Company Name: Bristol-Myers Squibb Co. (Recon.)
Public Availability Date: March 17, 2006
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
March 7, 2006
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Request for Reconsideration by Bristol-Myers Squibb Company Stockholder
Proposal of Nick Rossi Securities Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
On behalf of our client Bristol-Myers Squibb Company (the "Company"), we
respectfully request that the staff of the Division of Corporation Finance (the
"Staff") reconsider its response dated February 20, 2006 (the "Staff Response"),
denying the Company no-action relief with respect to a stockholder proposal and
a statement in support thereof (the "Proposal") received from Nick Rossi (the
"Proponent"), who has appointed Mr. John Chevedden to be his representative for
all issues pertaining to the Proposal. The Proponent submitted the Proposal for
inclusion in the Company's proxy statement and form of proxy for its 2006 Annual
Stockholders Meeting (collectively, the "2006 Proxy Materials"). Should the
Staff not reverse its position upon reconsideration, we respectfully request
that the Staff refer this matter to the Securities and Exchange Commission (the
"Commission") for review pursuant to 17 C.F.R. §202.1(d), because it involves
both "matters of substantial importance" and "novel or highly complex" issues as
discussed below.
We believe that Staff reconsideration or Commission reversal of the Staff
Response is warranted, because the Board of Directors of the Company (the
"Board") has carefully considered and acted favorably upon the Proposal so that
there is no need for the Company's stockholders to have to consider the matter.
Moreover, the Staff Response narrowly interprets the "substantially implemented"
standard in Rule 14a-8(i)(10) in a manner that is inconsistent with the purpose
of the Rule. Thus, we believe that Staff reconsideration or Commission reversal
is necessary to avoid abuse of the Rule 14a-8 process.
BACKGROUND
I. The 2005 Proposal
The Company received, from a different proponent, a substantially similar
recoupment proposal for inclusion in the 2005 proxy materials (the "2005
Proposal"), which stated:
RESOLVED: The shareholders of Bristol-Myers Squibb Company ("BMS" or the
"Company") request the board of directors to adopt a policy whereby, in the
event of a restatement of financial results, the board will review all bonuses
and other awards that were made to senior executives on the basis of having met
or exceeded performance targets during the period of restatement and will recoup
for the benefit of the Company all such bonuses or awards to the extent that
these performance targets were not achieved.
The Board, in the exercise of its fiduciary duties, carefully considered the
2005 Proposal and, in March 2005, adopted a policy whereby certain compensation
paid to executive officers would be recouped in the event of a restatement of
financial results (the "Recoupment Policy"). The Recoupment Policy is as
follows:
It is the Board of Directors' Policy that the Company will, to the extent
permitted by governing law, require reimbursement of any bonus paid to executive
officers and certain other officers after March 1, 2005 where: a) the payment
was predicated upon the achievement of certain financial results that were
subsequently the subject of a restatement, b) in the Board's view the executive
engaged in misconduct that caused or partially caused the need for the
restatement, and c) a lower payment would have been made to the executive based
upon the restated financial results. In each such instance, the Company will
seek to recover the individual executive's entire annual bonus for the relevant
period, plus a reasonable rate of interest.
In adopting the Recoupment Policy, the Board also considered its ability to
recoup performance-based compensation under the 2002 Stock Incentive Plan (the
"Plan"), the only plan pursuant to which executives receive non-cash
performance-based compensation. The Board determined that provisions allowing
for contractual forfeiture of non-cash performance-based compensation granted
under the Plan agreements provided the Company with the ability to recoup
non-cash performance-based compensation to executives to the same extent as the
Recoupment Policy provides for recoupment of annual cash bonus awards.
The Company did not submit a no-action request in response to the 2005 Proposal
on Rule 14a-8(i)(10) grounds, because the Recoupment Policy was not adopted
until March 2005. Thus, the 2005 Proposal was included in the proxy statement
for the Company's 2005 Annual Stockholders Meeting. In this regard, it should be
noted that Institutional Shareholder Services ("ISS") recommended in its 2005
Proxy Analysis that its clients vote against the 2005 Proposal, because the
Board, through adoption of the Recoupment Policy, had "substantially addressed"
it.
II. The Proposal
The Proposal submitted for the Company's 2006 Proxy Materials is substantially
similar to the 2005 Proposal. The Proposal is as follows:
RESOLVED: Recoup Unearned Management Bonuses. Shareholders request our board to
adopt a policy in our bylaws if practicable whereby, in the event of a
significant restatement of financial results or significant extraordinary
write-off, our board will review all bonuses and any other awards that were made
to senior executives on the basis of having met or exceeded specific performance
targets during the restatement period and will recoup, to the fullest extent
practicable, for the benefit of our Company all such bonuses or awards to the
extent that the specified performance targets were not achieved.
This would include that all applicable employment agreements and compensation
plans adopt enabling or consistent text in an expedited manner as soon as
feasibly possible. This proposal is not intended to unnecessarily limit our
Board's judgment in crafting the requested change in accordance with applicable
laws and existing contracts and pay plans.
The Board, in the exercise of its fiduciary duties, thoroughly considered the
Proposal and determined that no changes to the Recoupment Policy it adopted in
March 2005 were necessary or appropriate.
III. The Company's Request for No-Action Relief and the Staff Response
On December 22, 2005, the Company filed a letter requesting that the Staff
concur that the Company could properly omit the Proposal from its 2006 Proxy
Materials (the "Company Request"). A copy of the Company Request, including the
Proposal, is attached hereto as Exhibit A. The Company Request stated that the
Board had previously adopted the Recoupment Policy, which is comparable in all
material respects to the Proposal. Further, the Board determined that the
provisions allowing for contractual forfeiture of non-cash performance-based
compensation granted under the Plan agreements provided the Company with the
ability to recoup non-cash performance-based compensation, in addition to
recouping annual cash bonus awards under the Recoupment Policy. Accordingly, the
Company Request asked the Staff to concur that the Proposal was excludable
pursuant to Rule 14a-8(i)(10).
On February 20, 2006, the Staff issued its response to the Company Request,
noting that "[w]e are unable to concur in your view that Bristol-Myers may
exclude the proposal under rule 14a-8(i)(10)." The Staff Response did not
include any explanation.
