Company Name: Weyerhaeuser Co.
Public Availability Date: February 6, 2004Document Sections:
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER
STAFF REPLY LETTER [INQUIRY LETTER]
December 19, 2003 VIA OVERNIGHT COURIER
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 Nick Rossi, With John Chevedden as Proxy,
for Inclusion in the Weyerhaeuser Company 2004 Proxy Statement
Dear Sir or Madam: We are counsel to the Weyerhaeuser Company, a Washington corporation
("Weyerhaeuser" or the "Company"). On October 13, 2003, Weyerhaeuser received a
proposed shareholder resolution and supporting statement (together, the
"Proposal") from Nick Rossi, with John Chevedden as proxy (the "Proponent" or
"Mr. Chevedden"), for inclusion in the proxy statement to be distributed to the
Company's shareholders in connection with its 2004 Annual Meeting (the "2004
Proxy Statement"). We hereby request that the staff of the Division of Corporation Finance (the
"Staff") confirm that it will not recommend any enforcement action to the
Securities and Exchange Commission (the "Commission") if, in reliance on certain
provisions of Commission Rule ("Rule") 14a-8 under the Securities Exchange Act
of 1934, as amended, Weyerhaeuser excludes the portions of the Proposal
identified below from its proxy materials. Further, in accordance with Rule 14a-8(j), on behalf of Weyerhaeuser, the
undersigned hereby files six copies of this letter and the Proposal, which are
attached to this letter as Exhibit A. One copy of this letter, with copies of
all enclosures, is being simultaneously sent to the Proponent.
The Proposal The Proposal relates to shareholder rights plans and states in relevant part:
RESOLVED: That the shareholders of our company request that the Board of
Directors seek shareholder approval at the earliest subsequent shareholder
election, for the adoption, maintenance or extension of any current or future
poison pill. Once adopted, removal of this proposal or any dilution of this
proposal, would consistently be submitted to shareholder vote at the earliest
subsequent shareholder election. Summary of Bases for Exclusion
We have advised Weyerhaeuser that it may properly exclude the Proposal, or
portions thereof, from the 2004 Proxy Statement and form of proxy for the
following reasons: 1. The entire Proposal may be excluded pursuant to Rules 14a-8(i)(3)/14a-9 and
Rule 14a-8(i)(6) because the Proposal is impermissibly vague and indefinite,
and, therefore, potentially misleading. 2. A portion of the Proposal may be excluded pursuant to Rule 14a-8(i)(1)
because it is not a proper subject for action by shareholders under Washington
law. 3. Portions of the Proposal may be excluded pursuant to Rules 14a-8(i)(3)/14a-9
because they contain statements or assertions of fact that are materially false
or misleading. The reasons for our conclusions in this regard are more particularly described
below. Explanation of Bases for Exclusion
1. The entire Proposal may be excluded pursuant to Rules 14a-8(i)(3)/14a-9 and
Rule 14a-8(i)(6) because the Proposal is impermissibly vague and indefinite,
and, therefore, potentially misleading. The Proposal is properly excludable from the 2004 Proxy Materials because the
Proposal is impermissibly vague, indefinite and, therefore, potentially
misleading, in contravention of Rule 14a-8(i)(3)/14a-9 and Rule 14a-8(i)(6).
The Staff has consistently concluded that a proposal can be excluded under Rules
14a-8(i)(3)/14a-9 if (a) it is so vague and indefinite that it would be
difficult for a company implementing it and for shareholders voting on it to
determine with any reasonable certainty what measures the proposal would require
if it were approved, (b) the proposal involves highly speculative determinations
concerning the definition of certain terms used in the proposal, or (c) it is so
vague and indefinite that it is potentially misleading since any action by a
company to implement the proposal would have to be made without guidance from
the proposal and consequently in possible contravention of the intention of the
shareholders who voted in favor of the proposal. See Smithfield Foods, Inc.
(July 18, 2003) (allowing the company to exclude the proposal under Rule
14a-8(i)(3) as vague and indefinite based, in part, on the company's arguments
that the proposal did not inform shareholders of what the company would be
required to do if the proposal were approved and if the shareholders were to
approve the proposal, the company would not know what action to take to fulfill
the request); Johnson & Johnson (Feb. 7, 2003) (allowing the company to exclude
the proposal under Rule 14a-8(i)(3) as vague and indefinite based, in part, on
the company's argument that the proposal is devoid of any description of the
"Glass Ceiling Report" or the recommendations "flowing from it" so shareholders
would not understand what they are being asked to consider from the text of the
proposal); PG&E Corp. (Mar. 1, 2002) (allowing the company to omit Mr.
