Company Name: Raytheon Co.
Public Availability Date: January 30, 2004Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER [INQUIRY LETTER]
By Federal Express December 23, 2003 Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C 20549 Re: Raytheon Company - File No. 1-13699
Statement of Reasons for Omission of Shareholder
Proposal Pursuant to Rule 14a-8(i)(4) and Rule 14a-8(i)(7)
Ladies and Gentlemen: We are filing this letter on behalf of our client Raytheon Company, a Delaware
corporation ("Raytheon"), which has received a shareholder proposal (the
"Proposal"), which is attached to this letter as Exhibit A, from shareholder
Stephen S. Niechcielski, who states that he is acting on behalf of himself and
29 other Raytheon stockholders listed on his proposal "plus the hundreds of
others who are retirees or beneficiaries with pensions from the old Raytheon
Engineers and Constructors, Inc." (the "Proponent") that the Proponent wishes to
have included in Raytheon's proxy materials for its 2004 annual meeting of
shareholders (the "2004 Proxy Materials"). The Proposal states, in relevant part:
"RESOLVED, Shareholders request the Board of Directors to:
"Direct the Benefits Committee for the Raytheon Retirement Plan for Engineers &
Constructors and Aircraft Credit Employees pension plan to provide a raise in
the pensions for the ex-RE&C retirees in the plan in proportion to the number of
years a retiree had been in the plan during the period 1992-2003, monies to come
from the plan's overfunded assets or from the company's funds."
Raytheon intends to omit the Proposal and its supporting text for the following
reasons: The Proposal is excludable because it is related to a personal grievance and
personal benefit under Rule 14a-8(i)(4). The Proposal is excludable because it is related to Raytheon's ordinary
business matters, under Rule 14a-8(i)(7). Accordingly, we hereby submit this statement of reasons for exclusion of the
Proposal from the 2004 Proxy Materials pursuant to Rule 14a-8(j) promulgated
under the Securities Exchange Act of 1934, as amended, and hereby request that
the Staff of the Division of Corporate Finance (the "Staff") confirm that it
will not recommend enforcement action against Raytheon should it omit the
Proposal from the 2004 Proxy Materials. Pursuant to Rule 14a-8(j)(2), filed
herewith are six copies of this letter as well as six copies of the Proposal. In
addition, pursuant to Rule 14a-8(j)(1), Raytheon is notifying the Proponent of
its intention to omit the Proposal from the 2004 Proxy and we have provided a
copy of this submission to the Proponent. 1. The Proposal is Directly Related to the Proponent's Personal Grievance and
Interests, and Should Therefore Be Excluded. a. The Proposal is in Direct Furtherance of the Proponent's Personal Grievance
Against Raytheon. Rule 14a-8(i)(4) permits the exclusion of any proposal that "relates to the
redress of a personal claim or grievance". The Rule is designed to prevent
shareholders from unfairly and counter-productively taking over the shareholder
proposal process and using it as a forum for addressing their own personal
concerns. This is particularly important when those concerns are not of general
interest or importance to the shareholder community at large.
The present Proposal reflects an ongoing personal grievance that the Proponent
has already addressed to Raytheon. The Proponent claims to speak for a group of
retired employees of a former subsidiary of Raytheon who are dissatisfied with
decisions Raytheon has made in regard to a specific retiree benefit plan (the
"Defined Benefits Plan"). As is detailed in the Proposal, the Proponent believes
that the Defined Benefits Plan is presently "overfunded" - that is, the plan's
monetary assets are greater than its liabilities. The Proponent would have
Raytheon distribute a portion of those assets to the plan beneficiaries in the
form of an increase to their pensions, and communicated this to Raytheon via a
petition promulgated in 2002. In its response at the time, Raytheon maintained,
as it currently maintains, that there exists no obligation whatsoever that the
funds be so distributed, and that any excess funds remaining when all
beneficiary pensions claims have been satisfied would rightly revert to
Raytheon. The Proponent appears to be irate that Raytheon has not granted its wishes, as
is evidenced by its criticism of Raytheon's decision to use company funds in
other areas and its equation of adopting the Proposal with "being fair to the
retirees". As a result of not achieving the desired result through other efforts
to date, the Proponent now seeks to command the time and attention of all
shareholders in furtherance of this ongoing personal dispute.