ANALYSIS
The Staff Response denying no-action relief with respect to the Proposal is
inconsistent with the purpose of Rule 14a-8(i)(10). The purpose of this
exclusion, as articulated by the Commission, is "to avoid the possibility of
shareholders having to consider matters which have already been favorably acted
upon by the management." Proposed Amendments to Rule 14a-8 Under the Securities
Exchange Act of 1934 Relating to Proposals by Security Holders, Exchange Act
Release No. 12,598 (July 7, 1976) (hereinafter, "The 1976 Release"). In this
regard, the Board considered the Proposal and determined that, through its prior
adoption of the Recoupment Policy and the existing forfeiture provisions in the
Plan agreements, the Proposal had been substantially implemented. As such, it
would be a waste of time and Company resources for the Company's stockholders to
have to consider the matter.
The Commission has stated that in order for a proposal to be excluded under Rule
14a-8(i)(10), the proposal need not be implemented in full or precisely as
presented. See Amendments to Rule 14a-8 Under the Securities Exchange Act of
1934 Relating to Proposals by Security Holders, Exchange Act Release No. 20,091,
at §II.E.5. (Aug. 16, 1983) (hereinafter, "The 1983 Release"). Rather, "a
determination that the company has substantially implemented the proposal
depends upon whether its particular policies, practices and procedures compare
favorably with the guidelines of the proposal." Texaco, Inc. (avail. Mar. 28,
1991) (emphasis added). See, e.g., Intel Corp. (avail. Mar. 11, 2003)
(concurring that a proposal requesting that Intel's board submit to a
stockholder vote all equity compensation plans and amendments to add shares to
those plans that would result in material potential dilution was substantially
implemented by a board policy that excepted certain awards from the policy);
Nordstrom, Inc. (avail. Feb. 8, 1995) (concurring that a proposal requesting a
report to stockholders on Nordstrom's relationship with suppliers and a
commitment to regular inspections was substantially implemented by existing
company guidelines and a press release, even though the guidelines did not
commit the company to conduct regular or random inspections to ensure
compliance).
As noted above, the Proposal requests that the Board adopt a policy whereby the
Board will recoup bonuses and other performance-based awards made to senior
executives, in the event of a significant restatement of financial results or
significant extraordinary write-off, to the extent that specified performance
targets are not achieved. The Recoupment Policy compares favorably to the
Proposal because both the Recoupment Policy and the Proposal apply in the event
of a restatement of financial results and require reimbursement, to the extent
permitted by governing law, of bonuses awarded to executive officers predicated
upon the achievement of certain financial results during the time period(s)
restated. As more fully described in our previous submission, attached hereto as
Exhibit A, we believe that the Recoupment Policy achieves the essential
objectives of the Proposal, and the differences between the Recoupment Policy
and the Proposal should not stand in the way of the Staff finding that the
Company has substantially implemented the Proponent's request. First, the
Recoupment Policy applies only in the event of a restatement, rather than in the
event of a restatement or a "significant extraordinary write-off." The Board
determined that the Proposal would be unworkable in the event of a "significant
extraordinary write-off" because there is no correlation between such a
write-off and a period of restatement, such that the Company would be unable to
determine how long preceding a significant extraordinary write-off the Proponent
expects the Company to recoup certain compensation. Second, the Recoupment
Policy contains a standard pursuant to which the Board has the discretion to
determine whether an executive was at least partially responsible for the need
for the restatement. The Board believed that such a standard is necessary to
avoid the unintended effect of placing the Company at a competitive disadvantage
in recruiting critical executive talent. Third, the Recoupment Policy is
included in the Additional Policies and Guidelines of the Company's Corporate
Governance Guidelines, whereas the Proposal requests that the policy be adopted
in the Company's Bylaws "if practicable." It is our belief that this variation
is not a legitimate basis for distinguishing the Company Policy from the
Proposal, because (i) the Commission and Staff have both recognized that
proposals can be "substantially implemented" by means other than those requested
by the proponent, and (ii) the Proposal itself reflects the fact that having a
policy set forth in the Company's Bylaws is not an essential element of the
Proposal, but need only be effected "if practicable."
Commission statements and Staff precedent under Rule 14a-8(i)(10) confirm that
the standard for determining whether a proposal has been "substantially
implemented" is not dependent on the means by which implementation is achieved.
For example, when it initially adopted the predecessor of Rule 14a-8(i)(10), the
Commission specifically determined not to require that a proposal be implemented
"by action of management," observing, "it was brought to the attention of the
Commission by several commentators that mootness can be caused for reasons other
than the actions of management, such as statutory enactments, court decisions,
business changes and supervening corporate events." Adoption of Amendments
Relating to Proposals by Security Holders, Exchange Act Release No. 19,771 (Nov.
22, 1976). The focus of Rule 14a-8(i)(10) is whether "particular policies,
practices and procedures compare favorably" with those requested under the
proposal. Texaco, Inc. (avail. Mar. 28, 1991). See Intel Corp. (avail Feb. 14,
2005) (concurring that a proposal requesting that Intel "establish a policy" of
expensing all future stock options was substantially implemented through FASB's
adoption of Statement 123(R), requiring the expensing of stock options).
Further, the Proposal itself recognizes that implementation through the Bylaws
is not a critical element of the Proposal, but need only be effected "if
practicable." This language clearly permits the Company to determine the best
means to implement the Proposal, clarifying that the goal of the Proposal is the
adoption of a policy whereby performance-based compensation will be recouped by
the Company, in the event of a restatement, if specified performance targets are
not met. Given this flexibility in the Proposal's language, and the Company's
determination that the most readily available means to implement the Proposal is
through the Recoupment Policy, we believe that it would not be appropriate, and
would be inconsistent with the purpose of Rule 14a-8(i)(10), if the Commission
concluded that the manner in which the Proposal was implemented was
determinative of whether the Company "substantially implemented" the Proposal.
Thus, to avoid having the Company's stockholders consider a matter that the
Board has already acted favorably upon by adopting the Recoupment Policy, the
Proposal should be excluded as substantially implemented pursuant to Rule
14a-8(i)(10).
CONCLUSION
Based upon the foregoing analysis, we respectfully request that the Staff
reconsider its position set forth in the Staff Response and concur that it will
take no action if the Company excludes the Proposal from its 2006 Proxy
Materials. Alternatively, should the Staff not reverse its position as stated in
the Staff Response, we respectfully request that the Staff forward this matter
to the Commission for review pursuant to 17 C.F.R. §202.1(d) because it involves
both "matters of substantial importance" and "novel or highly complex" issues
for the reasons set forth above. Pursuant to Rule 14a-8(j), enclosed herewith
are six copies of this letter and its attachments. Consistent with the
provisions of Rule 14a-8(j), we are concurrently providing copies of this
correspondence to the Proponent. As the Company will begin printing its 2006
Proxy Materials on March 17, 2006, we respectfully request that we be notified
of the Commission's decision prior to that date.
If we can provide additional correspondence to address any questions that the
Staff may have with respect to this no-action request, please do not hesitate to
call me at (202) 955-8653 or Sandra Leung, the Company's Vice President and
Secretary, at (212) 546-4260.
Very truly yours,
/s/
Amy L. Goodman
Enclosures
cc: Sandra Leung, Bristol-Myers Squibb Company
John Chevedden
Christopher Cox, Chairman
Cynthia A. Glassman, Commissioner
Paul S. Atkins, Commissioner
Roel C. Campos, Commissioner
Annette L. Nazareth, Commissioner
Martin P. Dunn, Acting Director, Division of Corporation Finance
70342344_9.DOC
[APPENDIX1]
Nick Rass,
P.O. Box 249
Boonville, CA 95415
Prof. Peter R. Dolan
Chairman
Bristol-Myers Squibb Company (BMY)
345 Park Ave
New York NY 10154
Dear Prof. Dolan,
This Rule 14a-8 proposal is respectfully submitted for the 2006 annual
shareholder meeting to support the long-term performance of our company. Rule
14a-8 requirements are intended to be met including ownership of the required
stock value until after the date of the applicable shareholder meeting. This
submitted format, with the shareholder-supplied emphasis, is intended to be used
for definitive proxy publication.
This is the proxy for Mr. John Chevedden and/or his designee to act on my behalf
in shareholder matters, including this shareholder proposal for the forthcoming
shareholder meeting before, during and after the forthcoming shareholder
meeting. Please direct all future communication to Mr. John Chevedden at:
PH: 310-371-7872
2215 Nelson Ave., No. 205
Redondo Beach, CA 90278
Your consideration and the consideration of the Board of Directors is
appreciated.
Sincerely,
/s/
10/05/05
cc: Sandra Leung, Corporate Secretary
PH: 212 546-4260
FX: 212 605-9622
FX: 212 546-4020
[APPENDIX2]
[November 19, 2005]
3 - Recoup Unearned Management Bonuses
RESOLVED: Recoup Unearned Management Bonuses. Shareholders request our board to
adopt a policy in our bylaws if practicable whereby, in the event of a
significant restatement of financial results or significant extraordinary
write-off, our board will review all bonuses and any other awards that were made
to senior executives on the basis of having met or exceeded specific performance
targets during the restatement period and will recoup, to the fullest extent
practicable, for the benefit of our Company all such bonuses or awards to the
extent that the specified performance targets were not achieved.
This would include that all applicable employment agreements and compensation
plans adopt enabling or consistent text in an expedited manner as soon as
feasibly possible. This proposal is not intended to unnecessarily limit our
Board's judgment in crafting the requested change in accordance with applicable
laws and existing contracts and pay plans.
The need for this proposal is highlighted by our company announcing in June 2005
that it settled the U.S. Attorney's investigation regarding questionable
wholesaler inventory and accounting, in a Deferred Prosecution Agreement. The
government will not pursue its criminal complaint if it is satisfied after two
years that our company has complied with the terms of the Agreement. Under the
Agreement, our company will make an additional $300 million payment to the
shareholder fund previously established in connection with the company's
settlement with the Securities and Exchange Commission (SEC) announced in August
2004. As a result, our company will record an additional $249 million reserve.
To our Board's credit our Board has shown that it can act to improve our
corporate governance. For instance, our Board filed our company's revised
Charter with the SEC on August 3, 2005. This reflected the declassification of
our board and removed several supermajority provisions as approved by
stockholders on May 3, 2005. I believe that this proposal, Recoup Unearned
Management Bonuses, is a further step in improving our corporate governance.
Similar to Proposal Voted at Computer Associates
This proposal is similar to the proposal voted at the Computer Associates (CA)
August 2004 annual meeting. In October 2003 Computer Associates announced that
it had inflated revenues in the fiscal year ending March 31, 2000 by reporting
revenue from contracts before they had been signed.
Bonuses for senior executives that year were based on income exceeding goals.
Sanjay Kumar, then CEO, received a $3.2 million bonus based on Computer
Associates' supposedly superior performance. Mr. Kumar did not offer to return
his bonuses based on discredited earnings.
There is no excuse for over-compensation based on discredited earnings at any
company. This proposal will give shareholders more options if we find ourselves
in a situation similar to the Computer Associates scenario. If it appears that
our Company reported erroneous results that must be negatively restated, then
our board should be enabled by adoption of this proposal to recoup executive pay
that was not earned or deserved.
Notes:
Nick Rossi, P.O. Box 249, Boonville, Calif. 95415 submitted this proposal.
[INQUIRY LETTER]
December 22, 2005
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: Stockholder Proposal of Nick Rossi Securities Exchange Act of 1934Rule
14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that Bristol-Myers Squibb Company (the "Company" or
"Bristol-Myers") intends to omit from its proxy statement and form of proxy for
its 2006 Annual Stockholders Meeting (collectively, the "2006 Proxy Materials"),
a stockholder proposal (the "Proposal") and statement in support thereof
submitted by Nick Rossi (the "Proponent"), who appointed John Chevedden to be
his representative for all issues pertaining to the Proposal.
Pursuant to Rule 14a-8(j), enclosed herewith are six (6) copies of this letter
and its attachments. Also, in accordance with Rule 14a-8(j), a copy of this
letter and its attachments is being mailed on this date to the Proponent,
informing him of Bristol-Myers' intention to omit the Proposal from its 2006
Proxy Materials. Pursuant to Rule 14a-8(j), this letter is being filed with the
Securities and Exchange Commission (the "Commission") no later than eighty (80)
calendar days before Bristol-Myers files its definitive 2006 Proxy Materials
with the Commission. Bristol-Myers hereby agrees to forward promptly to the
Proponent any response from the staff of the Division of Corporation Finance
(the "Staff") to this no-action request that the Staff transmits by facsimile to
Bristol-Myers only.
A copy of the Proposal and supporting statement, as well as related
correspondence from the Proponent, is attached to this letter as Exhibit A. We
believe that the Proposal may be properly excluded from the 2006 Proxy Materials
pursuant to:
Rule 14a-8(i)(10) because Bristol-Myers has substantially implemented the
Proposal;
Rule 14a-8(i)(3) because the Proposal is vague and indefinite in violation of
the proxy rules; and
Rule 14a-8(i)(6) because Bristol-Myers lacks the power or authority to
implement the Proposal.
THE PROPOSAL
The Proposal requests that the Board adopt a policy, in the Company's bylaws if
practicable, "whereby, in the event of a significant restatement of financial
results or significant extraordinary write-off, our board will review all
bonuses and any other awards that were made to senior executives on the basis of
having met or exceeded specific performance targets during the restatement
period and will recoup, to the fullest extent practicable, for the benefit of
our Company all such bonuses or awards to the extent that the specified
performance targets were not achieved. This would include that all applicable
employment agreements and compensation plans adopt enabling or consistent text
in an expedited manner as soon as feasibly possible. This proposal is not
intended to unnecessarily limit our Board's judgment in crafting the requested
change in accordance with applicable laws and existing contracts and pay plans."
ANALYSIS
I. The Proposal May Be Excluded Under Rule 14a-8(i)(10) Because Bristol-Myers
Has Substantially Implemented The Proposal.
A. Background
Rule 14a-8(i)(10) permits a company to exclude a stockholder proposal if the
company has substantially implemented the proposal. The Commission stated in
1976 that the predecessor to Rule 14a-8(i)(10) "is designed to avoid the
possibility of shareholders having to consider matters which have already been
favorably acted upon by the management." See Exchange Act Release No. 12598
(July 7, 1976). The Commission has refined Rule 14a-8(i)(10) over the years. In
the 1983 amendments to the proxy rules, the Commission indicated:
In the past, the staff has permitted the exclusion of proposals under Rule
14a-8(c)(10) only in those cases where the action requested by the proposal has
been fully effected. The Commission proposed an interpretative change to permit
the omission of proposals that have been "substantially implemented by the
issuer." While the new interpretative position will add more subjectivity to the
application of the provision, the Commission has determined the previous
formalistic application of this provision defeated its purpose. Amendments to
Rule 14a-8 Under the Securities Exchange Act of 1934 Relating to Proposals by
Security Holders, Exchange Act Release No. 20091, at §II.E.5. (Aug. 16, 1983)
(the "1983 Release").
The 1998 amendments to the proxy rules reaffirmed this position when the current
Rule 14a-8(i)(10) was put in place. See Amendments to Rules on Shareholder
Proposals, Exchange Act Release No. 40018 at n.30 and accompanying text (May 21,
1998) (noting that the revisions to Rule 14a-8(i)(10) reflect the "substantially
implemented" interpretation adopted in 1983). Consequently, as noted in the 1983
Release, in order to be excludable under Rule 14a-8(i)(10), a stockholder
proposal need be only "substantially implemented," not implemented exactly as
proposed.
The Staff has stated "a determination that the company has substantially
implemented the proposal depends upon whether [the company's] particular
policies, practices and procedures compare favorably with the guidelines of the
proposal." Texaco, Inc. (avail. March 28, 1991). In other words, Rule
14a-8(i)(10) permits exclusion of a stockholder proposal when a company has
implemented the essential objective of the proposal, even when the manner by
which a company implements a proposal does not precisely correspond to the
actions sought by a stockholder proponent. See the 1983 Release; ConAgra Foods,
Inc. (avail. June 20, 2005); The Talbots, Inc. (avail. April 5, 2002); and Erie
Indemnity Company (avail. March 15, 1999).
B. Bristol-Myers' Recoupment Policy and Plan Agreements
On March 1, 2005, the Bristol-Myers Board of Directors (the "Board") adopted a
policy (the "Recoupment Policy"), which provides for recoupment of annual bonus
awards. In particular, the Recoupment Policy provides:
It is the Board of Directors' Policy that the Company will, to the extent
permitted by governing law, require reimbursement of any bonus paid to executive
officers and certain other officers after March 1, 2005 where: a) the payment
was predicated upon the achievement of certain financial results that were
subsequently the subject of a restatement, b) in the Board's view the executive
engaged in misconduct that caused or partially caused the need for the
restatement, and c) a lower payment would have been made to the executive based
upon the restated financial results. In each such instance, the Company will
seek to recover the individual executive's entire annual bonus for the relevant
period, plus a reasonable rate of interest.
Moreover, in adopting the Recoupment Policy, the Board considered its ability to
recoup performance-based compensation under the 2002 Stock Incentive Plan (the
"Plan"), the only plan pursuant to which executives may receive non-cash
performance-based compensation. Non-cash based performance compensation is
granted to executives under this Plan pursuant to the Long-Term Performance
Strategic Execution Award Agreement and the Nonqualified Stock Option Agreement,
which are attached to this letter as Exhibit B and Exhibit C, respectively
(collectively, the "Plan Agreements"). Under the Plan Agreements, non-cash
performance based compensation may be recouped in the event that an executive "engage[s]
in any activity that is harmful to the interests of the company, including,
without limitation, any conduct" during the term of the executive's employment
"that violates the company's Standards of Business Conduct and Ethics,
securities trading policy and other policies." The Board determined that
provisions allowing for contractual forfeiture of non-cash performance-based
compensation granted under the Plan Agreements provided the Company with the
ability to recoup non-cash performance-based compensation to executives to the
same extent as the Recoupment Policy provides for recoupment of annual cash
bonus awards.
We believe that the Recoupment Policy adopted by the Board, together with the
forfeiture provision in the Plan Agreements, compare favorably to the Proposal,
and, accordingly, pursuant to Rule 14a-8(i)(10), the Proposal may be properly
omitted from the 2006 Proxy Materials.
C. Analysis
Rule 14a-8(i)(10) permits a company to exclude a stockholder proposal if the
company "has already substantially implemented the proposal." The Commission has
stated that in order for a proposal to be omitted under this rule, the proposal
need not be implemented in full or precisely as presented. See the 1983 Release.
Rather, "a determination that the company has substantially implemented the
proposal depends upon whether its particular policies, practices and procedures
compare favorably with the guidelines of the proposal." Texaco, Inc. (avail.
March 28, 1991) (emphasis added); see, e.g., Intel Corp. (avail. March 11, 2003)
(concurring that a proposal requesting that Intel's board submit to a
stockholder vote all equity compensation plans and amendments to add shares to
those plans that would result in material potential dilution was substantially
implemented by a board policy that excepted certain awards from the policy);
Nordstrom, Inc. (avail. Feb. 8, 1995) (concurring that a proposal requesting a
report to stockholders on Nordstrom's relationship with suppliers and a
commitment to regular inspections was substantially implemented by existing
company guidelines and a press release, even though the guidelines did not
commit the company to conduct regular or random inspections to ensure
compliance).