Chevedden's proposal because the proposal was vague and indefinite, based on the
company's argument that neither the shareholders nor the company's board of
directors would be able to determine what actions the company would have to take
to comply with Mr. Chevedden's proposal); Philadelphia Electric Co. (July 30,
1992) (allowing the company to omit the proposal because it is "so inherently
vague and indefinite that neither the shareholders voting on the proposal, nor
the company in implementing the proposal (if adopted), would be able to
determine with any reasonable certainty exactly what actions or measures the
proposal requires"); Philip Morris Cos., Inc. (Feb. 7, 1991) (allowing the
company to omit the proposal because it "appear[ed] to involve highly subjective
determinations concerning what constitute[d] `advocate,' `encourage,' `bigotry,'
`hate,' and `aiding in any way'" and because it "would be vague and indefinite
to shareholders voting on the proposal as well as potentially misleading since
any action taken by management, upon implementation could be significantly
different from the actions envisioned by shareholders voting on the proposal").
In addition, a proposal may be excluded under Rule 14a-8(i)(6) if it "is so
vague and indefinite that [the company] would be unable to determine what action
should be taken." See Intl. Business Machines Corp. (Jan. 14, 1992).
The Proposal is impermissibly vague, indefinite and, therefore, potentially
misleading because: 1. The Proposal is contradictory in that the resolution portion of the Proposal
requests that the Board "seek shareholder approval at the earliest subsequent
shareholder election, for the adoption, maintenance or extension of any current
or future poison pill" while the supporting statement for the Proposal states
that the Proposal "gives our Directors the flexibly [sic] to overrule our
shareholder vote if our Directors seriously believe they have a good reason."
2. The Proposal involves highly subjective determinations concerning what
constitutes "seriously believe" and "good reason."
3. The Proposal is unclear as to what is meant by the phrase "the earliest
subsequent shareholder election." The Proposal Is Contradictory
It is entirely unclear how the Company's Board of Directors (the "Board") should
implement the Proposal if it is approved because of its contradictory
statements. The supporting statement notes that the Proposal "gives our
Directors the flexibly [sic] to overrule our shareholder vote if our Directors
seriously believe they have a good reason." Nevertheless, the resolution portion
of the Proposal, as it is currently worded, does not appear to permit the Board
to "overrule" a shareholder vote regarding poison pills for "good reason" nor
does it provide any other form of flexibility in this regard. Thus, the Proposal
is inconsistent. If the Board implemented the Proposal, it is unclear whether
the Board would be permitted to act despite the shareholders' vote if it has a
"good reason." Moreover, the shareholders voting on the Proposal will be
confused as to whether what they are approving gives the Board the authority to
overrule a shareholder vote regarding poison pills with "good reason" or not.
This vagueness and indefiniteness inherent in the Proposal are potentially
misleading to shareholders and thus contrary to Rules 14a-8(i)(3)/14a-9 and Rule
14a-8(i)(6). The Proposal Involves Highly Subjective Determinations of What Constitutes
"Seriously Believe" and "Good Reason" Furthermore, even assuming the supporting statement would effectively qualify
the proposed resolution, the Proposal would involve highly subjective
determinations concerning what it means for the Board to "seriously believe"
there is a "good reason" to overrule the shareholders' vote, as there is no
indication in the Proposal as to what procedures the Board would need to follow
in order to establish its proper use of such veto power or what standard should
be applied to determine whether the Board in fact "seriously believe[s]" there
is a "good reason" to act despite the shareholders' vote in favor of the
Proposal. Because the Proposal does not provide the Board with clear guidance,
the Company believes that any action ultimately taken to implement this aspect
of the Proposal could be significantly different from the action envisioned by
shareholders voting on the Proposal and thus the Proposal, as drafted, is
potentially misleading to shareholders. The Proposal Is Unclear as to What Is Meant by the Phrase "the Earliest
Subsequent Shareholder Election" Another vague and indefinite aspect of the Proposal is when the approval from
shareholders should be sought. The resolution portion of the Proposal
ambiguously states that shareholder approval for the adoption, maintenance or
extension of a poison pill must be sought by the Company at "the earliest
subsequent shareholder election." It is unclear whether the Proposal is calling
for shareholders to approve a poison pill before it is implemented or subsequent
to its implementation. The Company's interpretation and implementation of this
statement could be different from the actions envisioned by shareholders voting
on the Proposal due to the statement's vagueness and indefiniteness. Moreover,
such vagueness and ambiguity as to when the shareholder approval should be
sought leaves the Company unable to determine what action should be taken in
order to properly implement the Proposal. As noted above, the Proposal is inherently vague, indefinite and, therefore,
potentially misleading, in contravention of Rules 14a-8(i)(3)/14a-9 and Rule
14a-8(i)(6). Without further guidance, the Company would have no clear
directions regarding the actions necessary to implement the Proposal and would
be required to make highly subjective determinations concerning important
aspects of the Proposal. As a result, the shareholders would likely have widely
divergent views of the actions that would be expected of the Company and neither
the shareholders nor the Board would be able to determine what actions the
Company would have to take to comply with the Proposal. Accordingly, the Company
is of the view that the Proposal may be omitted from the 2004 Proxy Statement
pursuant to Rules 14a-8(i)(3)/14a-9 and Rule 14a-8(i)(6). In Monsanto Co. (Nov. 26, 2003), the Staff was unable to concur with Monsanto
Company's view that a similar proposal submitted to Monsanto Company by Mr.