The Staff has previously excluded shareholder proposals from former employees
who have attempted to use the proposal process as a forum to air their personal
grievances. See Int'l Business Machines Corp. (December 18, 2002) (proposal that
employee discrimination complaints be reviewed regardless of employee status was
excludable as a personal grievance); Phillips Petroleum Company (March 12, 2001)
(proposal requiring semi-annual shareholder reports was excludable as a personal
grievance) and Pyramid Technology Corporation (November 4, 1994) (proposal that
corporate executives should be made personally liable for fees related to
insider transactions was excludable as a personal grievance). In each of the
these referenced letters, the proponent was a former employee of the company
who, apparently frustrated in other avenues of redress, was attempting to
convert the shareholder proposal process to his own ends. Here too, the
Proponent is improperly trying to usurp the process to force the attention of
all shareholders to his own personal grievance. b. The Proposal is Intended to Confer a Personal Benefit on the Proponent.
Furthermore, Rule 14a-8(i)(4) also permits the exclusion of any proposal that
"is designed to result in a benefit to [the proponent], or to further a personal
interest, which is not shared by the other shareholders at large."
The Staff has consistently applied this kind of exclusion to proposals like the
present Proposal, when the proponent was in a position to either directly
benefit or be adversely affected by changes to retiree benefit policies. See
Union Pacific Corporation (January 31, 2000) (proposal requesting the company
repeal a pension plan that was deemed detrimental to the proponents) and Int'l
Business Machines Corporation (January 20, 1998) (proposal to increase the
minimum pension benefit to retirees where the proponent was a retiree of the
company). In the present case, the Proponent has a direct personal stake in the outcome of
this Proposal, as he and the other individuals who apparently collectively
prompted the Proposal are the very pension beneficiaries who will profit from
the Proposal's adoption. These retirees, not all of whom may even be Raytheon
shareholders, will directly benefit from funds that would otherwise ultimately
revert back to Raytheon. In this light, it is clear that the majority of all
shareholders could actually be adversely affected by the adoption of this
Proposal. Accordingly, since the Proposal relates to a matter that is the subject of the
Proponent's personal grievance against Raytheon, seeks to confer a personal
benefit on the Proponent and could adversely affect the majority of all other
shareholders, the Proposal should be excluded pursuant to Rule 14a-8(i)(4).
2. The Proposal Concerns a Matter Relating to Raytheon's Ordinary Business
Operations, and Should Therefore Be Excluded. Rule 14a-8(i)(7) allows for the exclusion of proposals that relate to a
company's ordinary business operations. According to the Commission, the
"ordinary business" exclusion is aimed at preventing attempts by shareholders to
micro-manage a company, especially in situations where those shareholders might
not have the best access to relevant information or where direct shareholder
control might be impracticable. See Securities Exchange Act Release No. 34-40018
(May 21, 1998). The Proposal seeks to increase retiree pensions as a result of the fact that the
Defined Benefits Plan is presently overfunded. However, the Commission has long
considered that proposals regarding the planning, administration or
implementation of employee and retiree benefits are related to the ordinary
business of a corporation, and are thus excludable. (There is an exception for
proposals that concern only senior executive and director compensation, unlike
the Proposal.) The Staff has regularly adopted this view. See General Electric
Co. (January 10, 2003) (proposal that the company make certain changes to the
administration of its medical insurance plan); GenCorp Inc. (December 5, 2002)
(proposal requesting the review and adjustment of a subsidiary's benefits plan);
DTE Energy Company (January 22, 2001) (proposal requesting various retiree
benefits changes); Bell Atlantic Corporation (October 18, 1999) (proposal to
adopt new retiree health insurance plan). In all of the foregoing cases, the
Staff allowed the various shareholder proposals to be excluded on the grounds
that they pertained to ordinary business matters, under the more specific
heading of employee benefits. The Staff has also specifically recognized that shareholder proposals related to
increasing pension benefits as a result of pension plans being overfunded are
excludable because they pertain to ordinary business operations. In both General
Electric Company (January 22, 2002) and General Electric Company (January 16,
2002), the Staff permitted proposals for pension increases that were linked to
plan overfunding to be excluded under Rule 14a-8(i)(7). As the present Proposal
is making precisely this kind of request, it should similarly be excludable.