As noted above, the Proposal requests that the Bristol-Myers Board adopt a
policy whereby the Board will (1) in the event of a significant restatement of
financial results or significant extraordinary write-off, (2) review all bonuses
and any other performance-based compensation made to senior executives during
the period of the restatement, (3) recoup, for the benefit of the Company, all
such bonuses or awards to the extent that the performance targets were not
achieved, while (4) maintaining the Board's judgment to craft the requested
policy in accordance with applicable laws and existing contracts and pay plans.
The Recoupment Policy compares favorably to the Proposal because both the
Recoupment Policy and the Proposal apply in the event of a restatement of
financial results and require reimbursement, to the extent permitted by
governing law, of bonuses awarded to executive officers predicated upon the
achievement of certain financial results during the time period(s) restated.
The Recoupment Policy applies to any bonus payments made to an executive officer
where "the payment was predicated upon the achievement of certain financial
results that were subsequently the subject of a restatement." Thus, under the
Recoupment Policy, there is no requirement of a significant restatement as
requested in the Proposal. The Recoupment Policy, however, does not apply in the
event of a "significant extraordinary write-off." We believe that this aspect of
the Proposal is excludable pursuant to Rules 14a-8(i)(3) and (6), as set forth
below in Sections II and III. In any event, we believe that even without the
reference to "significant extraordinary write-off," the Recoupment Policy
compares favorably to the Proposal.
Under the Recoupment Policy, Bristol-Myers will "require reimbursement of any
bonus" paid to its executive officers. The Recoupment Policy encompasses cash
bonuses awarded under the Executive Performance Incentive Plan. This is the only
performance-based cash compensation plan that Bristol-Myers currently maintains.
In addition to the annual cash bonuses that may be recouped under the Recoupment
Policy, the Company's non-cash performance-based awards granted under the 2002
Stock Incentive Plan may be recouped pursuant to the forfeiture provision in
each executive's Plan Agreement. The non-cash performance-based compensation
granted under the Plan constitutes the only non-cash performance-based
compensation granted to executives. Therefore, the Proposal's essential
objective of recouping "all bonuses and any other awards" made on the basis of
meeting specific performance targets is accomplished through the Recoupment
Policy and the forfeiture provisions in the Plan Agreements.
The Recoupment Policy requires recoupment of the entire annual cash bonus of the
"executive officer" plus a reasonable rate of interest. The Recoupment Policy
applies to executive officers, who are the Company's "senior executives." In
addition, this provision of the Recoupment Policy extends beyond the Proposal,
as the Proposal seeks only to recoup executive officers' bonuses or awards and
makes no mention of interest.
The Recoupment Policy provides that the Board will require reimbursement of
annual bonuses from executive officers who, in the Board's view, "engaged in
misconduct that caused or partially caused the need for the restatement." The
Board also will determine whether the bonus payments would have been lower had
they been calculated based on the restated results. This is consistent with the
discretion granted to the Board in the Proposal, which provides that the
judgment of the Board may be used in crafting a recoupment policy "in accordance
with applicable laws and existing contracts and pay plans."
Accordingly, we believe that Bristol-Myers' Recoupment Policy, together with the
forfeiture provisions in the Plan Agreements, compare favorably to, and address
the essential objective of, the Proposal, and, accordingly, the Proposal may be
excluded pursuant to Rule 14a-8(i)(10).
II. The Proposal May Be Excluded Under Rule 14a-8(i)(3) Because It Is Vague And
Indefinite In Violation Of The Proxy Rules.
A stockholder proposal that is overly vague may be omitted from a company's
proxy materials under Rule 14a-8(i)(3) as materially false and misleading. In
Staff Legal Bulletin 14B (September 15, 2004) ("SLB 14B"), the Staff explained
that exclusion or modification of a proposal under Rule 14a-8(i)(3) may be
appropriate where "the resolution contained in the proposal is so inherently
vague or indefinite that neither the stockholders 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." Moreover, a proposal is sufficiently vague and indefinite so
as to justify exclusion where a company and its stockholders might interpret the
proposal differently, such that "any action ultimately taken by the [c]ompany
upon implementation of the proposal could be significantly different from the
actions envisioned by the shareholders voting on the proposal." Fuqua
Industries, Inc. (avail. March 12, 1991). We believe that the Proposal is
impermissibly vague and indefinite, and therefore, excludable under Rule
14a-8(i)(3) as a result of the Proposal's references to Bristol-Myers recouping
compensation paid during a "restatement period" in the event of a "significant
extraordinary write-off."
The Proposal states that Bristol-Myers should adopt a policy so that, in the
event of a "significant extraordinary write-off," the Company will "recoup"
certain compensation paid during the "restatement period." There is no
correlation between a "significant extraordinary write-off" and a restatement.
Thus, Bristol-Myers and its stockholders cannot determine the period of time for
which the Company is supposed to "recoup" compensation in the event of a
"significant extraordinary write-off." There is a long line of precedent where
the Staff has concurred that stockholder proposals concerning executive
compensation could be excluded under Rule 14a-8(i)(3) where aspects of the
proposals created ambiguities that resulted in the proposals being vague or
indefinite. For example, in Safescript Pharmacies, Inc. (avail. Feb. 27, 2004),
the Staff concurred that the company could exclude as vague and indefinite a
proposal requesting that stock options be "expensed in accordance with FASB
guidelines," because FASB permits two methods of expensing stock-based
compensation. In Woodward Governor Co. (avail. Nov. 26, 2003), the Staff
concurred with exclusion under Rule 14a-8(i)(3) of a proposal requesting that
"compensation" for the "executives in the upper management (that being plant
managers to board members)" be based on stock growth, because the proposal did
not clearly explain how the executives would be compensated "based on stock
growth." The Proposal's reference to a "restatement period" (as it relates to a
"significant extraordinary write-off") is similarly vague and indefinite,
therefore, the Proposal may be excluded pursuant to Rule 14a-8(i)(3).
III. Bristol-Myers Lacks The Power Or Authority To Implement The Proposal Under
Rule 14a-8(i)(6).
Pursuant to Rule 14a-8(i)(6), a company may exclude a proposal "if the company
would lack the power or authority to implement the proposal." See, e.g.,
Catellus Development Corp. (avail. March 3, 2005); AT&T Corp. (avail. March 10,
2002); The Boeing Company (avail. Feb. 22, 1999). Bristol-Myers lacks the power
to implement the Proposal because the Proposal is unworkable in the event of a
"significant extraordinary write-off." Specifically, the Proposal asks that, in
the event of a significant extraordinary write-off, the Board review bonuses and
other awards based on achieving performance targets during the "restatement
period." There is no correlation between a "significant extraordinary write-off"
and a restatement. Bristol-Myers would be unable to determine how long preceding
a "significant extraordinary write-off" the Proposal expects the Company to
recoup certain compensation. Thus, the Proposal is excludable under Rule
14a-8(i)(6), because Bristol-Myers lacks the power to implement the Proposal.
CONCLUSION
Based upon the foregoing analysis, Bristol-Myers respectfully requests that the
Staff concur that it will take no action if Bristol-Myers excludes the Proposal
from its 2006 Proxy Materials. We would be happy to provide you with any
additional information and answer any questions that you may have regarding this
subject. Should you disagree with the conclusions set forth in this letter, we
respectfully request the opportunity to confer with you prior to the
determination of the Staff's final position. If we can be of any further
assistance in this matter, please do not hesitate to call me at (212) 546-4260.
Sincerely,
/s/
Sandra Leung
Enclosures
cc: John Chevedden
Nick Rossi
[INQUIRY LETTER]
March 9, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Bristol-Myers Squibb Company (BMY)
#3 Shareholder Position on Company No-Action Request Bristol-Myers Squibb
Company (February 20, 2006) Rule 14a-8 Proposal: Recoup Unearned Management
Bonuses
Shareholder: Nick Rossi
Ladies and Gentlemen:
It is respectfully requested that the Division not make a determination on the
belated March 7, 2006 request for reconsideration until the shareholder party
has an opportunity for a full response.
The belated March 7, 2006 request for reconsideration is particularly untimely
since the company had no responses to the shareholder party's December 28, 2005
and January 31, 2006 responses to the company no action request.
Additionally the company request for reconsideration may not be properly
submitted. It does not include the complete documentation from both sides since
the company initially submitted its no action request.
The following text is from the January 31, 2006 shareholder party's response:
This adds to the initial December 28, 2005 response (unanswered) to the company
no action request.
In Hewlett-Packard Company (December 22, 2005) HP did not obtain concurrence
under rule 14a-8(i)(10), rule 14a-8(i)(3) and rule 14a-8(i)(6) concerning the
same topic of this proposal, and furthermore regarding a more encompassing
"Resolved" statement on this same topic.
The text of this proposal states:
"3 Recoup Unearned Management Bonuses
"RESOLVED: Recoup Unearned Management Bonuses. Shareholders request our board to
adopt a policy in our bylaws if practicable whereby, in the event of a
significant restatement of financial results or significant extraordinary
write-off, our board will review all bonuses and any other awards that were made
to senior executives on the basis of having met or exceeded specific performance
targets during the restatement period and will recoup, to the fullest extent
practicable, for the benefit of our Company all such bonuses or awards to the
extent that the specified performance targets were not achieved.
"This would include that all applicable employment agreements and compensation
plans adopt enabling or consistent text in an expedited manner as soon as
feasibly possible. This proposal is not intended to unnecessarily limit our
Board's judgment in crafting the requested change in accordance with applicable
laws and existing contracts and pay plans."
The page 3 Bristol-Myers Policy does not implement the proposal because it
allows any executive who did not cause the unearned bonus to receive an unearned
bonus. Thus under the company Policy, if there is an unearned bonus given to 10
executives and only one executive was at fault, the company lets 9 executives
keep their unearned bonuses. The company even uses the twice-singular singular
term "individual executive's" is describing the application of its policy. In
other words the company could have only a 10% implementation.
Such a 10% implementation could encourage executives to remain silent when they
see one executive cooking the books because if this can be covered up for a
short time then 90% of the executives will still get to keep unearned bonuses.
The company policy does not explain what "in the board's view" means. Could this
mean a 5-to-4 vote of all directors attending a particular board meeting
attended by all non-independent directors but with some independent directors
absent.
The company apparently claims for the benefit of its argument under rule
14a-8(i)(3) and rule 14a-8(i)(6) that it is incapable of making a routine
business judgement on the period of time to which a "significant extraordinary
write-off" applied to. The company cites no previous filing with the Securities
and Exchange Commission where the company admitted it could not determine a time
period to ascribe a specific write-off taken.
The strictly limited company page 3 policy at least assumes that the "relevant
period" can be determined by the company. The company does not amplify its
bafflement claim with an affidavit from a single director that the director
would not be qualified to participate in determining a period of time to which a
"significant extraordinary write-off" applied to.
For the above reasons it is respectfully requested that concurrence not be
granted to the company. It is also respectfully requested that that the
shareholder have the last opportunity to submit material since the company had
the first opportunity. (End of January 31, 2006 shareholder party response.)
It is respectfully requested that the Division not make a determination on this
belated request for reconsideration until the shareholder party has an
opportunity for a full response.
Sincerely,
John Chevedden
cc:
Nick Rossi
Sandra Leung<sandra.leung@bms.com>
[INQUIRY LETTER]
March 14, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
cc:
Christopher Cox, Chairman
Cynthia A. Glassman, Commissioner
Paul S. Atkins, Commissioner
Roel C. Campos, Commissioner
Annette L. Nazareth, Commissioner
Martin P. Dunn, Acting Director, Division of Corporation Finance
Bristol-Myers Squibb Company (BMY)
#4 Shareholder Position on Company No-Action Request Bristol-Myers
Squibb Company (February 20, 2006) Rule 14a-8 Proposal: Recoup Unearned
Management Bonuses
Shareholder: Nick Rossi
Ladies and Gentlemen:
It is respectfully requested that the Division not make a determination on the
belated March 7, 2006 request for reconsideration until the shareholder party
has an opportunity for a full response.
The belated March 7, 2006 request for reconsideration is particularly untimely
since the company had no responses to the shareholder party's December 28, 2005
and January 31, 2006 responses to the company no action request.
Additionally the company request for reconsideration may not be properly
submitted. It does not include the complete documentation from both sides since
the company initially submitted its no action request.
This letter includes the shareholder responses since December 28, 2005 on this
proposal.