Chevedden was excludable under Rule 14a-8(i)(3) as vague and indefinite.
However, we submit that the language of the resolution contained in the proposal
to Monsanto Company differs significantly from the Proposal and the analysis on
which Weyerhaeuser's challenge is based is not the same analysis used as the
basis of the challenge in Monsanto. Accordingly, we do not believe the Staff's
decision in Monsanto is applicable to the challenge submitted herein.
2. A portion of the Proposal may be excluded pursuant to Rule 14a-8(i)(1)
because it is not a proper subject for action by shareholders under Washington
law. Rule 14a-8(i)(1) permits a company to omit a shareholder proposal, or portions
thereof, if it is not a proper subject for action by shareholders under the laws
of the company's state of organization. The note to Rule 14a-8(i)(1) states
that, "[d]epending on the subject matter, some proposals are not considered
proper under state law if they would be binding on the company if approved by
shareholders" and that "most proposals that are cast as recommendations or
requests that the board of directors take specified action are proper under
state law." As a Washington corporation, Weyerhaeuser is subject to the
provisions of the Washington Business Corporation Act (the "WBCA"). Section
23B.08.010(2) of the WBCA states that "[a]ll corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation
managed under the direction of, its board of directors, subject to any
limitation set forth in the articles of incorporation." No provision in the
Company's articles of incorporation confers such powers to the company's
shareholders. We believe that the second sentence in the first paragraph, which states, "Once
adopted, removal of this proposal or any dilution of this proposal, would
consistently be submitted to shareholder vote at the earliest subsequent
shareholder election" is excludable pursuant to Rule 14a8-(i)(1) unless it is
recast as a recommendation or a request because it is not a proper subject for
action by shareholders under Washington law. This request is consistent with the
Staff's response to similar proposals submitted to other companies. See
Honeywell Int'l, Inc. (Feb. 18, 2003) (directing the proponent to recast its
proposal that the office of chairman of the board be held by an independent
outside director as a recommendation or request to the board of directors, based
on the company's argument that a binding proposal violated Delaware law and thus
Rule 14a-8(i)(1)). Accordingly, unless such statement is recast so that it is a recommendation or
request to the Board rather than mandatory, we believe it is properly excludable
because it violates Washington law and thus Rule 14a-8(i)(1).
3. Portions of the Proposal may be excluded pursuant to Rules 14a-8(i)(3)/14a-9
because they contain statements or assertions of fact that are materially false
or misleading. Proxy Rule 14a-8(i)(3) permits a company to exclude a shareholder proposal from
its proxy statement if the proposal or supporting statement is contrary to any
of the proxy rules, including Rule 14a-9, which prohibits materially false or
misleading statements in proxy soliciting materials. This includes portions of a
proposal that contain false or misleading statements, inappropriately cast the
proponent's opinions as statements of fact or otherwise fail to appropriately
document assertions of fact. See The Dow Chemical Co. (Mar. 17, 2003); Alaska
Air Group, Inc. (Mar. 14, 2003); The Home Depot, Inc. (Mar. 4, 2003); The Boeing
Co. (Feb. 18, 2003); Weyerhaeuser Co. (Jan. 21, 2003); Staff Legal Bulletin No.
14 (July 13, 2001) (where the Staff states that shareholders "should provide
factual support for statements in the proposal and supporting statements or
phrase statements as their opinion where appropriate"). Mr. Chevedden is well
aware of the requirements of Rule 14a-8(i)(3), as each year the Staff
consistently asks Mr. Chevedden to revise or delete portions of his proposals
based on this rule. See, e.g., AMR Corp. (Apr. 4, 2003); Sabre Holdings Corp.
(Mar. 20, 2003); The Boeing Co. (Feb. 26, 2003); Weyerhaeuser Co. (Jan. 16,
2003); Southwest Airlines Co. (Mar. 25, 2002); Alaska Air Group (Mar. 8, 2002);
The Boeing Co. (Mar. 2, 2002); General Motors (Mar. 27, 2001); Northrop Grumman
Corp. (Feb. 16, 2001); UAL Corp. (Feb. 9, 2001); Electronic Data Systems (Mar.
