Company Name: Entergy Corp.
Public Availability Date: January 31, 2006
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 12, 2005
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Re: Entergy CorporationOmission of Shareholder Proposal Pursuant to Rule 14a-8
Dear Sir or Madam:
I am writing on behalf of Entergy Corporation, a Delaware corporation (the
"Company"), pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934,
as amended, to respectfully request that the Staff of the Division of
Corporation Finance (the "Staff") of the Securities and Exchange Commission (the
"Commission") concur with the Company's view that, for the reasons stated below,
the shareholder proposal (the "Proposal") and the statement in support thereof
(the "Supporting Statement") submitted by Emil Rossi (the "Proponent"), may
properly be omitted from the proxy materials (the "Proxy Materials") to be
distributed by the Company in connection with its 2006 annual meeting of
stockholders (the "2006 Meeting").
Pursuant to Rule 14a-8(j)(2), we are enclosing six copies of (i) this letter and
(ii) the Proposal and Supporting Statement submitted by the Proponent, attached
hereto as Exhibit A. In accordance with Rule 14a-8(j), a copy of this submission
is being sent simultaneously to the Proponent and, at the Proponent's request,
to Mr. John Chevedden.
I. Introduction
The Proposal requests that the directors of the Company take steps, to the
extent possible, to adopt a "simple majority vote" on issues subject to a
stockholder vote. Specifically, the Proposal states:
"RESOLVED: Shareholders recommend that our Board of Directors take each step
necessary for a simple majority vote to apply on each issue that can be subject
to shareholder vote to the greatest extent possible. This proposal is focused on
precluding voting requirements higher than approximately 51% wherever
practicable."
The Company requests that the Staff concur with its view that the Proposal may
properly be omitted from its Proxy Materials pursuant to (i) Rule 14a-8(i)(10),
because the Proposal has been substantially implemented by the Company and (ii)
Rule 14a-8(i)(3), because the Proposal and Supporting Statement contain
statements that are contrary to Rule 14a-9's prohibition on materially false and
misleading statements in proxy solicitation materials.
II. The Proposal May be Excluded Under Rule 14a-8(i)(10) Because it Has Been
Substantially Implemented
Rule 14-8(i)(10) permits the omission of a stockholder proposal where a company
has substantially implemented the proposal. See, Exchange Act Release No
34-20091 (August 16, 1983); Allegheny Energy, Inc., (February 14, 2005); Puerto
Rican Cement Co., Inc., (March 25, 2002); Niagara Mohawk Power Corp. (February
16, 1995). The Staff has consistently taken the position that shareholder
proposals have been substantially implemented within the meaning of Rule
14a-8(i)(10) when the company has policies, practices and procedures in place
relating to the subject matter of the proposal, or has implemented the essential
objective of the proposal. See, e.g., Telular Corp. (available December 5, 2003)
(where by-laws contemplated and permitted declassification of the board
requested in proposal); See also Cisco Systems, Inc. (available August 11, 2003)
(where company's executive compensation plan had been considered and approved by
the board before shareholder proposal submitted); and Intel Corporation
(available March 11, 2003) (where proposal to require shareholder vote on all
equity compensation plans and amendments excludable where board had adopted
resolutions establishing similar policy).
In this instance, the Company has already substantially implemented the
Proposal. As disclosed in the Company's Current Report on Form 8-K filed with
the Commission on December 8, 2005, the Board of Directors on December 2, 2005
amended the bylaws of the Company to eliminate the only reference in the bylaws
to a supermajority vote of the shareholders. Additionally, on December 2, 2005,
the Board of Directors adopted a resolution recommending to the shareholders of
the Company that the shareholders approve at the 2006 Annual Meeting of
Shareholders an amendment to the Certificate of Incorporation eliminating the
only supermajority provision in the Company's Certificate of Incorporation (see
Attachment B, a Secretary's Certificate certifying the adoption of such
resolutions). The Company has no other supermajority provisions for shareholder
voting.
III. The Proposal May Be Omitted Pursuant to Rule 14a-8(i)(3) Because It Is
Contrary to Rule 14a-9 as Vague, Indefinite and, thus, Misleading.
