Company Name: Jefferson-Pilot Corp.
Public Availability Date: January 31, 2006
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 20, 2006
VIA HAND DELIVERY
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Securities Exchange Act of 1934, Rule 14a-8; Shareholder Proposal of the
Walker F. Rucker Family Trust, dated January 17, 2006 Relating to the Special
Meeting to be Held on March 20, 2006
Ladies and Gentlemen:
We are writing on behalf of our client, Jefferson-Pilot Corporation, a North
Carolina corporation (the "Company"). The Company intends to exclude a
shareholder proposal (the "Proposal") received from the Walker F. Rucker Family
Trust (the "Proponent") from the Joint Proxy Statement/Prospectus and form of
proxy (collectively, the "Proxy Materials") to be mailed to the Company's
shareholders in connection with the special shareholders' meeting of the Company
to be held on March 20, 2006 (the "Special Meeting") to vote on the proposed
merger (the "Merger") of the Company and Lincoln National Corporation ("LNC").
The Company hereby respectfully requests that the Staff of the Division of
Corporation Finance (the "Staff") confirm that it agrees that (i) the Company
may properly exclude the Proposal from the Proxy Materials for the reasons set
forth below and (ii) the Staff will not recommend any enforcement action to the
Securities and Exchange Commission (the "Commission") if the Proposal is
excluded from the Proxy Materials. The Company also requests that the Commission
waive the 80-day period set forth in Rule 14a-8(j)(1) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), so as to permit the
Company to mail definitive copies of its Proxy Materials for the Special Meeting
commencing on or about February 10, 2006. Because the Proposal was submitted so
close to the scheduled printing and mailing date of the Proxy Materials, which
were included (in preliminary form) in a Registration Statement on Form S-4 of
LNC (the "Registration Statement") filed on December 8, 2005 (as to which the
Staff has advised it will not review), we respectfully request that you address
the issues raised by this letter, including the point about the timeliness of
the Proposal (Section II.A below), as promptly as practicable.
Pursuant to Rule 14a-8(j), enclosed herewith on behalf of the Company are six
(6) copies of this letter and its attachments. Also in accordance with Rule
14a-8(j), by a copy of this letter and its attachments, we are informing the
Proponent of the Company's intention to exclude the Proposal from the Proxy
Materials. The Proponent's letter setting forth the Proposal is attached hereto
as Attachment A (the "Proponent's Proposal Letter").
I. Summary of the Proposal:
The Proponent proposes in the Proposal that the Company "put itself on the
market for a minimum of $65.50 per common-stock share." Further, the Proposal
states that "[i]t is the [Proponent's] position that any transaction resulting
in the extinction of Jefferson Pilot should require a minimum 25% takeover
premium ... [and] Jefferson Pilot should publicly and immediately put itself
into play to maximize shareholder value."
II. Reasons for Excluding the Proposal under Rule 14a-8:
A. The Company may exclude the Proposal from the Proxy Materials relating to the
Special Meeting because the Proponent has not satisfied the procedural
requirement set forth in Rule 14a-8(e)(3) under the Exchange Act.
Rule 14a-8(e)(3) requires that a proposal to be presented at any meeting other
than an annual meeting be received a "reasonable time" before the company begins
to print and mail its proxy materials. Although Rule 14a-8 does not define what
constitutes a "reasonable time" in the context of a special meeting, it is
noteworthy that this Rule requires that a proposal to be presented at an annual
meeting be received by the registrant a minimum of 120 days in advance of the
anticipated mailing of proxy materials to shareholders.
In determining whether a proposal is made within a reasonable time, the
fundamental consideration is whether the time of submission of the proposal
affords the registrant reasonable time to consider the proposal without causing
an excessive delay in the distribution of proxy materials to its shareholders.
See Greyhound Lines, Inc., SEC No-Act. (Jan. 8, 1999). In Greyhound, the Staff
granted no-action relief where the registrant received a shareholder proposal 14
days after the filing of preliminary proxy materials and approximately 6 weeks
after the announcement of the merger agreement and while it was in the final
stages before commencing its proxy solicitation.
Similarly, in other no-action correspondence, the Commission has consistently
stated that it would not recommend enforcement action against a registrant that
excluded a shareholder proposal received after the preliminary proxy materials
relating to that meeting had been filed with the Commission. See, e.g., Scudder
New Europe Fund, Inc., SEC No-Act. (Nov. 10, 1998) (granting no-action relief
where a shareholder proposal was received the same day as the filing of
preliminary proxy materials); The United Kingdom Fund, Inc., SEC No-Act. (Jan.