24, 2000). In our view, the Proposal contains several such statements. We
believe that the portions of the Proposal identified below are properly
excludable unless modified by the Proponent. First, Proponent's statements in the last sentence of paragraph 3 and the last
sentence of paragraph 9, that "[t]his topic won an overall 60%-yes vote at 79
companies in 2003," and that "[b]ased on the 60% overall yes-vote in 2003 many
shareholders believe companies should allow their shareholders a vote," are
properly excludable unless modified because they assert facts in reliance on
purported authorities, without identifying those authorities or providing any
documentation for verification. The Proponent should identify or provide factual
support in the form of a citation to a specific source appearing in the Proposal
text for each of the foregoing statements. Otherwise, the statements should be
deleted altogether. These requests are consistent with the Staff's response to
similar statements made by the Proponent in proposals submitted to the Company
and other companies. See Weyerhaeuser Co. (Jan. 16, 2003) (instructing Mr.
Chevedden to provide a citation to a specific source or delete the heading
stating "[t]his topic won an average 60%-yes vote at 50 companies in 2002");
Sabre Holdings Corp. (Mar. 20, 2003) (instructing Mr. Chevedden to provide a
citation to a specific source for "[t]he 83%-vote in 2002 exceeded the
60%-average yes vote for this topic at 50 companies in 2002"); J.P. Morgan Chase
& Co. (Mar. 10, 2003) (directing Mr. Chevedden to provide a citation to a
specific source for "[t]his topic won an average 60%-yes vote at 50 companies in
2002"); The Boeing Co. (Feb. 26, 2003) (directing Mr. Chevedden to delete "[t]wenty-five
(25) proposals on this topic won an overall 63% approval rate at major companies
in 2002"); Second, several of the Proposal's statements are properly excludable unless
modified because they assert facts in reliance on purported authorities, without
properly identifying those authorities or providing proper documentation for
verification in the text of the Proposal itself. Specifically:
[paragraph 6] "Diluted Stock
An anti-democratic scheme to flood the market with diluted stock is not a reason
that a tender offer for our stock should fail. Source: The Motley Fool"
[paragraph 7] "Akin to a Dictator
Poison pills are akin to a dictator who says, `Give up more of your freedom and
I'll take care of you.['] 'Performance is the greatest defense against getting taken over. Ultimately, if
you perform well you remain independent, because your stock price stays up.'
Source: T.J. Dermot Dunphy, CEO of Sealed Air (NYSE) for more than 25 years"
[paragraph 8] "The key negative of poison pills is that pills can preserve
management deadwood instead of protecting investors. Source: Moringstar.com"
[paragraph 10] "The Council of Institutional Investors www.cii.org, an
organization of 130 pension funds investing $2 trillion, called for shareholder
approval of poison pills." The Proponent provided no citations or only partial citations to specific
sources for each of the foregoing statements in the text of the Proposal itself.
Rather, the Proponent provided citations under a section entitled "References:"
which appears following the Proposal's supporting statement and following a
section entitled "Notes:" rather than in the text of the Proposal itself.
Because of the location of the citations, such citations do not get published
with the Proposal, and, as a result, the Proposal to be presented to the
shareholders does not include the citations. The Proponent should specifically
identify or provide factual support in the form of a citation to a specific
source for each of the foregoing statements in the text of the Proposal.
Otherwise, the statements should be deleted altogether. In this regard, even
some of the cites under the heading "References:" and in the text of the
Proposal are not complete and thus inadequate, such as "Moringstar.com, August
15, 2003," "The Motley Fool, June 13, 1997," "The Wall Street Journal, April 28,
1999" and "Wall Street Journal, Feb. 24, 2003." The Proponent should provide
full citations, including the title and author of the article quoted, so that
shareholders can more easily access such information. This request is consistent
with the Staff's response to similar statements in proposals submitted to the
Company and other companies. See AMR Corp. (Apr. 4, 2003) (instructing Mr.
Chevedden to provide factual support in the form of a citation to the specific
study and publication date for discussion referring to a "2001 Harvard study ...
by both the Harvard Business School and the University of Pennsylvania's Wharton
School"); FirstEnergy Corp. (Mar. 10, 2003) (directing Mr. Chevedden to provide
citation to a specific publication date for a reference to "BUSINESS WEEK's
inaugural ranking of the best and worst boards in 1996"); The Boeing Co. (Feb.
