Company Name: Anheuser-Busch Cos., Inc.
Public Availability Date: October 27, 2006
Document Sections:
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
August 10, 2006
VIA FEDERAL EXPRESS
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Anheuser-Busch Companies, Inc.Omission of Shareholder Proposal Pursuant to
Rule 14a-8(b) and (f) and Rule 14a-8(a)(7)
Dear Sir or Madam:
By means of this letter, Anheuser-Busch Companies, Inc. (the "Company") requests
that the staff of the Division of Corporation Finance of the Securities and
Exchange Commission (the "Staff") concur with the Company's view that, for the
reasons stated below, the shareholder proposal (the "Proposal") submitted by C.
Lamar Owens (the "Proponent") may properly be omitted from the proxy materials
to be distributed by the Company in connection with its 2007 annual meeting of
stockholders (the "Proxy Materials").
Pursuant to Rule 14a-8(j)(2), enclosed are six copies of each of (i) this
letter; (ii) the Proposal, attached hereto as Exhibit A; (iii) a letter dated
May 9, 2006 from the Company to the Proponent regarding the Proponent's failure
to comply with the provisions of Rule 14a-8(b), attached hereto as Exhibit B;
and (iv) an additional letter dated June 7, 2006 from the Company to the
Proponent reiterating Proponent's failure to comply with the provisions of Rule
14a-8(b), attached hereto as Exhibit C. In accordance with Rule 14a-8(j), the
Company is sending a copy of this submission to the Proponent.
On May 1, 2006, the Company received the Proposal. The Company believes that the
Proponent may intend that the Proposal be included in the Proxy Materials,
although the Proposal does not specifically mention the Proxy Materials. The
Proposal requests that a proposal be submitted at the next annual meeting of
stockholders that "Anheuser-Busch (AB) Board of Directors pass a resolution
requiring management for each brand and operating entity to hold an annual
formal review and presentation of advertising agencies. Said review shall
include a minimum of two competitive advertising agencies and the current agency
for each AB entity. Management may decide to retain the existing agency no more
than three consecutive years. On the third year review the current agency shall
be deleted from the review process."
The Proponent has not provided timely verification of his eligibility to submit
the Proposal and accordingly the Company believes that it may omit the Proposal
from the Proxy Materials pursuant to Rule 14a-8(b) and Rule 14a-8(f).
Additionally, the Proposal attempts to regulate the procedures used by the
Company to select advertising agencies. The Staff has a long tradition of
determining that shareholder proposals applying to a company's advertising
relate to its ordinary business operations and are therefore excludable pursuant
to Section 14a-8(i)(7).
The Proponent's Failure to Meet Eligibility Requirements.
Rule 14a-8(b)(1) requires that in order to submit a shareholder proposal, the
proponent "must have continuously held at least $2,000 in market value, or 1%,
of the company's securities entitled to be voted on the proposal at the meeting
for at least one year" prior to the date on which the proposal was submitted.
The Proposal was received by the Company on May 1, 2006.
If a proponent fails to provide the necessary evidence of eligibility in
accordance with Rule 14a-8(b), a company may omit the proposal pursuant to Rule
14a-8(f) if (1) within 14 calendar days of receiving the proposal, the company
notifies the proponent of the defect and the time frame for responding to remedy
the defect and (2) the proponent fails to correct the defect within 14 days
after receiving the company's notification.
According to the Company's records, the Proponent is not a record owner of the
Company's voting stock. Accordingly, on May 9, 2006, eight days after the
Company received the Proposal, the Company sent to the Proponent by ordinary
mail a letter requesting verification that the Proponent satisfied the
requirements of Rule 14a-8(b). The letter attached as an exhibit Rule 14a-8
which describes the form of verification a proponent may provide. The Proponent
did not respond to this letter. On June 7, 2006, the Company sent to the
Proponent an additional letter by certified mail reminding Proponent of the
necessity to send the Company verification that he satisfied the requirements of
Rule 14a-8(b). Proponent received this letter on June 9, 2006. This additional
letter attached a copy of the earlier letter, including a copy of Rule 14a-8.
Pursuant to Rule 14a-8(f)(1), the Proponent was required to respond within 14
days after his receipt of the Company's first letter. To date, the Proponent has
not responded to either letter and accordingly has not verified that he holds
the requisite amount of securities of the Company and that he intends to hold
the securities until the 2007 annual meeting.
The Staff has consistently concluded that a company may omit a proposal pursuant
to Rule 14a-8(f) if the proponent fails to comply with Rule 14a-8(b). See Staff
Bulletin No. 14, Section C.1.c. See also H.J. Heinz Company (available May 23,
2006); The Topps Company, Inc. (available April 3, 2006); Crown Holdings, Inc.
(available February 8, 2006).
Because Proponent has not verified his satisfaction of the minimum stockholding
requirements and his intent to hold the securities until the 2007 annual
meeting, the Company believes that the Proposal may be omitted from the Proxy
Materials under Rule 14a-8(b) and Rule 14a-8(f).