A key sentence in the December 28, 2005 letter states: "Thus under the company
Policy if there is an unearned bonus given to 10 executives and only one
executive was at fault, the company lets 9 executives keep their unearned
bonuses."
It is respectfully requested that the Division not make a determination on this
belated request for reconsideration until the shareholder party has an
opportunity for a full response.
Sincerely,
John Chevedden
cc:
Nick Rossi
Sandra Leung<sandra.leung@bms.com>
[INQUIRY LETTER]
March 9, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Bristol-Myers Squibb Company (BMY)
#3 Shareholder Position on Company No-Action Request Bristol-Myers Squibb
Company (February 20, 2006) Rule 14a-8 Proposal: Recoup Unearned Management
Bonuses
Shareholder: Nick Rossi
Ladies and Gentlemen:
It is respectfully requested that the Division not make a determination on the
belated March 7, 2006 request for reconsideration until the shareholder party
has an opportunity for a full response.
The belated March 7, 2006 request for reconsideration is particularly untimely
since the company had no responses to the shareholder party's December 28, 2005
and January 31, 2006 responses to the company no action request.
Additionally the company request for reconsideration may not be properly
submitted. It does not include the complete documentation from both sides since
the company initially submitted its no action request.
The following text is from the January 31, 2006 shareholder party's response:
This adds to the initial December 28, 2005 response (unanswered) to the company
no action request.
In Hewlett-Packard Company (December 22, 2005) HP did not obtain concurrence
under rule 14a-8(i)(10), rule 14a-8(i)(3) and rule 14a-8(i)(6) concerning the
same topic of this proposal, and furthermore regarding a more encompassing
"Resolved" statement on this same topic.
The text of this proposal states:
"3 Recoup Unearned Management Bonuses
"RESOLVED: Recoup Unearned Management Bonuses. Shareholders request our board to
adopt a policy in our bylaws if practicable whereby, in the event of a
significant restatement of financial results or significant extraordinary
write-off, our board will review all bonuses and any other awards that were made
to senior executives on the basis of having met or exceeded specific performance
targets during the restatement period and will recoup, to the fullest extent
practicable, for the benefit of our Company all such bonuses or awards to the
extent that the specified performance targets were not achieved.
"This would include that all applicable employment agreements and compensation
plans adopt enabling or consistent text in an expedited manner as soon as
feasibly possible. This proposal is not intended to unnecessarily limit our
Board's judgment in crafting the requested change in accordance with applicable
laws and existing contracts and pay plans."
The page 3 Bristol-Myers Policy does not implement the proposal because it
allows any executive who did not cause the unearned bonus to receive an unearned
bonus. Thus under the company Policy, if there is an unearned bonus given to 10
executives and only one executive was at fault, the company lets 9 executives
keep their unearned bonuses. The company even uses the twice-singular singular
term "individual executive's" is describing the application of its policy. In
other words the company could have only a 10% implementation.
Such a 10% implementation could encourage executives to remain silent when they
see one executive cooking the books because if this can be covered up for a
short time then 90% of the executives will still get to keep unearned bonuses.
The company policy does not explain what "in the board's view" means. Could this
mean a 5-to-4 vote of all directors attending a particular board meeting
attended by all non-independent directors but with some independent directors
absent.
The company apparently claims for the benefit of its argument under rule
14a-8(i)(3) and rule 14a-8(i)(6) that it is incapable of making a routine
business judgement on the period of time to which a "significant extraordinary
write-off" applied to. The company cites no previous filing with the Securities
and Exchange Commission where the company admitted it could not determine a time
period to ascribe a specific write-off taken.
The strictly limited company page 3 policy at least assumes that the "relevant
period" can be determined by the company. The company does not amplify its
bafflement claim with an affidavit from a single director that the director
would not be qualified to participate in determining a period of time to which a
"significant extraordinary write-off" applied to.
For the above reasons it is respectfully requested that concurrence not be
granted to the company. It is also respectfully requested that that the
shareholder have the last opportunity to submit material since the company had
the first opportunity. (End of January 31, 2006 shareholder party response.)
It is respectfully requested that the Division not make a determination on this
belated request for reconsideration until the shareholder party has an
opportunity for a full response.
Sincerely,
John Chevedden
cc:
Nick Rossi
Sandra Leung<sandra.leung@bms.com>
[INQUIRY LETTER]
January 31, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Bristol-Myers Squibb Company (BMY)
#2 Shareholder Position on Company No-Action Request Rule 14a-8
Proposal: Recoup Unearned Management Bonuses
Shareholder: Nick Rossi
Ladies and Gentlemen:
This adds to the initial December 28, 2005 response (unanswered) to the company
no action request.
In Hewlett-Packard Company (December 22, 2005) HP did not obtain concurrence
under rule 14a-8(i) (10), rule 14a-8(i)(3) and rule 14a-8(i)(6) concerning the
same topic of this proposal, and furthermore regarding a more encompassing
"Resolved" statement on this same topic.
The text of this proposal states:
"3 Recoup Unearned Management Bonuses
"RESOLVED: Recoup Unearned Management Bonuses. Shareholders request our board to
adopt a policy in our bylaws if practicable whereby, in the event of a
significant restatement of financial results or significant extraordinary
write-off, our board will review all bonuses and any other awards that were made
to senior executives on the basis of having met or exceeded specific performance
targets during the restatement period and will recoup, to the fullest extent
practicable, for the benefit of our Company all such bonuses or awards to the
extent that the specified performance targets were not achieved.
"This would include that all applicable employment agreements and compensation
plans adopt enabling or consistent text in an expedited manner as soon as
feasibly possible. This proposal is not intended to unnecessarily limit our
Board's judgment in crafting the requested change in accordance with applicable
laws and existing contracts and pay plans."
The page 3 Bristol-Myers Policy does not implement the proposal because it
allows any executive who did not cause the unearned bonus to receive an unearned
bonus. Thus under the company Policy, if there is an unearned bonus given to 10
executives and only one executive was at fault, the company lets 9 executives
keep their unearned bonuses. The company even uses the twice-singular singular
term "individual executive's" is describing the application of its policy. In
other words the company could have only a 10% implementation.
Such a 10% implementation could encourage executives to remain silent when they
see one executive cooking the books because if this can be covered up for a
short time then 90% of the executives will still get to keep unearned bonuses.
The company policy does not explain what "in the board's view" means. Could this
mean a 5-to-4 vote of all directors attending a particular board meeting
attended by all non-independent directors but with some independent directors
absent.