18, 2003) (directing Mr. Chevedden to provide factual support in the form of a
citation when the proposal merely cited to "McKinsey & Co. corporate governance
survey"); Weyerhaeuser Co. (Jan. 21, 2003) (instructing the proponent to provide
citation to a specific publication date for the proposal's reference to a "major
series by the Seattle Times"). Third, the statement appearing in paragraph 3 "Shareholder voices have been
heard, but not a satisfactory response from our directors" is properly
excludable unless modified because it inappropriately and misleadingly casts the
Proponent's own opinions as statements of fact. The Proponent should qualify the
foregoing statement by adding, "The Proponent believes" or "In the opinion of
the Proponent" or some other variation that casts the statement as the
Proponent's opinion rather than fact. This request is consistent with the
Staff's response to similar statements in proposals submitted to the Company and
other companies. See AMR Corp. (Apr. 4, 2003) (directing Mr. Chevedden to recast
the statement that "Outside of management circles a poison pill is often viewed
as a device which can injure shareholders by reducing management accountability
and adversely affecting shareholder value," among others, as the proponent's
opinion); Maytag Corp. (Mar. 5, 2003) (instructing Mr. Chevedden to recast the
statement that "Enron and the corporate disasters that followed forced many
companies to get serious about good governance," among others, as the
proponent's opinion); The Boeing Co. (Feb. 26, 2003) (instructing Mr. Chevedden
to recast "[a] pill could prevent the emergence of a more capable management
team" as the proponent's opinion); Weyerhaeuser Co. (Jan. 21, 2003) (instructing
the proponent to recast the statement that "the resulting national media
attention further damaged our company's reputation" as the proponent's opinion).
Without such qualification, the statement misleadingly suggests facts that have
not otherwise been documented. Fourth, the website addresses in paragraph 7 and in the first sentence of
paragraph 9, which include: [paragraph 7] "Moringstar.com"
[paragraph 9] "www.cii.org"
are properly excludable unless modified because they are false or misleading.
The Staff has indicated that website addresses are not excludable from
shareholder proposals per se, but excludable if a company can demonstrate that
"information on the website may be materially false or misleading, irrelevant to
the subject matter of the proposal or otherwise in contravention of the proxy
rules." Staff Legal Bulletin No. 14 (July 13, 2001). We believe the Staff's
prerequisites for exclusion of the websites referenced in the Proposal are
satisfied. The websites are filled with material entirely extraneous and
irrelevant to the Proposal, including newsletters, other proposals, email lists
and links to even more unrelated and irrelevant websites. For example, the
www.cii.org website currently includes press releases regarding completely
unrelated matters and a list of underperforming companies. Moreover, the
Proponent's inclusion of these website addresses is an attempt to direct
shareholders to information the Proponent could not otherwise include in the
Proposal due to the 500-word limit imposed on shareholder proposals pursuant to
Rule 14a-8(d). Indeed, because the websites are constantly changing, neither the
Company nor the Staff nor any other person can be assured of the truth or
accuracy of the information that may be accessed at the sites. In order to
preserve the proxy rules' integrity, the Staff consistently has required
deletion of third-party website addresses from shareholder proposals. Pharmacia
Corp. (Mar. 7, 2002) (instructing Mr. Chevedden to delete the website addresses
"www.cii.org" and "www.cii.org/ciicentral/policies.htm"); The Boeing Co. (Feb.
23, 1999) (allowing exclusion of a sentence including a website address and a
recommendation made on the website); Emerging Germany Fund, Inc. (Dec. 22, 1998)
(stating "[t]here is support for your view that the reference to the Internet
site ... may undermine the proxy process requirements of Rule 14a-8"); Pinnacle
West Capital Corp. (Mar. 11, 1998) (stating "there appears to be some basis for
your view that the reference to the web page ... may be excluded").
In the alternative, we note that, more recently, the Staff has required Mr.
Chevedden to revise references to websites to provide a citation to a specific
source for the discussion referenced in the proposal he submitted to the Company
and to other companies. See Weyerhaeuser Co. (Jan. 16, 2003) (directing Mr.
Chevedden to revise the reference to www.cii.org to provide a citation to a
specific source for the discussion referenced); The Home Depot, Inc. (Mar. 31,
2003) (instructing Mr. Chevedden to revise the reference to www.cii.org to
provide a citation to a specific source for the discussion referenced in the
statement that "[t]he Council of Institutional Investors www.cii.org ... called
for shareholder approval of poison pills"); Sabre Holdings Corp. (Mar. 20, 2003)
(directing Mr. Chevedden to revise the reference to www.cii.org to provide a
citation to a specific source for the discussion referenced in the statement
that "[t]he Council of Institutional Investors www.cii.org ... called for
shareholder approval of poison pills"); FirstEnergy Corp. (Mar. 10, 2003)
(instructing Mr. Chevedden to revise the reference to www.cii.org to provide a
citation to a specific source for the definition referenced in the statement
that "[t]he Council of Institutional Investors www.cii.org ... called for
shareholder approval of poison pills"); The Boeing Co. (Feb. 26, 2003)
(directing Mr. Chevedden to revise the reference to www.cii.org to provide a
citation to a specific source for the discussion referenced in the statement
that "[a]nnual election of each director is a Council of Institutional Investors
www.cii.org core policy"). Mr. Chevedden should do likewise in this case.