The Staff has found that a proposal may be excluded where "neither the
shareholders voting on the proposal, nor the Company implementing the proposal,
if adopted, would be able to determine with any reasonable certainty exactly
what actions would be taken under the proposal." See Fuqua Industries
Incorporated (March 12, 1991). For example, in A.H. Belo Corporation (January
29, 1998), a shareholder proposal was excluded because "neither the shareholders
voting on the proposal, nor the Company, would be able to determine with
reasonable certainty what measures the Company would take if the proposal was
approved." This principle was expressly reaffirmed in Staff Legal Bulletin 14B
(September 15, 2004), which stated, in relevant part, that excluding or
modifying "a statement 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 requiresthis objection also may be appropriate
where the proposal and the supporting statement, when read together, have the
same result"; see also Gannett Co., Inc. (February 24, 1998) (Staff concurred in
exclusion of shareholder proposal because it was "unclear what action the
Company would take if the proposal were adopted"); General Electric Company
(January 23, 2003) (permitting omission of a proposal where General Electric
argued that the proposal was vague and indefinite because it failed to define
critical terms or otherwise provide guidance on how it should be implemented);
Eastman Kodak Company (March 3, 2003), (Staff concurred with exclusion of a
proposal that failed "to provide guidance on how it should be implemented");
Philadelphia Electric Company (July 30, 1992); Coming Incorporated (February 18,
1997); Occidental Petroleum Corporation (February 11, 1991); Wendy's
International, Incorporated (February 6, 1990); North Fork Bancorporation, Incorporated (March 25, 1992); and NYNEX Corporation (January 24, 1990).
As in the foregoing examples, the Proposal uses subjective and ambiguous terms.
The Proposal requests that the Company "take each step necessary for a simple
majority vote to apply ..." However, the Proposal contains no definition or
guidelines as to what constitutes a "simple majority vote" or as to how or by
whom such a determination should be made. In particular, it is unclear whether a
"simple majority vote" is intended to mean a majority of the outstanding shares
entitled to vote on a matter, a majority of the shares present and entitled to
vote on a matter or a majority of the votes cast on a matter. The Company's
stockholders are being asked to approve a proposal that provides vague and
ambiguous standards as to what additional steps, if any, the Company may be
expected to take.
In addition, if the Company were to attempt to implement the Proposal, it would
be left with no guidance as to what exactly would constitute a "simple majority
vote." Without such guidance, the Company could potentially implement the
Proposal in contravention of the intentions of the stockholders who voted for
the Proposal. Therefore, if the Proposal were to be adopted, neither the
Company, the Board nor the Company's stockholders could determine what
additional actions, if any, would be required in connection with its
implementation. The Proposal is effectively rendered meaningless because it is
open-ended and subject to different interpretations.
Because of the Proposal's vagueness and indefiniteness, the Company believes it
may properly be omitted from the Proxy Materials pursuant to Rule 14a-8(i)(3).
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 the undersigned at (601) 339-2363.
Very truly yours,
/s/
Christopher T. Screen
Senior Counsel
[APPENDIX1]
Emil Ross;
P.O. Box 249
Boonville, CA 95415
Mr. Robert v.d. Luft
Chairman
Entergy Corporation
639 Loyola Ave
New Orleans LA 70113
Dear Mr. Luft,
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 to support the long-term performance of our company.
Sincerely,
/s/
Oct 26-05
cc: Robert D. Sloan
Corporate Secretary
Phone: 504 576-4000
Fax: 504 569-4063
Fx: 601-368-5593
Fx: 601-339-2388
[APPENDIX2]
[October 29, 2005]
3-Adopt Simple Majority Vote
RESOLVED: Shareholders recommend that our Board of Directors take each step
necessary for a simple majority vote to apply on each issue that can be subject
to shareholder vote to the greatest extent possible. This proposal is focused on
precluding voting requirements higher than approximately 51% wherever
practicable.
Emil Rossi, P.O. Box 249, Boonville, Calif. 95415 submitted this proposal.
75% yes-vote
This topic won a 75% yes-vote average at 7 major companies in 2004. The Council
of Institutional Investors www.cii.org, with $3 trillion invested by members,
formally recommends adoption of this proposal topic.