The company apparently claims for the benefit of its argument under rule
14a-8(i)(3) and rule 14a-8(i)(6) that it is incapable of making a routine
business judgement on the period of time to which a "significant extraordinary
write-off" applied to. The company cites no previous filing with the Securities
and Exchange Commission where the company admitted it could not determine a time
period to ascribe a specific write-off taken.
The strictly limited company page 3 policy at least assumes that the "relevant
period" can be determined by the company. The company does not amplify its
bafflement claim with an affidavit from a single director that the director
would not be qualified to participate in determining a period of time to which a
"significant extraordinary write-off" applied to.
For the above reasons it is respectfully requested that concurrence not be
granted to the company. It is also respectfully requested that that the
shareholder have the last opportunity to submit material since the company had
the first opportunity.
Sincerely,
John Chevedden
cc:
Nick Rossi
Sandra Leung<sandra.leung@bms.com>
[INQUIRY LETTER]
December 28, 2005
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Bristol-Myers Squibb Company (BMY)
Shareholder Position on Company No-Action Request Rule 14a-8 Proposal:
Recoup Unearned Management Bonuses
Shareholder: Nick Rossi
Ladies and Gentlemen:
This is an initial response to the company no action request.
In Hewlett-Packard Company (December 22, 2005) HP did not obtain concurrence
under rule 14a-8(i)(10), rule 14a-8(i)(3) and rule 14a-8(i)(6) concerning the
same topic of this proposal, and furthermore regarding a more encompassing
"Resolved" statement on this same topic.
The text of the proposal states:
"3 Recoup Unearned Management Bonuses
"RESOLVED: Recoup Unearned Management Bonuses. Shareholders request our board to
adopt a policy in our bylaws if practicable whereby, in the event of a
significant restatement of financial results or significant extraordinary
write-off, our board will review all bonuses and any other awards that were made
to senior executives on the basis of having met or exceeded specific performance
targets during the restatement period and will recoup, to the fullest extent
practicable, for the benefit of our Company all such bonuses or awards to the
extent that the specified performance targets were not achieved.
"This would include that all applicable employment agreements and compensation
plans adopt enabling or consistent text in an expedited manner as soon as
feasibly possible. This proposal is not intended to unnecessarily limit our
Board's judgment in crafting the requested change in accordance with applicable
laws and existing contracts and pay plans."
The Bristol-Myers Policy on page 3 does not implement the proposal because it
allows any executive who did not cause the unearned bonus to receive an unearned
bonus. Thus under the company Policy if there is an unearned bonus given to 10
executives and only one executive was at fault, the company lets 9 executives
keep their unearned bonuses. The company even uses the twice-singular singular
term "individual executive's" is describing the application of its policy. In
other words the company could have only a 10% implementation.
The company apparently claims for the benefit of its argument under rule
14a-8(i)(3) and rule 14a-8(i)(6) that it is incapable of making a routine
business judgement on the period of time to which a "significant extraordinary
write-off" applied to. The company cites no previous filing with the Securities
and Exchange Commission where the company admitted it could not determine a time
period to ascribe a specific write-off taken.
The strictly limited company policy on page 3 at least assumes that the
"relevant period" can be determined by the company
For the above reasons it is respectfully requested that concurrence not be
granted to the company. It is also respectfully requested that there be an
opportunity to submit additional material in support of the inclusion of this
rule 14a-8 proposal. Also that the shareholder have the last opportunity to
submit material since the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Nick Rossi
Sandra Leung<sandra.leung@bms.com>
[INQUIRY LETTER]
March 15, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Bristol-Myers Squibb Company (BMY)
#5 Shareholder Position on Company No-Action Request Bristol-Myers Squibb
Company (February 20, 2006) Rule 14a-8 Proposal: Recoup Unearned Management
Bonuses
Shareholder: Nick Rossi
Ladies and Gentlemen:
The belated March 7, 2006 request for reconsideration is particularly untimely
since the company had no responses to the shareholder party's December 28, 2005
and January 31, 2006 responses to the company no action request.
This text from the shareholder party January 31, 2006 letter has yet to be
addressed:
"The page 3 Bristol-Myers Policy does not implement the proposal because it
allows any executive who did not cause the unearned bonus to receive an unearned
bonus. Thus under the company Policy, if there is an unearned bonus given to 10
executives and only one executive was at fault, the company lets 9 executives
keep their unearned bonuses. The company even uses the twice-singular singular
term 'individual executive's' is describing the application of its policy. In
other words the company could have only a 10% implementation.
"Such a 10% implementation could encourage executives to remain silent when they
see one executive cooking the books because if this can be covered up for a
short time then 90% of the executives will still get to keep unearned bonuses."
It is respectfully requested that concurrence not be granted to the company.
It is also respectfully requested that the shareholder have the last opportunity
to submit material since the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Nick Rossi
Sandra Leung<sandra.leung@bms.com>
[STAFF REPLY LETTER]
March 17, 2006
Amy L. Goodman
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5306
Re: Bristol-Myers Squibb Company Incoming letter dated March 7, 2006
Dear Ms. Goodman:
This is in response to your letter dated March 7, 2006 concerning the
shareholder proposal submitted to Bristol-Myers by Nick Rossi. We also have
received a letter on the proponent's behalf dated March 9, 2006. On February 20,
2006, we issued our response expressing our informal view that Bristol-Myers
could not exclude the proposal for its upcoming annual meeting. You have asked
us to reconsider our position.
After reviewing the information contained in your letter, we find no basis to
reconsider our position. Among the differences between the proposal and
Bristol-Myers' Recoupment Policy, we particularly note the followingwhile the
proposal requests that, under circumstances specified in the proposal,
Bristol-Myers recoup all bonuses and any other awards made to senior executive
officers in the event of a restatement of financial results or significant
extraordinary write-off, Bristol-Myers' Recoupment Policy would result in
recoupment only from those officers who, in the Board's view, engaged in
misconduct that caused or partially caused the need for the restatement.
You also requested that the Commission review the Division of Corporation
Finance's February 20, 2006 no-action letter. Under Part 202.1(d) of Section 17
of the Code of Federal Regulations, the Division may present a request for
Commission review of a Division no-action response relating to rule 14a-8 if it
concludes that the request involves "matters of substantial importance and where
the issues are novel or highly complex." We have applied this standard to your
request and determined not to present your request to the Commission.
Sincerely,
/s/
Martin P. Dunn
Acting Director
cc: John Chevedden
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
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