In addition, the Internet address Moringstar.com leads to an Internet loan site
that does not contain discussion of poison pills. We believe that the Proponent
intended to cite to "Morningstar.com" rather than "Moringstar.com." At the
least, Proponent should revise this citation to correctly reflect the intended
source or delete the citation and related statement altogether.
Fifth, the statement in paragraph 7 "Akin to a DictatorPoison pills are akin
to a dictator who says, `Give up more of your freedom and I'll take care of
you.[']" should be deleted from the Proposal because the statement indirectly
impugns the integrity of the Board and is inflammatory. By using a quote that
states that a poison pill is akin to a dictator, the Proponent is making an
inflammatory statement that indirectly ties the Board to being akin to a
dictator if it implements a poison pill, thus impugning the integrity of the
Board, a tactic clearly prohibited by Rule 14a-9 and the Staff's interpretations
thereunder. In Monsanto Co. (Nov. 26, 2003), the Staff was unable to concur with
Monsanto Company's view that the caption "Akin to a Dictator" in a similar
proposal submitted by Mr. Chevedden to Monsanto Company was inflammatory and
misleading and impugned the character and integrity of Monsanto Company's
directors. However, we urge the Staff to reconsider its decision in Monsanto
based on the Staff's decisions with regard to many other proposals submitted to
companies by Mr. Chevedden and other proponents that contained similarly
inflammatory statements. See The Home Depot, Inc. (Mar. 31, 2003) (instructing
Mr. Chevedden to delete "Home Depot has been a dog among large-caps" based, in
part, on the company's argument that the statement is misleading and
inflammatory); Alaska Air Group, Inc. (Mar. 14, 2003) (instructing Mr. Chevedden
to delete "[a]lthough Delaware law allows some flexibility our company requires
an 80%-yes vote from all shares in existence to adopt this proposal topic"
based, in part, on the company's argument that the statement impugned the
integrity of the company and its officers and directors); The Boeing Co. (Feb.
26, 2003) (directing Mr. Chevedden to delete the statement that "[t]here is no
evidence that our management located any of the numerous reports that support
this shareholder proposal topic," among others, based, in part, on the company's
argument that the statement was misleading, irrelevant and indirectly impugned
the character of the board of directors); Weyerhaeuser Co. (Jan. 21, 2003)
(instructing the proponent to delete statements regarding the derivation of the
Company's assets from "lands intended for homesteaders" based, in part, on the
Company's argument that these statements indirectly impugned the integrity of
the Board and indirectly made charges concerning immoral conduct without factual
foundation). Accordingly, we believe these portions of the Proposal are properly excludable
from the Company's 2004 Proxy Statement pursuant to Rules 14a-8(i)(3)/14a-9.
* * * * * For the foregoing reasons, we believe that the Proposal, or portions thereof,
may be omitted from the 2004 Proxy Statement and respectfully request that the
Staff confirm that it will not recommend any enforcement action if the Proposal
or portions thereof are excluded. Your prompt review of this matter would be greatly appreciated. Should you have
any questions regarding any aspect of this matter or require any additional
information, please call the undersigned at (206) 359-8447.
Please acknowledge receipt of this letter and its enclosures by stamping the
enclosed copy of this letter and returning it to me in the enclosed envelope.
Very truly yours, /s/
J. Sue Morgan JSM:raa
Enclosures cc: John Chevedden
Claire Grace, Weyerhaeuser Company [APPENDIX]
3Shareholder Input on a Poison Pill RESOLVED: Shareholders request that our Directors increase shareholder voting
rights and submit the adoption, maintenance or extension of any poison pill to a
shareholder vote. Also once this proposal is adopted, dilution or removal of
this proposal is requested to be submitted to a shareholder vote at the earliest
possible shareholder election. Directors have discretion in responding to
shareholder votes. We as shareholders voted in support of this topic:
Year........Rate of Support
2002........52%
2003........55% This percentage is based on yes and no votes cast. I believe this level of
shareholder support is impressive because the 55% support followed our
Directors' objection to the proposal and insiders hold 5% of our stock. I
believe that there is a greater tendency for shareholders, who more closely
follow our company's corporate governance, to vote in favor of this proposal
topic. I do not see how our Directors object to this proposal because it gives our
Directors the flexibility to ignore our shareholder vote if our Directors
seriously believe they have a good reason. I believe our 55% vote is a strong
signal of shareholder concern. This topic also won an overall 60% yes-vote at 78
other companies in 2003. Nick Rossi, P.O. Box 249, Boonville, Calif. 95415 submitted this proposal.