The Proposal relates to the ordinary business operations of the Company
Under Rule 14a-8(i)(7), a company may omit a shareholder proposal from its proxy
materials if the proposal "deals with a matter relating to the company's
ordinary business operations." In 1998, the Commission explained the two
justifications for this exclusion (Exchange Act Release No. 34-40018; footnotes
omitted):
The policy underlying the ordinary business exclusion rests on two central
considerations. The first relates to the subject matter of the proposal. Certain
tasks are so fundamental to management's ability to run a company on a
day-to-day basis that they could not, as a practical matter, be subject to
direct shareholder oversight. Examples include the management of the workforce,
such as the hiring, promotion and termination of employees, decisions on
production quality and quantity, and the retention of suppliers.
...
The second consideration relates to the degree to which the proposal seeks to
"micro-manage" the company by probing too deeply into matters of a complex
nature upon which shareholders, as a group, would not be in a position to make
an informed judgment. This consideration may come into play in a number of
circumstances, such as where the proposal involves intricate detail, or seeks to
impose specific time-frames or methods for implementing complex policies.
The Proposal urges adoption of procedures by the Company to review and select
advertising agencies and violates both considerations underlying Rule
14a-8(i)(7). The Company is a consumer products company and engages in marketing
and advertising of its products. In order to market and advertise its products
effectively, Company management routinely selects, evaluates and terminates
advertising agencies. The Proposal seeks to inject shareholders into
management's interaction with the Company's advertising agencies. Additionally,
the Proposal violates the second consideration underlying Rule 14a-8(i)(7) by
providing detailed procedures to govern the selection and retention of
advertising agencies by the Company, specifying time periods in which
advertising agencies are to be evaluated, a minimum number of advertising
agencies to be included in the evaluation and terms limits for advertising
agencies.
On at least one previous occasion, the Staff has determined that a shareholder
proposal attempting to regulate the relations between a company and its
advertising agency related to the conduct of ordinary business operations and
was therefore excludable pursuant to Section 14a-8(i)(7). In Pepsico Inc.
(available March 7, 1991), a shareholder submitted a proposal that the company
sue and discharge its advertising agency, and the Staff permitted omission of
the proposal on the basis that "questions involving the supervision of
advertising agencies" related to the company's ordinary business operations.
More generally, the Staff has had a long and consistent history in determining
that proposals relating to a company's advertising or marketing operations
implicated the company's ordinary business operations and were therefore
excludable pursuant to Section 14a-8(i)(7). Among these precedents are
Abercrombie & Fitch Co. (available March 24, 2006) (proposal that company seek
approval by the United States Postal Services for the covers of its catalogues
related to the manner in which a company advertises its products and therefore
excludable); General Electric Company (available January 18, 2005) (proposal
that company avoid advertising on media that carry statements advocating firearm
control legislation related to the manner in which a company advertises its
products and therefore excludable); Hewlett-Packard Company (available October
8, 2004) (proposal to use brand name for marketing and advertising purposes
excludable); Johnson & Johnson (available January 12, 2004) (proposal that the
board review pricing and marketing operations excludable); CBRL Group, Inc.
(available August 28, 2001) (proposal that company acquire song for advertising
purposes excludable); AT&T Corporation (available December 28, 1995) (proposal
that the company terminate advertising to "questionable" groups or causes
excludable); American Telephone and Telegraph Company (available January 11,
1991) (proposal that the company adopt a corporate advertising ethics policy
statement excludable).
As the Proposal involves the Company's advertisement of its products, the
Company believes that it may omit the Proposal from the Proxy Materials in
accordance with Rule 14a-8(i)(7).
Conclusion
For the reasons stated above, the Company believes that the Proposal may
properly be omitted from the Proxy Materials pursuant to Rule 14a-8(b) and Rule
14a-8(f) and Rule 14a-8(i)(7). The Proponent has not provided verification that
he satisfies the eligibility requirements of Rule 14a-8(b). Further, the
Proposal applies to the Company's advertising of its products which constitutes
a part of the Company's ordinary business operations and therefore may be
omitted pursuant to Rule 14a-8(i)(7).
Should the Staff disagree with the Company's position or desire any additional
information, the Company would appreciate the opportunity to confer with the
Staff concerning these matters prior to the issuance of its response.
If the Staff has any questions or comments regarding the foregoing, please
contact me at (314) 577-3298.
Very truly yours,
/s/
Thomas Larson
Associate General Counsel
cc: JoBeth G. Brown
C. Lamar Owens
[APPENDIX]
Mr. Patrick T. Stokes
Chairman & CEO
ANHEUSER-BUSCH COMPANIES, INC.
One Busch Place
St. Louis, Missouri 63118-1852
Re: Stockholder Proposal
April 26, 2006
Good day:
The following proposal is submitted for consideration and vote at the next
Anheuser Busch Annual Stockholders Meeting.
Proposal
The Stockholders propose that Anheuser Busch (AB) Board of Directors pass a
resolution requiring management for each brand and operating entity to hold an
annual formal review and presentation of advertising agencies. Said review shall
include a minimum of two competitive advertising agencies and the current agency
for each AB entity. Management may decide to retain the existing agency no more
than three consecutive years. On the third year review the current agency shall
be deleted from the review process.