End Potential Frustration of the Shareholder Majority
Our current rule allows a small minority to frustrate the will of our
shareholder majority. For example if 66% vote to improve our corporate
governance and only 1% vote noonly 1% could force their will on the
overwhelming 66% majority.
This proposal does not address a majority vote requirement in director elections
- an issue gaining a groundswell of support as a separate ballot item.
Progress Begins with One Step
It is important to take one forward step in our corporate governance and adopt
the above RESOLVED statement since our 2005 governance was not impeccable. For
instance in 2005 it was reported (and certain concerns are noted):
We had to marshal a 67% shareholder vote to make at least one key governance
improvement - Entrenchment concern.
Cumulative voting was not allowed.
We had 15 directors - Unwieldy board concern
With one-third of our board (5-members) active CEOs, we had too many active
CEOs as our directors - Over-commitment concern and independence concern.
CEO pay was $13 million.
Additionally:
William Percy, a member of our key Audit Committee no less, was rated a
"problem director" by The Corporate Library (TCL), an independent investment
research firm in Portland, Maine. This due to his involvement with the board of
Mississippi Chemical Corporation, which filed Chapter 11 bankruptcy.
One example of potential director over-commitment was Claibome Denning, the
president and chief executive at Murphy Oil, and a member of our audit committee
and nominating committee.
Another example of potential director over-commitment was Alexis Herman, who
served on three corporate boards and eight committees, and was spread so thin
she failed Entergy's 75% attendance standard.
Two directors were former officers of the company (Messrs. Hintz and Luft);
and a third's children had an ongoing financial relationship with the company -
Independence concern.
The number of less-than-best practices above reinforce the reason to take one
step forward now and adopt simple majority vote.
Notes:
The above format is the format submitted and intended for publication.
The company is requested to assign a proposal number (represented by "3" above)
based on the chronological order in which proposals are submitted. The requested
designation of "3" or higher number allows for ratification of auditors to be
item 2.
This proposal is believed to conform with Staff Legal Bulletin No. 14B (CF),
September 15, 2004 including:
Accordingly, going forward, we believe that it would not be appropriate for
companies to exclude supporting statement language and/or an entire proposal in
reliance on rule 14a-8(i)(3) in the following circumstances:
the company objects to factual assertions because they are not supported;
the company objects to factual assertions that, while not materially false or
misleading, may be disputed or countered;
the company objects to factual assertions because those assertions may be
interpreted by shareholders in a manner that is unfavorable to the company, its
directors, or its officers; and/or
the company objects to statements because they represent the opinion of the
shareholder proponent or a referenced source, but the statements are not
identified specifically as such.
See also: Sun Microsystems, Inc. (July 21, 2005).
Please note that the title of the proposal is part of the argument in favor of
the proposal. In the interest of clarity and to avoid confusion the title of
this and each other ballot item is requested to be consistent throughout the
proxy materials.
Please advise if there is any typographical question.
Stock will be held until after the annual meeting. Verification of stock
ownership will be forwarded.
[INQUIRY LETTER]
JOHN CHEVEDDEN
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
310-371-7872
December 21, 2005
Division of Corporation Finance
Office of the Chief Counsel
450 Fifth Street, N.W.
Washington D.C. 20549
Entergy Corporation (ETR)
Shareholder Position on Company No-Action Request Rule 14a-8 Proposal: Simple
Majority Vote
Shareholder: Emil Rossi
Ladies and Gentlemen:
This is an initial response to the Entergy Corporation no action request.
The company no action request is at least incomplete. It fails to state the
percentage vote required of shares outstanding or shares voted in order to
secure the necessary shareholder approval for amending the Certificate of
Incorporation. Furthermore the company makes no commitment whatsoever to obtain
such vote.
The following High Risk Alert on Goodyear (GT) is not the only example of a
company putting a proposal on its ballot with the intention that it will fail to
get the required vote yet incredulously get full credit for substantial
implementation at the same time. The following High Risk Alert on Goodyear is
from The Corporate Library:
Source:
http://www.boardanalyst.com/alerts/alert_GT_051305.html
High Risk Alert
Goodyear Tire & Rubber
Goodyear's (GT) response to a 2002 shareholder proposal that received the
approval of 72% of the company's shareholders is underwhelming.
