Company Name: ConAgra Foods, Inc.
Public Availability Date: July 3, 2006
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER
[INQUIRY LETTER]
May 26, 2006
VIA FEDERAL EXPRESS
Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: ConAgra Foods, Inc.; Commission File No. 1-7275 Exclusion of Shareholder Proposal Pursuant to Rule 14a-8(j)
Ladies and Gentlemen:
Our firm serves as counsel for ConAgra Foods, Inc., a Delaware corporation. We are submitting this letter on behalf of ConAgra Foods pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended, to the staff of the Division of Corporation Finance of the Securities and Exchange Commission.
ConAgra Foods received a shareholder proposal from the Office of the Comptroller of New York City, the custodian and trustee of the New York City Employees' Retirement System, the New York City Teachers' Retirement System, the New York City Police Pension Fund and the New York City Fire Department Pension Fund, and the custodian of the New York City Board of Education Retirement System, for inclusion in ConAgra Foods' proxy materials for the 2006 annual stockholders' meeting expected to be held on or about September 28, 2006. A copy of the proposal and the relevant correspondence from the proponent is attached as Exhibit A.
Subject to the staff's response, ConAgra Foods intends to exclude the proposal from its proxy materials pursuant to Rule 14a-8(i)(10), because ConAgra Foods has already substantially implemented the proposal. ConAgra Foods respectfully requests confirmation that the staff will not recommend any enforcement action against ConAgra Foods for excluding the proposal from its proxy materials pursuant to this rule.
We are enclosing six copies of this letter and the exhibits referred to herein. To the extent that any reasons for exclusion stated in this letter are based on matters of law, this letter will serve as supporting opinion of counsel pursuant to Rule 14a-8(j)(2)(iii). We are also forwarding a copy of this letter to the proponent as notice of ConAgra Foods' intention to exclude the proposal from the proxy materials.
THE PROPOSAL
The proposal states:
"RESOLVED: Shareholders request that the Board of Directors issue a sustainability report to shareholders, at reasonable cost, and omitting proprietary information, by September 1, 2006."
DISCUSSION
The proposal requests that ConAgra Foods issue a sustainability report. The supporting statement to the proposal advises that the report should include the company's definition of sustainability and a company-wide review of company policies and practices related to long-term social and environmental sustainability. ConAgra Foods already publishes a sustainability report in The Corporate Responsibility Report which is available on the company's website. You may access the report on the website (http://www.conagrafoods.com) by selecting "Company" and the link to "Corporate Responsibility Report." A copy of the report is attached as Exhibit B. The report provides the information that the proponent requests in the supporting statement to the proposal. We assume the "September 1, 2006" is a typographical error and the proponent meant "September 1, 2007" since the annual meeting does not occur until September 28, 2006.
The proposal may be excluded under Rule 14a-8(i)(10), because ConAgra Foods has already substantially implemented the proposal. The proponent submitted a substantively identical proposal to ConAgra Foods last year. In a no-action response last year, the staff permitted ConAgra Foods to omit the proposal on the basis that the proposal had been substantially implemented via publication of the Corporate Responsibility Report.
ConAgra Foods' Definition of Sustainability and Review of Policies and Practices
The company's concept and definition of sustainability are contained in the opening paragraphs of its Corporate Responsibility Report, where the company states it is "committed to our consumers, customers, employees, shareholders and the communities in which we operate. We are dedicated to creating and maintaining a safe, diverse and ethical workplace. We place a high priority on active participation in our communities. We continuously work to reduce waste and protect the environment." Further, in each of the major areas of social, environment and workplace matters, the company further refines the meaning of sustainability as it applies to the major topic. As described below, the company reviews its polices and practices related to social, environmental and workplace sustainability in separate sections of the report.
Social
Through leadership partnerships and financial contributions, ConAgra Foods is committed to improving the quality of life in communities across America. At "ConAgra Foods Foundation" in the Corporate Responsibility Report, the company reports on these initiatives.