Poison Pill Negative The key negative of poison pills is that pills can preserve management deadwood.
Source: Moringstar.com
The Potential of a Tender Offer Can Motivate Our Directors
Hectoring directors to act more independently is a poor substitute for the
bracing possibility that shareholders could turn on a dime and sell the company
out from under its present management. Wall Street Journal, Feb. 24, 2003
Diluted Stock An anti-democratic scheme to flood the market with diluted stock is not a reason
that a tender offer for our stock should fail. Source: The Motley Fool
Akin to a Dictator Poison pills are akin to a dictator who says, "Give up more of your freedom and
I'll take care of you. "Performance is the greatest defense against getting taken over. Ultimately if
you perform well you remain independent, because your stock price stays up."
Source: T.J. Dermot Dunphy, CEO of Sealed Air (NYSE) for more than 25 years I
believe our Directors could make a token response to this proposalhoping to
gain points in the new corporate governance rating systems. A reversible
response, which could still allow our directors to give a poison pill on short
notice, would not substitute for this proposal. Council of Institutional Investors Recommendation
The Council of Institutional Investors www.cii.org, an organization of 130
pension funds investing $2 trillion, called for shareholder approval of poison
pills. Based on the 60% overall yes-vote in 2003 the majority of shareholders
(voting yes or no) at 78 companies believe companies should increase shareholder
input on a poison pill. Shareholder Input on a Poison Pill Yes on 3
Notes: The above format is the format submitted and intended for publication.
Please advise if there is any typographical question.
The company is requested to assign a proposal number (represented by "3" above)
based on the chronological order in which proposals are submitted. The requested
designation of "3" or higher number allows for ratification of auditors to be
item 2. References: Yahoo! Finance, Quotes and Info
The Motley Fool, June 13, 1997
Moringstar.com, Aug. 15, 2003
Mr. Dunphy's statements are from The Wall Street Journal, April 28, 1999.
IRRC Corporate Governance Bulletin, JuneSept. 2003
Council of Institutional Investors, Corporate Governance Policies, March 25,
2002
[STAFF REPLY LETTER]
January 2, 2004 Via Airbill 6 Copies
7th copy for date-stamp return Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
Mail Stop 0402
450 Fifth Street, NW
Washington, DC 20549 Response to Perkins Coie LLP No Action Request
Weyerhaeuser Company (WY)
Nick Rossi Ladies and Gentlemen:
The numbers preceding the brackets below correspond to the pages of the company
letter. The company has apparently not used the updated proposal, included here,
which was timely submitted. 3] Hog ProductionPurported Precedent
The company claim starts with a hog production case as a purported analogy on
page 3, Smithfield Foods, Inc. (July 18, 2003). Then the company claims a "Glass
Ceiling Repot" analogy. The company does not cite any reason that purported
precedent involving hog production should be stretched beyond the narrow
application of that specialized business to have an extended application to a
core corporate governance issuethe poison pill and rules governing the
potential sale of the company. The company does not claim that hog production
has even one other important precedent for the conduct of the company's
business. Another purported analogy is Philadelphia Electric Co. (July 30, 1992). This
concerned a somewhat unusual shareholder proposal topic on the election of a
committee of small shareholders to present a plan to the board.
Then the company delves into proposals with text on "bigotry" and "hate."
4] The updated proposal timely submitted to the company does not state
"overrule." 5] It appears the company has added a word to the proposal to in an attempt to
distort the meaning. The company appears to add the word "only" at the beginning
of the phrase "... if our directors seriously believe they have a good reason."
This proposal as written does not mandate "seriously believe" or "a good reason"
and both phrases are preceded by "believe" which gives directors further
flexibility. Hence any argument attacking the meaning of "seriously believe" or
"a good reason" is moot. The key point of the shareholder proposal is a shareholder vote on a poison
pill. Since shareholders cannot control whether the board adopts a pill or
control the date the board is to take such action, a request to "seek
shareholder approval at the earliest subsequent shareholder election should be
adequate. 6] The company acknowledges that the staff determination one month ago in a
similar case on the same vague and indefinite claim, Monsanto Co. (Nov. 26,
2003), is contrary to what the company is asking for here. The Monsanto claim
was argued by Wachtell, Lipton, Rosen & Katz. In a revealing twist the company
gives vague and unspecific reasons to for purported material differences between
Monsanto Co. (Nov. 26, 2003) and the proposal here. The company fails to name or
explain a key distinction to rest its argument on. The company acknowledges that "the Staff was unable to concur with Monsanto" in
Monsanto Co. (Nov. 26, 2003) on the very same issue here. Yet the company fails
to name any specific "language" that "differs significantly." The company fails
completely to give any explanation. 7] The updated proposal is abundantly clear on the issue of recommendation.