The 2002 proposal asked the board to "take the necessary steps to declassify the
Board of Directors and establish annual elections of directors." A 2001
proposal, also approved by a majority of Goodyear's shares voted, expressed a
similar sentiment. Three years later, in the 2005 proxy, the Goodyear board
finally responded:
The Board of Directors has adopted a resolution approving the submission to
shareholders of an amendment to Sections 1 and 2 of Article II of the Code of
Regulations that would declassify the Board of Directors and provide for the
annual election of all directors. The form of this amendment, called the "Annual
Election Amendment," is attached as Exhibit C. The Board of Directors makes no
recommendation regarding whether to vote for or against the Annual Election
Amendment. (Goodyear proxy report, March 24, 2005; italics added)
By submitting a binding proposal to shareholders, the Goodyear board performed
the bare minimum asked by the proposal, but by withholding its recommendation,
the board hexed the CEmanagement-sponsored' proposal from the start. The
following chart shows the difference in votes between the 2002 shareholder
proposal and management's 2005 proposal that they failed to endorse:
2002 Shareholder Proposal
2005 Management Proposal
Votes For
84,421,119
53.2%
81,495,897
46.4%
Votes Against
29,023,751
18.3%
9,091,639
5.2%
Votes Abstained
2,227,763
1.4%
5,755,299
3.3%
Broker Non-Votes
31,123,545
19.6%
64,986,877
37.0%
% of 158,760,734 shares outstanding
% of 175,780,313 shares outstanding
Small wonder, then, that the company reported this in its May 4, 2005 10-Q: "The
resolution, having failed to receive the affirmative vote of at least a majority
of the shares of Common Stock entitled to vote at the Annual Meeting, was not
adopted." This binding negative vote also gives the board carte blanche to
refuse to include future declassification proposals on the proxy. This 2005 coup
d'etat made for outstanding gamesmanship, but terrible governance.
It's hard to draw a conclusive link between management's lack of recommendation
and the staggering broker non-vote, but the shareholders who did vote deserve
credit for seeing through the ruse: votes against the proposal declined from 29
million votes to just 9 million, or 5.2% of shares outstanding.
We have long assigned Goodyear a low shareholder responsiveness rating; the
board also ignored two previous poison pill proposals approved by a majority of
the shares voted. We've now lowered the company's responsiveness grade to F, and
would lower it to even further if we could. The company's recent Sarbanes-Oxley
Section 404 reporting requirements violations also suggest that our Board
Effectiveness Rating of D is on target this board poses a high risk to
shareholder value.
Jennifer Pepin, Senior Ratings Analyst - 5/13/2005
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
shareholder proposal. Also that the shareholder have the last opportunity to
submit material since the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Emil Rossi
Chris Screen<cscreen@entergy.com>
[INQUIRY LETTER]
#2 Re Entergy Corporation (ETR) No-Action Request Emil Rossi
JOHN CHEVEDDEN
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
310-371-7872
January 16, 2006
Division of Corporation Finance
Office of the Chief Counsel
450 Fifth Street, N.W.
Washington D.C. 20549
Entergy Corporation (ETR)
#2 Shareholder Position on Company No-Action Request Rule 14a-8 Proposal:
Simple Majority Vote
Shareholder: Emil Rossi
Ladies and Gentlemen:
This adds to the December 21, 2005 initial response to the Entergy Corporation
no action request. The company has made no reply to the December 21, 2005
initial response.
In Whole Foods Market, Inc. (December 14, 2005) Whole Foods did not receive
concurrence based on it taking action to include the same topic as this proposal
on its 2006 ballot for shareholder consideration.
The company no action request is at least incomplete. It fails to state key
information like the percentage vote required of shares outstanding or shares
voted in order to secure the necessary shareholder approval for amending the
Certificate of Incorporation. Without such information there is little prospect
of forecasting whether a ballot item will obtain the necessary votes for
adoption.
The company includes no independent opinion on the likelihood of obtaining such
vote. Furthermore the company makes no commitment whatsoever to obtain such
vote. I believe that little if anything may be accomplished if a company simply
includes an item in its proxy materials and then conveniently forgets about it.
The Entergy Corporation Certificate exhibit merely states that the amendment
will "be considered at the next annual meeting of the stockholders" without
committing to any recommendation of a yes-vote, no-vote or no preference.
