Company Name: Wyeth
Public Availability Date: January 26, 2004
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
STAFF REPLY LETTER
[INQUIRY LETTER]
December 23, 2003
By Overnight Mail
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of the Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Stockholder Proposal Regarding Access to and Affordability of Prescription
Drugs
Dear Sir or Madam:
Wyeth (the "Company") has received for inclusion in the proxy materials for its
2004 Annual Meeting of Stockholders (the "2004 Annual Meeting") a shareholder
proposal (the "Proposal") from one proponent (the "Proponent") who was later
joined by several supporters (the "Proponent Supporters") submitting proposals
that are identical to the Proposal seeking "to increase access to &
affordability of prescription drugs." A copy of the Proposal is attached hereto
as Annex A. The Company intends to omit the Proposal from its proxy materials
for the 2004 Annual Meeting pursuant to Rule 14a-8(i)(1) of the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") because the Proposal is not stated in a proper
manner under Delaware law.
Under Rule 14a-8(i)(1), the Company is permitted to exclude a proposal "[i]f the
proposal is not a proper subject for action by shareholders under the laws of
the jurisdiction of the company's organization." The note to Rule 14a-8(i)(1)
points out that proposals may not be proper under state law "if they would be
binding on the company if approved by shareholders." The Staff has consistently
found that binding proposals are excludable, unless amended by the proponent to
make them precatory. See, e.g., Phillips Petroleum Company (March 13, 2002); PPL
Corporation (February 19, 2002); PSB Holdings, Inc. (January 23, 2002); Columbia
Gas System, Inc. (January 16, 1996).
The Company is incorporated in the State of Delaware and the Proposal concerns a
matter that, under Delaware law, is not a proper subject for stockholder action
in its current form. Section 141(a) of the Delaware General Corporation Law (the
"DGCL") vests management of the business and affairs of a corporation in its
board of directors, except as otherwise provided in the DGCL or the
corporation's certificate of incorporation. Neither the DGCL nor the Company's
Amended and Restated Certificate of Incorporation, restrict the Company's Board
of Directors in any way relevant to the requirements of the Proposal. The
Proposal is not stated as a recommendation or request but rather would direct
the Company to take certain action. As such, the Proposal would require the
Company to take actions that Delaware law reserves for the judgment and
discretion of the Company's Board of Directors. Accordingly, the Proposals are
excludable pursuant to Rule 14a-8(i)(1).
Based upon the foregoing, the Company respectfully requests the advice of the
SEC Staff that it will not recommend enforcement action if the Company omits the
Proposal from the proxy materials for its 2004 Annual Meeting. The Company
currently intends to file its definitive proxy materials for the 2004 Annual
Meeting on or about March 18, 2004.
A copy of this letter and enclosures is being mailed to the Proponent and each
of the Proponent Supporters.
In accordance with Rule 14a-8(j) under the Exchange Act, I am enclosing six
copies of this letter and its annex. I am also enclosing one additional copy to
be date stamped and returned in the enclosed stamped, self-addressed envelope.
Sincerely,
/s/
Garrett L. Stackman
Encl.
cc: The Sisters of Charity of Saint Elizabeth (Proponent)
Camilla Madden Charitable Trust (Proponent Supporter)
Trinity Health (Proponent Supporter)
Congregation of the Sisters of Charity of the Incarnate Word (Proponent
Supporter)
The Sisters of Saint Joseph (Proponent Supporter)
Christus Health (Proponent Supporter)
Catholic Health Initiatives (Proponent Supporter)
The American Baptist Home Mission Society of The American Baptist Churches, USA
(Proponent Supporter)
Eileen M. Lach, Corporate Secretary
[APPENDIX 1]
PRESSURES TO INCREASE ACCESS TO & AFFORDABILITY OF PRESCRIPTION DRUGS
Be It Resolved: That the Board of Directors review pricing and marketing
policies and prepare a report (at reasonable cost and omitting proprietary
information), available to shareholders by September, 2004, on how our company
will respond to rising regulatory, legislative and public pressure to increase
access to and affordability of needed prescription drugs.
Supporting Statement:
The pharmaceutical industry faces a number of long-term challenges that threaten
our Company's viability and could adversely affect shareholder value.
"The pharmaceutical industry and its legal representatives are now beset by a
torrent of suits alleging fraud and predatory pricing, demands for more
stringent regulation, and investigation of longstanding practices in patenting,
promoting and producing drugs." (Drug Wars, American Bar Association Journal,
December 2002).
The pharmaceutical industry "depends heavily on public trust" and is
particularly vulnerable in times of crisis and/or controversy, according to
Rating Research LLC. (Reputation Strength Rating, Rating Research LLC, June
2003).
Only 13% of people "normally believe a statement by a pharmaceutical company."
(Attitudes to Government Regulation Vary Greatly For Different Industries,
Harris Interactive, 2 April 2003).
57% of Americans think our industry "should be more regulated by government."
Only 7% responded they preferred less regulation. (Attitudes to Government
Regulation Vary Greatly For Different Industries, Harris Interactive, 2 April
2003).
In an annual survey conducted by the Kaiser Commission on Medicaid and the
Uninsured, nearly all states reported taking action to rein in prescription drug
costs in the past year (Rising Costs Prompt States to Reduce Medicaid Further,
NY Times, 23 September 2003)
Given the social and political pressures to resolve the issue of accessibility
and affordability of healthcare in the US, we believe the directors of our
company have a duty to inform shareholders of the steps taken to address the
challenges confronting our industry: negative public perceptions, legal actions
at state and federal levels on prescription access and anti-trust issues, law
suits alleging antitrust and consumer fraud violations.
[APPENDIX 2]
Annex A
October 30, 2003
Mr. Robert Essner
President and CEO
Wyeth, Inc.
5 Giralda Farms
Madison, New Jersey 07940
Dear Mr. Essner,
The Sisters of Charity of Saint Elizabeth believe that access to life enhancing
and sustaining pharmaceutical drugs is a human right. We are particularly
concerned that the prohibitive cost of these drugs has prevented tens of
millions of Americans who are uninsured or underinsured from accessing them.
This is a critical social justice issue in our day. One aspect of the high cost
of these drugs is related to marketing and advertising including incentives for
health professionals. Therefore, the Sisters of Charity request the Board of
Directors to provide a report to shareholders on how our company will respond to
rising regulatory, legislative and public pressure to increase access to needed
prescription drugs as described in the attached proposal.
The Sisters of Charity of Saint Elizabeth are members of the Interfaith Center
on Corporate Responsibility (ICCR), an association of over 275 religious
investors who are committed to addressing social issues as shareholders. The
Sisters of Charity are the beneficial owners of at least 500 shares of stock.
Under separate cover you will receive proof of ownership. We will retain share
through the annual meeting.
I have been authorized by the Sisters of Charity of Saint Elizabeth to notify
you of our intention to file this resolution for consideration by the
stockholders at the next annual meeting and I hereby submit it for inclusion in
the proxy statement, in accordance with rule 14a-8 of the general rules and
regulations of the Securities Act of 1934.
We welcome dialogue on this important issue.
Sincerely,
/s/
Sister Rosemary Moynihan, SC
Coordinator of Corporate Responsibility
[STAFF REPLY LETTER]
January 26, 2004
Response of the Office of Chief Counsel
Division of Corporation Finance
Re: Wyeth Incoming letter dated December 23, 2003
The proposal seeks a report on the company's response to rising regulatory,
legislative and public pressure to increase access to and affordability of
needed prescription drugs.
There appears to be some basis for your view that Wyeth may exclude the proposal
under rule 14a-8(i)(1) as an improper subject for shareholder action under
applicable state law. It appears that this defect could be cured, however, if
the proposal were recast as a recommendation or request to the board of
directors. Accordingly, unless the proponent provides Wyeth with a proposal
revised in this manner, within seven calendar days after receiving this letter,
we will not recommend enforcement action to the Commission if Wyeth omits the
proposal from its proxy materials in reliance on rule 14a-8(i)(1).
Sincerely,
/s/
Keir D. Gumbs
Special Counsel
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