3. Conclusion For the foregoing reasons, we believe that the Proposal may be omitted from
Raytheon's 2004 Proxy Materials. Accordingly, we request the concurrence of the
Staff that it will not recommend enforcement action against Raytheon, should it
omit the Proposal from the 2004 Proxy Materials. If you have any questions regarding this matter or require any additional
information, please contact the undersigned at 617-941-8302, or Miriam Gross of
this Firm at 617-951-8565. If the Staff disagrees with any of the conclusions
set forth above, please contact the undersigned or Ms. Gross prior to the
issuance of a written response. Please be advised that Raytheon intends to mail
its definitive proxy materials to shareholders around March 26, 2004, and that
it will therefore be sending these materials to a financial printer not later
than March 21, 2004. Very truly yours,
/s/ Michael P. O'Brien
cc: Stephen S. Niechcielski
John W. Kapples (Raytheon Company)
Miriam Gross [APPENDIX 1]
Stockholder Proposal The following stockholders have proposed the adoption of the following
resolution and have furnished the following statement in support of the
proposal: Daniel A. Altlerl, Jr. 97 Trent Road, Turnersville, NJ 08012; Ivars
Benks, 1528 Richard Drive, West Chester, PA 19380; Mariana Brigandi, 1026 McKean
Street, Philadelphia, PA 19148; William I. Brosious, 112 Sutton Road, Ardmore,
PA 19003; Edgar H. Case II, Brittany Point, Apt. 3208, Lansdale, PA 19448; J.
Franklin Clapp. 104 West Riding Road, Cherry Hill, NJ 08003; Joseph M. Cowgill,
29 Island Road, Monroeville; NJ 08343; Paul H. Dan, 100 Kent Avenue, Marlton, NJ
08053; Alfred N. DeAngelis, 30 Whitall Drive, Sicklerville, NJ 08081; Thomas V.
Febbo, 212 Second Avenue, Newtown Square, PA 19073; Robert C. Fisk, 1005 Tenby
Road. PA 19312; Robert E. Gerwig, 4246 River Road, Mount Bethel, PA 18343;
Rogers W. Gimbemat, 723 Bryant Mountain Road, Roseland, VA 22967, Gautam Gupta,
734 Chatham Road, Breoxel Hill, PA 19026; John E. Herman, 1112 Drexel Avenue.
Drexel Hill, PA 19026; George R. Jablokow, 889 Red Barn Lane, Huntington Valley,
PA 19006; Francis C. James, 7904 Mars Place, Philadelphia, PA 19153; Edward F.
Jones, White Horse Village, 535 Gradyville Road, Newtown Square, PA 19073; Hok
Wai Kwan, 524 St. Davids Road. St. Davids, PA 19087; Thomas LaGrossa, 1310 Moore
Street, Philadelphia, PA 19148; Michael Leyderman, 10227 Murty Lane,
Philadelphia, PA 19116; Stephen S. Niechcielski, 1064 Scenic View Drive,
Schwenksville, PA 19473; Eileen & Joseph O'Brien, 4766 Springfield Avenue,
Pennsauken, NJ 08109; Sarkls H. Pahlawanian, 67 Buttonwood Drive, Exton, PA
19431; Alexander E. Pesenson, 192 Glenbrook Road. Meadowbrook, PA 19046; George
W. Powell, III, 458 South 4thStreet, Colwyn, PA 19023; Richard A. Rabeau, 289
E. Browning Road, Bellmawr, NJ 08031; Ronald L. Shore, 3214 Stump Hall Road,
Collegeville, PA 19426; Warren R. Thompson, 225 Greenwood Avenue, Jenkintown, PA
19046; and Malcolm Woodman, 1218 Larchmont Avenue, Havertown, PA 19083. The
stockholders beneficially own a total of 31,579 shares. AUTHORIZATION FOR AN INCREASE IN CERTAIN RETIREE PENSIONS
WHEREAS: United Engineers and Constructors, Inc. (UE&C). Philadelphia, PA established a
Defined Benefits Plan in 1949. Raytheon Company purchased UE&C in 1969 but continued the plan with
administration by a committee in Philadelphia, PA. Raytheon later renamed the
company Raytheon Engineers and Constructors (RE&C). On July 17, 2002, Raytheon sold the assets of RE&C, except for the RE&C
Retirement Plan. The plan was then "frozen" with prior employees having five
years of service with RE&C being in the pension plan. The RE&C Retirement Plan was then consolidated with another Raytheon pension
entity and became the Raytheon Retirement Plan for Engineers & Constructors and
Aircraft Credit Employees, being administered by the Raytheon Company in
Lexington, MA. Both the original and consolidated plans have been considerably "overfunded",
i.e., the assets of are greater than its liabilities. When UE&C or RE&C administered the plan, an increase was made about every
decade. In 1982, 25% was granted and another of 16% in 1992.
By 2002, the plan being frozen and overfunded, the participants had
anticipatedin the prior spiritan increase in their pensions. To that end, a
group of retirees in October 2002, at their Annual Reunion, promulgated a
petition to the Raytheon Company outlining their request for such an increase.
Raytheon responded that ours was a Defined Benefits Plan and they had no
obligation to grant an increase. When questioned about the overfunding, Raytheon
noted any increase in our pension would affect the company's profit and loss
statement and rejected our petition. Raytheon noted that any residual funds from the plan, remaining when the last of
our retirees or beneficiaries had expired, would revert to Raytheon. It was also
noted that about half would be lost in taxes or fees. During the period 1999 to 2002 (only data available), the aggregate compensation
of the four major Raytheon executives rose 76%, while the RE&C retirees'
pensions have remained stagnant for more than a decade. A pension increase of 15% would amount to less than $4 millions a year. This
could well be supported by the plan's assets, now about $75 millions greater
than the liabilities. However, should it not be possible to use the plan's
assets for the increase, the cost of being fair to the retirees would amount to
less than a half penny per share of Raytheon stock. RESOLVED, Shareholders request the Board of Directors to:
Direct the Benefits Committee for the Raytheon Retirement Plan for Engineers &
Constructors and Aircraft Credit Employees pension plan to provide a raise in
the pensions for the ex-RE&C retirees in the plan in proportion to the number of
years a retiree had been in the plan during the period 1992 - 2003, monies to
come from the plan's overfunded assets or from the company's funds.
Please vote your proxy FOR this resolution. [APPENDIX 2]
EXHIBIT A 1064 Scenic View Drive
Schwenksville, PA 19473
November 21, 2003 Corporate Secretary
Raytheon Company
Executive Offices
141 Spring Street
Lexington, MA 02421 We respectfully submit a stockholder proxy proposal, Authorization For An
Increase In Certain Retiree Pensions, for consideration at the April 2004
stockholders' meeting. The proposal is on behalf of myself and 29 other Raytheon
stockholders listed on the proposal plus the hundreds of others who are retirees
or beneficiaries with pensions from the old Raytheon Engineers and Constructors,
Inc (RE&C). The affidavits of Raytheon stock ownership and retention by the
stockholders are attached We sincerely regret that we must use this means to bring our situation to the
attention of the Raytheon stockholders. As noted in the accompanying proxy
proposal, certain groups of retirees were previously granted an increase in
their pensions about every decade when United Engineers & Constructors (UE&C),
its founder, and later RE&C administered the pension plan.
Raytheon Company took over administration of our pension plan in 2000 when they
sold off RE&C but retained our pension plan. At that time the pension plan was
"frozen" and the plan's assets far exceeded its liabilities.
In the year 2002, with the plan being frozen and "overfunded", the retirees had
expected the normal increase in their pensions since the previous adjustment had
been in early 1992. When none was forthcoming, the retirees in the Philadelphia
areas submitted a petition in October 2002signed by nearly 200 retirees and/or
their beneficiariesto the Raytheon Vice President for Benefits. Word was spread
to other retirees and many more contacted Raytheon by letter or telephone in
support of the petition. Raytheon responded with various reasons why they no longer would be granting
increases in the pensions. Unfortunately, despite further discussions, we have
reached an impasse and our only recourse is the path we are taking now.
The enclosed proxy proposal was read to those attending the Ninth Annual
UE&C/RE&C Retirees' Reunion this past October and it was unanimously approved.
The sheets showing their agreement and support for the proposal are enclosed.
The dialogue between our Petition Group and Raytheon continues. Should it bear
fruit and the requested increase be granted, we would be pleased to withdraw
this proxy proposal. Please advise the deadline for that action.
Yours sincerely, /s/
Stephen S. Niechcielski [INQUIRY LETTER]
January 24, 2004 Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Raytheon CompanyFile No. 1-13699
Statement of Reasons for Omission of Shareholder Proposal Authorization For An
Increase in Certain Retiree Pensions Dear Sir/Madam:
I have been authorized by Mr. Stephen S. Niechcielski (Exhibit A), on behalf of
him and the other proposal sponsors, to respond to the request by Bingham
McCutchen LLP that your offices permit the Raytheon Company to omit their proxy
proposal from the Raytheon April 2004 stockholders meeting.
The Bingham McCutchen letter should, by rights, be responded to by a law service
equivalent to Bingham McCutchen's. However, the 3766 present retirees and the
10,958 vested and future retirees** are basically clerks, secretaries,
draftspersons and engineers. As a group we have no recourse nor could we afford
legal facility assistance. We trust you will bear with us as we try to cut
through the tangled web woven by Bingham McCutchen so that you will reject their
premises and allow the sponsors of the proposal to have their "day in court" at
the Raytheon April 2004 stockholder meeting. We are herewith filing six copies of this letter and pertinent exhibits to your
office and sending a copy of the material to Raytheon Company via Bingham
McCutchen. The exhibits include, besides Mr. Niechcielski's letter (Exhibit A),
are A Summary of Events Leading to the Proxy Proposal (Exhibit B), the Cover
Letter to the UE&C/RE&C Petition (Exhibit C), the October 2002 Petition (Exhibit
D), the cover letter for the UE&C/RE&C Proxy Petition (Exhibit E), the October
2003 Proxy Proposal (Exhibit F), and the title pages and selected sections from
Schedule B for Forms 5500 for years 1998 through 2002 (Exhibit G). All of these
items, particularly the history leading to the proposal, are vital to our
arguments. Bingham McCutchen bases their request for omission on two arguments: a) that the
proposal violates the personal grievance rule and benefit rule; and b) that it
pertains to ordinary business matters Arguments Regarding Personal Grievances and Benefits
Bingham McCutchen claims that the proposal is not of general interest or
importance to the shareholder community. Maybe Bingham McCutchen is not aware
that almost every one of the 14,724 retirees and vested former employees had
Raytheon stock. In the mid-80's, a stock plan was instituted whereby RE&C
employees had shares of Raytheon stock put aside for them, based on a small
percentage of their salaries, until they retired. Because most of the retirees
had not been in the stock plan long enough or had lower salaries, they did not
have sufficient shares to be proxy proposal sponsors. The climate in corporate America today is one of more transparency and sympathy
for the employees. Raytheon and its Presidents have raised their voices in this
area. The Raytheon Standards of Business Ethics and Conduct state "We shall
treat others as we would want to be treated" and "We are honest and forthright
in our dealings with employees." A recent press release announcing the elevation
of Mr. William Swanson, the President and CEO, to Chairman of the Board quoted
him as saying "I am passionate about our customers and our employees." Should
not the company and its officers accord the retireesall of whom are
ex-employeesthe respect and treatment, if they have a just claim, as it has
pledged to do for the current employees? Could it be that the President of the
company is not aware that his legal arm is violating the company's and his own
view on how retirees should be treated? Bingham McCutchen states: "... the Proponent believes that the Defined Benefits
Plan is `overfunded'that the plan's monetary assets are greater than its
liabilities." ** Bingham McCutchen would have you believe that such is not the
case and that the sponsors were making it up. An inspection of the Schedule B's
in Exhibit G will demonstrate, in each of the included five years, that the
assets of the plan greatly exceeded the plan's liabilities. In addition, our
claim of "overfunding" was never once challenged during our year's dialogue,
following the sending of our Petition, with the Raytheon Vice-Presidents with
whom we dealt. In fact, during the preface to the last telephone conference with
them in November, one of them opened the conversation by acknowledging that our
plan was both frozen and "overfunded". We wish to assure Bingham McCutchen that the sponsors of the proposal, as well
as essentially all of the retirees, are well aware and understand that our
retirement plan is a Defined Benefits Plan. They know that the disposition of
excess assets over liabilities can be allocated at the discretion of the plan's
management. Reference to a Defined Benefits Plan is given in the cover letter to
the Petition, in the Petition itself, in the cover letter to the Proposal and in
the Proposal itself. The sponsors and retirees are also aware that there was
"overfunding" in 1982 and in 1992, when the plan was managed by Raytheon
Engineers and Constructors (RE&C) Retirement Committee. A portion of the
overfunded assets at those times was given to retirees who had been retired
during the previous decade. In 1999, the administrator of the plan indicated
that another such distribution would take place at the next decadal anniversary,
i.e., in 2002. Bingham McCutchen is correct "that any excess funds remaining when all
beneficiary pensions claims have been satisfied would rightly revert to
Raytheon." But what Bingham McCutchen may not appreciate is what we were told.
We had brought up the question of the disposal of excess funds when the plan
ended. The answer came in one of the telephone conferences with the
Vice-Presidents. It was admitted that residual funds would revert to Raytheon
but, for some reason, it was acknowledged that about half of the monies would go
for taxes and fees. We feel that the ordinary stockholder would rather see these
funds be allotted to ex-employees rather than to these foreign agencies.
The sponsors of the proposal, as well as those who worked on the petition and
the proposal, take umbrage at Bingham McCutchen's characterization of them as
being "irate". Both the petition and the proposal, along with their letters of
transmittal, (Exhibits C through F) were written in a respectful and
conciliatory manner. Bingham McCutchen must not be privy to the several dozen
letters and E-mails that passed between the Petition Group and the Raytheon
Vice-Presidents nor to the minutes of their several telephone conferences. An
inspection of these materials would show that such communication, if fruitless,
was always cordial and amicable. Yes, we were disappointed that our petition didn't bear fruit but we are not
"irate" with all its prejudicial implicationsthat the funds are being used
alternatively. In fact, the only possible remark in the documents Bingham
McCutchen might be thinking of is the fact that "the aggregate compensation of
the four major Raytheon executives rose 76% (1999 to 2002), while the RE&C
retirees' pensions remained stagnant for more than a decade." This, in no way,
should be interpreted as begrudging the executives their salaries or that their
salaried should be used for any other purpose. The paragraph was placed in the
proposal to allow the stockholders to draw their own comparisons.
Bingham McCutchen cites several prior decisions to bolster their argument.
Unfortunately, we do not have access to the legal facilities to test the
validity of their contentions. We do note, however, that none of the cases cited
involves pensions, as ours does. It seems to us that, with the many hundreds of
proposals that have come to the attention of your offices, there must have been
many that did involve a pension question. Since Bingham McCutchen has not
referred to any specifically, we question how the decisions they cite can relate
our proposal. Bingham McCutchen contends that our proposal should be omitted in light of
several previous decisions involving pensions and benefits "not shared by other
shareholders at large." Again we have no way to examine this material but we
would wish to ascertain if the plans in question were frozen and overfunded as
is ours. In addition, what were the scale of total benefits compared to the
minor one that ours would entail? Were their histories or circumstances similar
to ours such that they would have the sympathy of the greater part of the
stockholders? Arguments Regardingr Ordinary Business Operation
Bingham McCutchen cites several cases to indicate that our proxy proposal is
similar to them so that we too should be omitted. Unfortunately, we do not have
the resources to research the various cases. However, it seems to us that most
of the cases are related to areas such as health matters rather than with
pensions. Those dealing with pensions apparently involve overfunding, as does
ours. However, the impetus for our proposal was the fact that it is also frozen.
That's a different kettle of fish from the cases cited by Bingham McCutchen and
may well put ours out of the realm of "ordinary business.".
It is most interesting that Bingham McCutchen states: "There is an exception for
proposals that concern only** senior executive and director compensation..." In
light of the executive's attitudes to their employees, they may well consider a
frozen plan within that rubric. Conclusion
In conclusion, let us cite the old adage: "Beauty is in the eye of the
beholder." Maybe "Personal Grievance", "Personal Interests", and "Ordinary
Business Operations" also could or could not be in the eye of the beholder. A
case in point is the booklet sent to all Raytheon stockholders for the April 23,
2003 Annual Meeting of Stockholders. The booklet contains the eleven proxy
statements to be considered at the meeting. The statements range from "Offsets
on agreements by U.S. weapons manufacturers" to "Poison pills", to "Employee
relations in Northern Ireland". To a dispassionate observer, any or all might be
considered as violating Rules 14a-8(i)(4) or (7). Yet all were permitted to
proceed as proxy statements for the meeting. A clue as to "why" may be found in
the fact that company directors recommended that the shareholder vote against
each proposal. The proposals were all of a parochial interest and not likely to
pass. They may have been left unchallenged for that reason. The present
proposal, on the other hand, would have more of a universal appeal to fair
minded stockholders and would, therefore, have an excellent chance of passage at
the meeting. Bingham McCutchen contends that our proposal should be omitted in light of
several previous decisions involving pensions and benefits. We have not seen
these decisions but question whether they involve pension plans that are both
overfunded and frozen. While our proposal does not directly affect the majority
of stockholders personally, we believe the shareholders would agree that we
could be treated more fairly, given the facts in the case, and the relatively
small cost to the company and to the shareholders generally.
We urge the SEC to reject the request by Bingham McCutchen that the Proposal be
omitted from Raytheon's 2004 Proxy Materials and allow the sponsors and the
retirees they represent have their "day in court" with the Raytheon
stockholders. We are grateful for the opportunity of presenting our side of the story. Should
you have any questions or wish to have any further information or material,
please contact me by mail, telephone or E-mail at the addresses on the
letterhead. We would appreciate any considerations to our cause.
Yours truly, /s/
Henry J. Sandler
For the Petition Group cc: Michael P. O'Brian (Bingham McCutchen)
Stephen S. Niechcielski -----FOOTNOTES-----
** Schedule B, Form 5500 for 2002, (latest Form 5500 available)
** Italicized material, here and elsewhere, are excerpted from the Bingham
McCutchen letter of December 23, 2003. ** Underlining by Bingham McCutchen [INQUIRY LETTER]
December 30, 2003 Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Raytheon CompanyFile No. 1-13699
Statement of Reasons for Omission of Shareholder Proposal
Authorization For An Increase In Certain Retiree Pensions
Dear Sir/Madam: Mr. Steven S. Niechcielski, the originator along with 29 other eligible Raytheon
stockholders, has received copies of the December 23, 2003 communication from
Bingham McCutchen LLP to the SEC offices regarding the proposal that they had
submitted to Raytheon. We note, according to Rule 14a-8(k), that Mr. Niechcielski may submit a response
"as soon as possible after the company makes it submission". The company
submission notes that it will be sending it proxy materials to the printer no
later than March 21, 2004. Please advise us as to the deadline we must meet with
the SEC to have our rebuttal reviewed so that the SEC may consider denial of the
company's request to exclude our proposal. We feel that there are areas and statements in the McCutchen letter that are
irrelevant and/or misleading and we would appreciate the opportunity of
discussing them with you. I'm sure that you will understand that our proposal
sponsors are not lawyers and have no recourse to legal advice. McCutchen sites a
number of company cases, supposedly in their favor. However only two of them
deal with the issue of pensions supposedly resulting in exclusions of those
proposals. It seems to us, that there may have been other pension cases that
were allowed by the SEC. We are hoping that you will be able to give us guidance
in that area so that we can present a strong rebuttal. We would appreciate any help that you can offer.
Yours sincerely, /s/
Henry J. Sandler
[STAFF REPLY LETTER]
January 30, 2004 Response of the Office of Chief Counsel
Division of Corporation Finance Re: Raytheon Company
Incoming letter dated December 23, 2003
The proposal requests that the board raise the pensions of certain pension plan
participants in proportion to the number of years a retiree had been in the plan
during the period of 1992-2003. There appears to be some basis for your view that Raytheon may exclude the
proposal under rule 14a-8(i)(7), as relating to Raytheon's ordinary business
operations (i.e., employee benefits). Accordingly, we will not recommend
enforcement action to the Commission if Raytheon 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 exclusion upon
which Raytheon relies. Sincerely, /s/
Keir Devon Gumbs
Special Counsel
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