8] At the conclusion of the proposal the company was invited to ask the
shareholder party if there were any questions on the references. The company
failed to do so in its rush to resort a no action request.
Proposal text concerning the 60% vote, The Motley Fool, Morningstar.com, Mr.
Dunphy and www.cii.org was found to be includable with modification in UGI
Corporation (December 18, 2003). I believe the soundness of the information has been established and the need to
publish detailed source information does not serve a useful purpose. The company
has not produced any evidence that it gets requests from shareholders for
detailed source information on shareholder proposals. Certainly the company does
not forward any such request on to the proponents. The source of the 60% vote is given at the end of the proposal, IRRC Corporate
Governance Bulletin, JuneSept. 2003. 9] The company apparently requests greater clarification on the references
already provided with the proposal. 10] Ironically the company no action request here, to totally prevent
shareholders from voting on this established topic in 2004, supports the
statement, "Shareholder voices have been heard, but not a satisfactory response
from our directors." The directors' approval of expenditures to an outside law
firm with the aim of totally excluding even the possibility of a precatory
shareholder votethis following two consecutive annual majority-votesclearly
shows the directors' entrenched commitment to resist "a satisfactory response."
11] SLB 14 states: Companies seeking to exclude a website address under rule 14a-8(i)(3) should
specifically indicate why they believe information contained on the particular
website is materially false or misleading, irrelevant to the subject matter of
the proposal or otherwise in contravention of the proxy rules.
Contrary to SLB 14 the company failed to establish that Morningstar.com and
www.cii.org are "materially false or misleading."
12] Regarding Morningstar.com: The proposal submittal invited the company to
"Please advise if there is any typographical question." Had the company
responded then this would not be an issue. It appears the company is making the moot argument that Mr. Dunphy has impugned
"poison pills" in "poison pills are akin to a dictator."
The company acknowledges that Monsanto Co. (Nov. 26, 2003) did not grant
concurrent on this same issue. The company appears to claim that this issue
should not be decided based on the facts here but based on text in previous
shareholder proposals. Text in earlier proposals, that does not appear in this
proposal, is arguably irrelevant in reaching a determination on correct text in
this proposal. I do not believe the company has met its burden of proof obligation according to
rule 14a-8. For the above reasons this is to respectfully request non-concurrence with the
company no action request on each point. Sincerely,
/s/ John Chevedden
cc: Nick Rossi
Robert Essner
[STAFF REPLY LETTER]
February 6, 2004 Response of the Office of Chief Counsel Division of Corporation Finance
Re: Weyerhaeuser Company
Incoming letter dated December 19, 2003 The proposal requests that the board submit the adoption, maintenance or
extension of any poison pill to a shareholder vote. We are unable to concur in your view that Weyerhaeuser may exclude the proposal
under rule 14a-8(i)(1). Accordingly, we do not believe that Weyerhaeuser may
omit the proposal from its proxy materials in reliance on rule 14a-8(i)(1).
We are unable to concur in your view that Weyerhaeuser may exclude the entire
proposal under rule 14a-8(i)(3). There appears to be some basis for your view,
however, that portions of the supporting statement may be materially false and
misleading under rule 14a-9. In our view, the proponent must:
recast the statement that begins "Shareholder voices ..." and ends "... from
our directors" as the proponent's opinion;
provide a citation to a specific source for the statement that begins "This
topic also won ..." and ends "... 79 companies in 2003";
revise the reference to the Wall Street Journal article to add "Source:" to
the beginning of the reference and clarify that the article refers to an opinion
article;
revise the sentence attributed to The Motley Fool to directly quote the
sentence from the source;
revise the sentences attributed to T.J. Dermot Dunphy to clearly identify
which sentences are direct quotes; and
revise the reference to "Moringstar.com" to "Morningstar.com" and revise the
sentence attributed to that source to directly quote the sentence from the
source;
revise the reference to www.cii.org to provide a citation to a specific
source; and
provide a citation to a specific source for the sentence that begins "Based on
the 60% ..." and ends "... allow their shareholders a vote."
Accordingly, unless the proponent provides Weyerhaeuser with a proposal and
supporting statement revised in this manner, within seven calendar days after
receiving this letter, we will not recommend enforcement action to the
Commission if Weyerhaeuser omits only these portions of the supporting statement
from its proxy materials in reliance on rule 14a-8(i)(3). We are unable to concur in your view that Weyerhaeuser may exclude the proposal
under rule 14a-8(i)(6). Accordingly, we do not believe that Weyerhaeuser may
omit the proposal from its proxy materials in reliance on rule 14a-8(i)(6).
Sincerely, /s/
Grace K. Lee
Special Counsel
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