The company reports on the application of its resources through the ConAgra Foods Foundation to improving quality of life where its employees live and work, with focus on the following areas: hunger, nutrition and food safety; civic and community betterment; health and human services; and the arts and culture. As disclosed in the report, the Foundation makes substantial cash awards to organizations that demonstrate a significant impact on community welfare.
As reported, there is particular emphasis in these social practices on childhood hunger. The report describes the work of the Foundation toward making sure no child goes hungry. Through the ConAgra Foods Feeding Children Better initiative, the company's efforts are directed at three areas: safe havens for children to get nourishing meals; overcoming logistics hurdles for food banks; and public awareness. Beyond the Feeding Children Better program, ConAgra Foods has had a long-term alliance with America's Second Harvest to help feed people in need across the nation. America's Second Harvest is the nation's largest charitable hunger-relief organization, distributing 1.8 billion pounds of donated food annually, feeding 23 million hungry Americans.
The company makes and sells food products. Food safety education is important for everyone along the food chain. Since 1999, ConAgra Foods has partnered with the American Dietetic Association (ADA) to create Home Food Safety... It's in Your Hands, an unprecedented, multi-year national education program that targets home food preparers. Education can make a significant difference when it comes to home food safety, a difference that could prevent serious illness and even save lives, particularly among very young and older Americans, whose immune systems may be compromised.
The report also describes the company's policies and participation in programs designed for helping in times of disaster. ConAgra Foods is an original founding member of the American Red Cross' Annual Disaster Giving Program, a leadership group of companies that make substantial donations to aid in disaster relief in communities across the country. Through the Red Cross and major product donations, ConAgra Foods made substantial contributions to assist those impacted by the September 11, 2001, attacks, and has contributed funds and food to other disasters nationwide.
The report discloses that through the Foundation, the company's policy of providing funding to help minority students reach their higher education goals is carried out. Minority students are assisted by grants to the Consortium for Graduate Study in Management, Urban League of Nebraska for the Black College Tour, the United Negro College Fund and American Indian College Fund.
The report discloses the company's polices and practices are helping communities. As described in the report, this includes programs to support students within the communities to reduce high-risk behavior, provide for the needs of the medically underserved, provide job training for low-income women and provide assistance to Habitat for Humanity, an effort to provide families with decent housing.
Environmental
In the "Sustainable Development" section of the Corporate Responsibility Report the company sets forth its policy that business success and protecting the environment are not either/or propositions. The company believes that its guiding principle "Do Well by Doing Good" has led it to build a significant and effective sustainable development program. Among the matters reported in this section are results of environmental projects that reduced landfill waste, saved water, cut electrical and natural gas use, reduced packaging materials, and saved operational costs.
This section of the Corporate Responsibility Report also sets out the company's initiatives on water and energy conservation, prevention of air pollution, waste reduction and recycling and land management protection and enhancement. ConAgra Foods annually honors its operating groups and employees with the ConAgra Foods Sustainable Development Awards. The company discloses multiple company projects (by category) that were presented awards at the 2005 ConAgra Foods Annual Sustainable Development Conference. The nature of each project and the resulting benefit to the environment is described in the report.
Workplace
At "Workplace" in the Corporate Responsibility Report, the company discloses its policies and practices on a workplace culture of safety, a culture of diversity and inclusion, and a culture of wellness, supported by a clear Code of Conduct and strongly shared values and beliefs.
The company safety objectives are made clear: prevent injuries and illness; continuously assess ways to improve safety; and achieve uniformity and consistency of best practices across the company. The report also includes information on company locations participating in the OSHA Voluntary Protection Program.
The company policy on diversity in the workforce and its practices with respect to diversity are disclosed in this portion of the report. The company's Annual Diversity Report provides a comprehensive summary of the company efforts to build, support and develop a diverse and inclusive culture. The company practices and commitment with respect to supplier diversity are also disclosed in this section of the report.
Basis for Exclusion
Rule 14a-8(i)(10) permits the exclusion of shareholder proposals if a company has already substantially implemented the proposal. According to the Securities and Exchange Commission, the exclusion provided in Rule 14a-8(i)(10) "is designed to avoid the possibility of shareholders having to consider matters which already have been favorably acted upon by the management..." See, Exchange Act Release No. 34-12598 (July 7, 1976).