12, 1998) (granting no-action relief where a shareholder proposal was received 1
week after the filing of preliminary proxy materials). In addition, the
Commission granted no-action relief where a shareholder submitted a proposal
more than 2 months after the public announcement of a merger agreement and more
than 1 month after the filing of a preliminary proxy statement. See Public
Service Company of Colorado, SEC No-Act. (Nov. 29, 1995) (granting no-action
relief where the registrant announced a merger on August 23, filed preliminary
proxy materials on October 6, and received a shareholder proposal on November
8).
On October 10, 2005, the Company announced that it had entered into an agreement
and plan of merger with LNC on October 9, 2005. On December 8, 2005, LNC filed
with the Commission the Registration Statement, which included the preliminary
Joint Proxy Statement/ Prospectus. The Staff has informed LNC that this filing
will not be reviewed by the Staff. On January 5, 2006, the Company announced
that the record date for the Special Meeting will be February 3, 2006 and the
Special Meeting will be held on March 20, 2006. In addition, the Merger has been
well publicized with several documents being filed by the Company and LNC with
the Commission under Rule 425.
Despite the Company's and LNC's repeated public disclosure of the Merger, the
Proponent submitted the Proposal to the Company on January 17, 2006100 days
after the Company announced the Merger and 40 days after the Company's
preliminary proxy materials were filed with the Commission. Under the
instructions to Form S-4, the Joint Proxy Statement/Prospectus must be mailed to
shareholders no later than 20 business days before the shareholder meeting on
March 20, 2006, and in order to meet that deadline and otherwise provide the
Company's shareholders sufficient time to consider the disclosures in the Proxy
Materials, LNC and the Company plan to print and mail the Proxy Materials
promptly following the effective date of the Registration Statement, which is
expected to be on or about February 8, 2006.
Given the Proponent's delay in submitting the Proposal, the Company does not
have a reasonable amount of time to consider the Proposal without causing a
significant delay in printing and mailing the Proxy Materials related to the
Special Meeting. Under these circumstances, the Proposal cannot be considered to
have been submitted within a "reasonable time" in advance of the solicitation of
proxies in connection with the Special Meeting and, therefore, the Proposal
should be excluded from the Proxy Materials.
B. The Company may exclude the Proposal from the Proxy Materials relating to the
Special Meeting because the Proposal directly conflicts with one of the
Company's own proposals to be submitted to its shareholders at the same meeting
under Rule 14a-8(i)(9) under the Exchange Act.
Even had the Proponent met the procedural requirement of Rule 14a-8(e)(3), the
Company is entitled to exclude the Proposal pursuant to Rule 14a-8(i)(9).
Rule 14a-8(i)(9) provides that a proposal may be excluded if it conflicts
directly with one of the proposals that the registrant plans to submit to the
shareholders at the same meeting. At the Special Meeting, the Company's
shareholders will be asked to consider and vote upon the Merger with LNC. The
Proposal seeks to put forth an alternative, and contradictory, proposal that
calls for the Company to publicly and immediately "put itself on the market for
a minimum of $65.50 per common-stock share." These transactions are mutually
exclusive in that it would be impossible for the Company to consummate both
transactions. Submitting both proposals to a shareholder vote could provide
inconsistent and ambiguous results insofar as the shareholders could approve the
Merger, while at the same time approving the Proposal, an entirely inconsistent
transaction. Consequently, the Proposal directly conflicts with the Company's
own proposal. Because the Proposal and the Company's proposal are mutually
exclusive, the Proposal may be properly omitted from the Proxy Materials
pursuant to Rule 14a-8(i)(9).
The Commission has consistently taken no-action positions in similar situations
where a shareholder proposal was in opposition to the company's proposal for
which the special meeting was called. See, e.g., Unicom Corporation, SEC No-Act.
(Feb. 14, 2000) (regarding a shareholder proposal to reject a merger that was
excluded from the company's proxy materials in which shareholders were asked to
approve the same merger); Interlinq Software Company, SEC No-Act. (Apr. 20,
1999) (regarding a shareholder proposal seeking the company to effect a
self-tender that was excluded from the proxy materials in which the shareholders
were asked to approve a merger proposal); Fitchburg Gas and Electric Light
Company, SEC No-Act. (July 30, 1991) (regarding a shareholder proposal
requesting solicitation of third party offers to purchase the company, or
alternatively a share purchase, that was excluded from the company's proxy
materials in which shareholders were asked to approve a merger proposal).
The Proponent has advised the Company, in separate correspondence in which it
seeks to inspect certain corporate documents, that it "expects to use the
information, produced pursuant to this demand, in support of his efforts to
block the proposed merger...." A copy of this correspondence is also included
with this letter as Attachment B. Relying on Rule 14a-8(i)(9), the Staff has on
several occasions explicitly confirmed the propriety of excluding a shareholder
proposal where the "primary purpose" of the proposal was to oppose a merger
proposal by management. In Executive Industries, Inc., SEC No-Act. (June 26,
1981), the Staff's response letter to the company stated that the shareholder
proposal "would be in contradiction to management's purpose in submitting its
merger proposal" and that "there appears to be some basis for the view that the
primary purpose of the proposal is to oppose stockholder approval of the
merger." Similarly, in Scudder New Europe Fund, Inc., SEC No-Act. (Apr. 29,
1999), the Commission stated in its response letter that "under the precursor to
(i)(9), the staff took the position that a shareholder proposal may be excluded
if its primary purpose is to counter shareholder approval of a management
proposal."
Accordingly, because the Proposal directly conflicts with the Company's own
proposal to the shareholders, we believe the Proposal is excludible from the
Proxy Materials under Rule 14a-8(i)(9).
C. The Company requests that the Staff accept this submission less than 80 days
prior to the anticipated filing date of the definitive Proxy Materials.
Rule 14a-8(j)(1) under the Exchange Act provides that if a company intends to
exclude a proposal from its proxy materials, it must file its reasons with the
Commission no later than 80 calendar days before it files its definitive proxy
statement and form of proxy with the Commission, provided, however, that the
Staff may permit the company to make its submission later than 80 days before
the company files its definitive proxy statement and form of proxy, if the
company demonstrates good cause for missing the deadline. The Staff has
previously found such good cause to exist where the proponent has not provided
the proposal in a timely manner so as to allow the company to timely respond.
See, e.g., Selectica, Inc., SEC No-Act. (Aug. 25, 2005); Xerox Corp., SEC
No-Act. (May 2, 2005); General Electric Company, SEC No-Act. (Feb. 10, 2005).
In the case of the Proposal submitted by the Proponent, it was not received
until well after the 80-day deadline. Accordingly, although the Company has
submitted this letter within 3 days of receipt of the Proponent's Proposal
Letter, it is impossible for the Company to comply with Rule 14a-8(j)(1) and, in
light of this impossibility, the Company hereby requests a waiver of the 80-day
requirement in Rule 14a-8(j)(1).
III. Conclusion:
For the reasons set forth above, we respectfully request that you concur with
our position on the matters discussed herein. If you should have any questions
regarding this letter, or if you should require any additional information,
please do not hesitate to call the undersigned at (212) 556-2240. We would
appreciate if you would advise us as soon as possible in the event that you
conclude that you are unable to concur with any of the views expressed in this
letter and, in any event, prior to issuing a written response declining to agree
with any such conclusions.
Given that the Company presently anticipates mailing the Proxy Materials
relating to the Special Meeting on or around February 10, 2006, we would
appreciate if the Staff would consider expedited review of the Company's request
to exclude the Proposal from the Proxy Materials. To expedite your response, we
note for you the undersigned's fax number on the cover of this letter and note
that the Proponent's counsel's fax number is on the cover of the Proponent's
Proposal Letter.
Very truly yours,
/s/
E. William Bates, II
KING & SPALDING LLP
cc: Charles C. Cornelio
[INQUIRY LETTER]
January 17, 2006
Mr. Robert A. Reed
Vice President and Counsel
Jefferson Pilot Corporation
100 North Greene Street
Greensboro, NC 27401
Dear Mr. Reed:
Our client, the Walker F. Rucker Family Trust (the "Trust"), pursuant to S.E.C.
Rule 14a-8, 17 C.F.R. 240.14a-8, requests that the following shareholder
proposal be included in the proxy materials to be submitted to shareholders in
connection with the March 2006 special shareholders' meeting:
The Walker F. Rucker Family Trust (the "Trust") proposes that Jefferson Pilot
put itself on the market for a minimum of $65.50 per common-stock share. The
Trust contends that (1) analysts, such as CNNMoney, project 2006 to be a very
active year in insurance company consolidations, and (2) the $65.50 share price
represents an approximate 25% takeover premium from the per-share price of
Jefferson Pilot common stock immediately preceding the announcement of the
proposed merger. A 25% premium, according to published reports, represents the
average takeover premium for publicly traded United States corporations, and is
far in excess of the approximately 10% premium set forth in the proposed merger
agreement.
Lincoln National's shares have historically underperformed competitors' for the
last five years and, indeed, in the year before the proposed merger announcement
increased only about half as much as the Standard & Poor's Life Health Insurance
Index. At the time of the proposed merger announcement, its stock traded at 11.6
times earnings, as much as 35% lower than its rivals'. Lincoln badly needs the
transaction to go forward, as low interest rates and low investment returns have
forced life insurers such as Lincoln National to reduce their fixed costs.
Jefferson Pilot, on the other hand, is a company poised for growth. Indeed, the
July 28, 2005, statement of Jefferson Pilot's CEO, Dennis R. Glass, in
connection with the announcement of second-quarter earnings, was glowing,
touting the Company's "industry-leading return on equity" and "top-level
financial strength ratings," as well as "the financial resources to support
significant share buybacks, as well as the strong 10 percent cash dividend we
implemented in the second quarter."
It is the Trust's position that any transaction resulting in the extinction of
Jefferson Pilot should require a minimum 25% takeover premium. Given insurance
analysts' projections for 2006, Jefferson Pilot should publicly and immediately
put itself into play to maximize shareholder value.
Pursuant to Rule 14a-8, the proposal must be placed on the Company's proxy card
in connection with the special meeting of shareholders and should include means
for shareholders to specify by boxes a choice between approval or disapproval of
the proposal.
The Trust's certification of eligibility to recommend a shareholder proposal, as
well as a certification of the record holder of the Trust's Jefferson Pilot
Corporation stock, are attached hereto.
Very truly yours,
/s/
David M. Clark
DMC/mh
Enclosures
cc: Mr. Walker F. Rucker
[INQUIRY LETTER]
January 17, 2005
Via Hand-Delivery
Jefferson-Pilot Corporation
Attention: Mr. Robert A. Reed
Vice President and Counsel
100 North Greene Street
Greensboro, NC 27401
Dear Mr. Reed:
We represent the Walker F. Rucker Family Trust (the "Trust"), which has
continuously owned a block of Jefferson-Pilot Corporation's common stock for
more than six months immediately preceding this demand.
Walker F. Rucker, Trustee of the Trust, pursuant to N.C.G.S. §§55-7-20 and
55-16.02(b), hereby provides notice that he and undersigned counsel will appear
at 9:00 a.m. on Tuesday, January 24, 2006, at the offices of Jefferson-Pilot
Corporation or a reasonable location earlier specified by your representative,
to inspect the following documents:
(1) A record of names and addresses of, and number of shares held by, each
current shareholder of JPC, arranged by voting group (and within each voting
group by class or series of shares);
(2) Any and all records relating to any decision of JPC's Board of Directors to
decline, or not to pursue, any offer or expression of interest by any entity
seeking to enter a merger with and/or to purchase a controlling interest in JPC
from January 1, 2001, to present;
(3) Any and all records relating to the decision of JPC's Board of Directors to
go forward with the proposed merger with Lincoln National Corporation;
(4) Any and all records relating to any decision approving salaries or other
compensation of any kind to JPC's directors and/or executive officers from
January 1, 1996, to present;
(5) Any and all records relating to any decision by JPC's Board of Directors or
executive officers allowing directors or executive officers to participate in
the direction of JPC from Atlanta, Georgia, or any other city outside
Greensboro; and
(6) Any and all documents relating to reductions of the number of JPC's Board of
Directors.
The documents requested include records of actions taken with or without a
meeting by JPC's Board of Directors or by a committee of Board of Directors
while acting in place of the Board of Directors on behalf of JPC. After Mr.
Rucker and his counsel examine the documents, he expects to select certain
documents to be photocopied.
Mr. Rucker seeks to examine and copy the categories of documents described above
because, among other reasons, he is informed and believes, that the proposed
JPC-Lincoln National Corporation merger does not maximize shareholder value and
may be the product of a breach of duty by JPC's Board; and that JPC's approval
of salaries of its directors and executive officers may also amount to a breach
of duty to the corporation. The Trust expects to use the information, produced
pursuant to this demand, in support of his efforts to block the proposed merger
and/or as grounds for derivative litigation against the Board.
Yours very truly,
/s/
David M. Clark
mtb
cc: Mr. Walker F. