel Service, Inc.
John Brownell Lynn -----FOOTNOTES-----
1 Specifically, the Proponent states "UPS docks the pay of some employees
covered by the IBT agreement for `union dues.'" (Paragraph 4). In the same
paragraph, the Proponent again states that the "payment and docking process on
paper means the employee pays income, Social Security, and Medicare taxes on pay
never received." (Paragraph 4). Then, in the paragraph immediately following,
the Proponent for the third time states that "UPS docks [] employees' pay for
IBT." (Paragraph 5). [INQUIRY LETTER]
December 22, 2003 Corporate Secretary
United Parcel Service
55 Glenlake Parkway, N.E.
Atlanta, GA 30328 Dear Madam or Sir:
This is in response to Jeffrey D. Firestone's helpful letter of December 10,
2003. I am a UPS employee and shareowner (628.8891 Class A common). I intend to
continue to hold shares through the date of the 2004 Annual Meeting.
SHAREOWNER PROPOSAL (Revised) Resolved:
The shareowners of United Parcel Service urge the board of directors to prepare
or require preparation of a report to shareowners on the UPS relationship with
the International Brotherhood of Teamsters. The report should include in detail
the costs, benefits, and risks involved for UPS and its employees. It should
also include any opportunities to reduce or eliminate costs and risks and
improve benefits. Supporting Statement:
UPS management considers the relationship "mutually beneficial." Our Chairman
and CEO has been quoted - "We've dealt with the Teamsters for 80 years."
IBT pays for the federal government's special effort to reduce IBT corruption
and its control by organized crime. A large share of this continuing cost of
millions of dollars each year since 1989 is from UPS revenue.
Because of IBT involvement, UPS is considered a less reliable service provider
and a poorer investment than non-union FedEx. UPS did not make the Fortune 2003
list of 100 best companies to work for. FedEx is listed. UPS docks the pay of some employees covered by the IBT agreement for "union
dues." IBT "dues" are a minimum of 2.5 hours pay per month regardless of the
size of the group involved. There is no quantity discount. A part-time employee
in a non right-to-work state never sees pay earned during as much as 1.5 weeks
or more per year. Employees doing identical UPS work in a right-to-work state
are not required to pay any "dues." The payment and docking process on paper
means the employee pays income, Social Security, and Medicare taxes on pay never
received. UPS makes matching payments of Social Security and Medicare taxes on
"employee pay" that is actually sent to IBT. UPS status as a good citizen is harmed by its handling of the IBT involvement.
While taxpayers pay costs such as child care for UPS employees hired off
welfare, UPS docks those employees' pay for IBT. In 22 right-to-work states
where employees cannot be required to pay union dues, UPS promises to
"recommend" payment of IBT "dues" and arranges IBT access to employees. Under
those circumstances, IBT reports that many UPS employees sign up on the spot.
UPS sends money (more than a billion dollars during 2002) to a number of
multiemployer benefit trust plans administered by IBT. Part of that money is
used for pensions and health care of employees of other companies including UPS
competitors. The plans have reduced benefits for UPS participants while UPS
contributions continue to increase. There has been IBT misuse of the funds, and
multiple plans involve unnecessary administrative costs. IBT uses UPS revenue to lobby for a political climate harmful to UPS and its
employees. IBT uses UPS revenue to unionize businesses in other industries.
Increased prices that may result are paid by UPS and its employees.
Very truly yours, /s/
John B. Lynn
[STAFF REPLY LETTER]
February 23, 2004 Response of the Office of Chief Counsel Division of Corporation Finance
Re: United Parcel Service, Inc. Incoming letter dated January 7, 2004
The proposal urges the board of directors to prepare a report to shareowners on
UPS's relationship with the International Brotherhood of Teamsters.
There appears to be some basis for your view that UPS may exclude the proposal
under rule 14a-8(i)(7), as relating to UPS' ordinary business operations (i.e.,
relations between the company and its employee representatives). Accordingly, we
will not recommend enforcement action to the Commission if UPS omits the
proposal from its proxy materials in reliance on rule 14a-8(i)(7). In reaching
this position, we have not found it necessary to address the alternative basis
for omission upon which UPS relies. We note that UPS did not file its statement of objections including the proposal
at least 80 calendar days before the date on which it will file its definitive
proxy materials as required by rule 14a-8(j)(i). Noting the circumstances of the
delay, we grant UPS's request that the 80-day requirement be waived.
Sincerely, /s/
Daniel Greenspan
Attorney-Advisor
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