The standard the staff has applied in determining if a proposal is substantially implemented is whether a company's particular policies, practices and procedures compare favorably with the guidelines of the proposal. See, Exchange Act Release No. 34-20091 (Aug. 16, 1983) and Texaco, Inc. (March 28, 1991). The staff has consistently taken the position that when a company already has policies and procedures in place relating to the subject matter of the proposal, or has implemented the essential objectives of the proposal, the shareholder proposal has been substantially implemented within the scope of Rule 14a-8(i)(10). See, The Talbots, Inc. (April 5, 2002), The Gap, Inc. (March 16, 2001) and Kmart Corp. (Feb. 23, 2000).
The proponent submitted a substantively identical proposal to ConAgra Foods last year. In a no-action response last year, the staff permitted ConAgra Foods to omit the proposal on the basis that the proposal had been substantially implemented via publication of the Corporate Responsibility Report. Thus far in 2006, the staff has permitted exclusion of the proposal submitted by this proponent to other companies on the basis that the proposal was substantially implemented by company reports addressing their social, environmental and workplace policies and practices. See, Honeywell International Inc. (February 21, 2006) and Raytheon Company (January 25, 2006). There are few, if any, substantive differences between the proposal presented last year and the proposal presented this year; each proposal essentially requests the company to issue a sustainability report on social, environmental and workplace matters. The company continues to publish and update its Corporate Responsibility Report on its website, and believes that the report substantially implements the proposal, as it substantially implemented the proposal last year.
In Wendy's International, Inc. (February 21, 2006), the staff did not permit the exclusion of a proposal requesting a sustainability report on substantially implemented grounds. We note the proponent of that proposal argued that its proposal was materially different from the type of proposal submitted this year to ConAgra Foods because it requested Wendy's to provide indicators to measure long-term sustainability performance. Additionally, the proponent of the proposal to Wendy's argued that the report produced by ConAgra Foods was superior to the report produced by Wendy's.
The company also notes that in Terex Corporation (March 18, 2005), the staff did not permit exclusion (on substantially implemented grounds) of a proposal submitted by the proponent that was also substantively identical to the proposal submitted to ConAgra Foods. Unlike ConAgra Foods, Terex claimed that it substantially implemented the proposal by including on its website its views regarding corporate citizenship and making reference to a variety of other public disclosures including filings made with the Securities and Exchange Commission. ConAgra Foods' claim of substantial implementation is distinguished from Terex because ConAgra Foods prepares and publishes on its website an annual report disclosing the company's policies and practices related to social and environmental sustainability (i.e., the actions requested by the proposal).
The company has policies and procedures in place relating to the subject matter of the proposal and the company has implemented the essential objectives of the proposal. The proposal has, therefore, been substantially implemented.
CONCLUSION
Based upon the foregoing, ConAgra Foods respectfully requests that the staff confirm, at its earliest convenience, that it will not recommend any enforcement action if ConAgra Foods excludes the proposal from the proxy materials for its 2006 annual stockholders' meeting in reliance on Rule 14a-8(i)(10).
ConAgra Foods presently anticipates mailing its proxy materials for the 2006 annual stockholders' meeting on or about August 19, 2006. We would appreciate a response from the staff in time for ConAgra Foods to meet this schedule.
Please acknowledge receipt of this letter by stamping one of the enclosed copies and returning it to the undersigned using the stamped, pre-addressed envelope provided. Should the staff disagree with ConAgra Foods' position, we would appreciate the opportunity to confer with the staff prior to the issuance of its response. If you have any questions regarding this matter or as soon as a staff response is available, would you kindly call the undersigned at 402-341-3070.
Sincerely,
/s/
Guy Lawson
GL/mlw
Enclosures
cc: William C. Thompson, Jr., Comptroller of the City of New York
Patrick Doherty, Bureau of Asset Management, Office of the Comptroller of the City of New York
Owen C. Johnson, Corporate Secretary, ConAgra Foods, Inc.
David L. Hefflinger
[INQUIRY LETTER]
April 5, 2006
Mr. Owen C. Johnson
Executive Vice President and
Corporate Secretary
ConAgra Foods, Inc.
One ConAgra Drive
Omaha, NE 68102-5001
Dear Mr. Johnson:
The Office of the Comptroller of New York City is the custodian and trustee of the New York City Employees' Retirement System, the New York City Teachers' Retirement System, the New York City Police Pension Fund, and the New York City Fire Department Pension Fund, and custodian of the New York City Board of Education Retirement System (the "funds"). The funds' boards of trustees have authorized me to inform you of our intention to offer the enclosed proposal for consideration of stockholders at the next annual meeting.
I submit the attached proposal to you in accordance with rule 14a-8 of the Securities Exchange Act of 1934 and ask that it be included in your proxy statement.
Letters from Bank of New York certifying the funds' ownership, of shares of ConAgra Foods, Inc. common stock are enclosed. Each fund intends to continue to hold at least $2,000 worth of these securities through the date of the annual meeting.
We would be happy to discuss this initiative with you. Should the board decide to endorse its provisions as company policy, our funds will ask that the proposal be withdrawn from consideration at the annual meeting. Please feel free to contact me at (212) 669-2651 if you have any further questions on this matter.
Very truly yours,
/s/
Patrick Doherty
Enclosures
ConAgra sustainability - 06
[APPENDIX]
SUSTAINABILITY REPORT
Whereas:
Investors increasingly seek disclosure of companies' social and environmental practices in the belief that they impact shareholder value. Many investors believe companies that are good employers, environmental stewards, and corporate citizens are more likely to be accepted in their communities and to prosper long-term.
Sustainability refers to development that meets present needs without impairing the ability of future generations to meet their own needs. It includes "encouraging long lasting social well being in communities where [companies] operate, interacting with different stakeholders (e.g. clients, suppliers, employees, government, local communities, and non-governmental organizations) and responding to their specific and evolving needs, thereby securing a long-term `license to operate,' superior customer and employee loyalty, and ultimately superior financial returns." (Dow Jones Sustainability Group)
Globally, approximately 1,500 companies produce reports on sustainability issues (Association of Chartered Certified Accountants, www.corporate register.com), including more than half of the global Fortune 500 (KPMG International Survey of Corporate Responsibility Reporting 2005).
Ford Motor Company states, "sustainability issues are neither incidental nor avoidablethey are at the heart of our business." American Electric Power has stated, "management and the Board have a fiduciary duty to carefully assess and disclose to shareholders appropriate information on the company's environmental risk exposure."
Global expectations regarding sustainability reporting are changing rapidly. The European Commission recommends corporate sustainability reporting, and listed companies in Australia, South Africa and France must now provide investors with information on their social and environmental performance.
RESOLVED: Shareholders request that the Board of Directors issue a sustainability report to shareholders, at reasonable cost, and omitting proprietary information, by September 1, 2006.
Supporting Statement
The report should include the company's definition of sustainability, as well as a company-wide review of company policies and practices related to long-term social and environmental sustainability.
We recommend that the company use the Global Reporting Initiative's Sustainability Reporting Guidelines ("The Guidelines") to prepare the report. The Global Reporting Initiative (www.globalreporting.org) is an international organization with representatives from the business, environmental, human rights and labor communities. The Guidelines provide guidance on report content, including performance in six categories (direct economic impacts, environmental, labor practices and decent work conditions, human rights, society, and product responsibility). The Guidelines provide a flexible reporting system that permits the omission of content that is not relevant to company operations. Over 700 companies use or consult the Guidelines for sustainability reporting.
[STAFF REPLY LETTER]
July 3, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: ConAgra Foods, Inc. Incoming letter dated May 26, 2006
The proposal requests that the board issue a sustainability report to shareholders.
There appears to be some basis for your view that ConAgra Foods may exclude the proposal under rule 14a-8(i)(10). Accordingly, we will not recommend enforcement action to the Commission if ConAgra Foods omits the submission from its proxy materials in reliance on rule 14a-8(i)(10).
Sincerely,
/s/
Mary Beth Breslin
Special Counsel