The above process is considered in the best competitive interest of AB entities,
since advertising agencies tend to become stale and jaded over a period of time
with any client Fresh new ideas are garnered as a result of an annual review
process. Such a procedure has the additional benefit of keeping the selected
agency aggressive and more focus on improving the AB entity's market share and
public awareness.
As the previous President, CEO and Creative Director of a substantial agency I
can attest to the sharp edge of creativity and brand positioning becoming dull
over the years between client and advertising agency. I'm out of the advertising
business and have no vested interest in a review of AB entity ad agencies.
As a stockholder, both personally and as trustee of a pension plan, it is my
belief that the AB entities advertising agencies represent the best opportunity
for increasing public awareness and positive image as well as adding to market
share. Therefore, the recommended process should help add value to Anheuser
Busch shareholder positions.
Respectfully submitted,
/s/
C. Lamar Owens
Stockholder & Pension Plan Trustee
[INQUIRY LETTER]
C. Lamar Owens
1933 East Karen Drive
Phoenix, Arizona 85022
Mr. Thomas Larson
Associate General Counsel
Anheuser Busch
One Busch Place
St. Louis, MO 63118-1852
September 2, 2006
Re: Refusal to Include Stockholder Proposal
Dear Mr. Larson:
At the time of making the enclosed proposal I owned 200 shares of Anheuser Busch
(BUD) common stock. The proposal was made in good faith to help management get
the most out of their existing advertising agencies. After a career of over 30
years in the advertising business I am qualified to state the agencies become
lax unless formal reviews are scheduled at least every three years.
However, based up the defensive and negative reaction from BUD executives I
decided to sell my stock and cease using the various products as well.
Your latest letter to the SEC is indicative of the hoops legal hoops BUD
requires a stockholder to go through to place a simple matter on the proxy
ballot. First I received defensive letters from various BUD management claiming
that I was not a stockholder, which I certainly was. Second BUD indicated that
my proposed proxy statement did not meet the standards BUD requires to include
it on the ballot. Third BUD indicated that I had to make the proposal in person
at by attending the meeting.
It was an interesting learning experience for me to see how supposedly
democratic stockholders rights to make proposals to management are block in a
dictatorial style. If the SEC rules allow corporations to block stockholder
proposals that management disagrees with by setting up a multitude of hurdles
then the rules should be reviewed and changed.
I was naive enough to believe that even small stockholders had the right to make
serious proposals and to have those proposals considered by the Board of
Directors for inclusion on the proxy ballot. Instead I have received a flurry of
defensive and negative responses for BUD management and now the legal
department.
I hereby withdraw my proposal, since I am no longer a stockholder. However, by
copy of this letter I request the Securities and Exchange Commission to take a
closer look at how BUD, and any other corporation, has established systems and
procedures that make it extremely difficult for a stockholder to make a proposal
to place items on the ballot for stockholder vote.
Sincerely,
/s/
C. Lamar Owens
Copy to: Office of Chief Counsel Securities and Exchange Commission
[INQUIRY LETTER]
September 12, 2006
CERTIFIED MAIL RETURN RECEIPT REQUESTED
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: No Action Letter Request dated August 10, 2006 from Anheuser-Busch
Companies, Inc.
Dear Sir or Madam:
By means of a letter dated August 10, 2006. Anheuser-Busch Companies, Inc. (the
"Company") requested that staff of the Division Of Corporation Finance of the
Securities and Exchange Commission concur that the Company is permitted to omit
from its proxy materials a shareholder proposal submitted by C. Lamar Owens.
Mr. Owens has withdrawn his proposal (a copy of the withdrawal is attached), and
accordingly the Company hereby withdraws its request to the staff.
If the staff has any questions or comments regarding the foregoing, please
contact me at (314) 577-3298. Thank you for your assistance.
Very truly yours,
/s/
Thomas Larson
Associate General Counsel
TDL:dlk
enclosure
cc: JoBeth G. Brown
C. Lamar Owens (Certified Mail, Return Receipt Requested)
[STAFF REPLY LETTER]
October 27, 2006
Thomas Larson
Associate General Counsel
Anheuser-Busch Companies, Inc.
Legal Department
One Busch Place
St. Louis, MO 63118-1852
Re: Anheuser-Busch Companies, Inc.
Dear Mr. Larson:
This is in regard to your letter dated September 12, 2006 concerning the
shareholder proposal submitted to Anheuser-Busch by C. Lamar Owens for inclusion
in Anheuser-Busch's proxy materials for its upcoming annual meeting of security
holders. Your letter indicates that the proponent has withdrawn the proposal,
and that Anheuser-Busch therefore withdraws its August 10, 2006 request for a
no-action letter from the Division. Because the matter is now moot, we will have
no further comment.
Sincerely,
/s/
Mary Beth Breslin
Special Counsel
cc: C. Lamar Owens
1933 East Karen Drive
Phoenix, AZ 85022
|