The following High Risk Alert on Goodyear (GT), also cited in Whole Foods
Market, Inc. (December 14, 2005), is not the only example of a company putting a
proposal on its ballot with the intention that it will fail to get the required
vote yet incredulously get full credit for substantial implementation at the
same time. The following High Risk Alert on Goodyear is from The Corporate
Library:
Source:
http://www.boardanalyst.com/alerts/alert_GT_051305.html
High Risk Alert
Goodyear Tire & Rubber
Goodyear's (GT) response to a 2002 shareholder proposal that received the
approval of 72% of the company's shareholders is underwhelming.
The 2002 proposal asked the board to "take the necessary steps to declassify the
Board of Directors and establish annual elections of directors." A 2001
proposal, also approved by a majority of Goodyear's shares voted, expressed a
similar sentiment. Three years later, in the 2005 proxy, the Goodyear board
finally responded:
The Board of Directors has adopted a resolution approving the submission to
shareholders of an amendment to Sections 1 and 2 of Article II of the Code of
Regulations that would declassify the Board of Directors and provide for the
annual election of all directors. The form of this amendment, called the "Annual
Election Amendment," is attached as Exhibit C. The Board of Directors makes no
recommendation regarding whether to vote for or against the Annual Election
Amendment. (Goodyear proxy report, March 24, 2005; italics added)
By submitting a binding proposal to shareholders, the Goodyear board performed
the bare minimum asked by the proposal, but by withholding its recommendation,
the board hexed the OEmanagement-sponsored' proposal from the start. The
following chart shows the difference in votes between the 2002 shareholder
proposal and management's 2005 proposal that they failed to endorse:
2002 Shareholder Proposal
2005 Management Proposal
Votes For
84,421,119
53.2%
81,495,897
46.4%
Votes Against
29,023,751
18.3%
9,091,639
5.2%
Votes Abstained
2,227,763
1.4%
5,755,299
3.3%
Broker Non-Votes
31,123,545
19.6%
64,986,877
37.0%
% of 158,760,734 shares outstanding
% of 175,780,313 shares outstanding
Small wonder, then, that the company reported this in its May 4, 2005 10-Q: "The
resolution, having failed to receive the affirmative vote of at least a majority
of the shares of Common Stock entitled to vote at the Annual Meeting, was not
adopted." This binding negative vote also gives the board carte blanche to
refuse to include future declassification proposals on the proxy. This 2005 coup
d'etat made for outstanding gamesmanship, but terrible governance.
It's hard to draw a conclusive link between management's lack of recommendation
and the staggering broker non-vote, but the shareholders who did vote deserve
credit for seeing through the ruse: votes against the proposal declined from 29
million votes to just 9 million, or 5.2% of shares outstanding.
We have long assigned Goodyear a low shareholder responsiveness rating; the
board also ignored two previous poison pill proposals approved by a majority of
the shares voted. We've now lowered the company's responsiveness grade to F, and
would lower it to even further if we could. The company's recent Sarbanes-Oxley
Section 404 reporting requirements violations also suggest that our Board
Effectiveness Rating of D is on target this board poses a high risk to
shareholder value.
Jennifer Pepin, Senior Ratings Analyst - 5/13/2005
For the above reasons 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:
Emil Rossi
Chris Screen<cscreen@entergy.com>
[STAFF REPLY LETTER]
January 31, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Entergy Corporation Incoming letter dated December 12, 2005
The proposal recommends that the board take each step necessary for a simple
majority vote to apply on each issue that can be subject to shareholder vote to
the greatest extent possible.
There appears to be some basis for your view that Entergy may exclude the
proposal under rule 14a-8(i)(10). In this regard, we note your representation
that Entergy will provide shareholders at Entergy's 2006 Annual Meeting with an
opportunity to approve amendments to Entergy's certificate of incorporation that
would eliminate all supermajority voting requirements. Accordingly, we will not
recommend enforcement action to the Commission if Entergy omits the proposal
from its proxy materials in reliance on rule 14a-8(i)(10). In reaching this
position, we have not found it necessary to address the alternative basis for
omission upon which Entergy relies.
Sincerely,
/s/
Tamara M. Brightwell
Attorney-Adviser
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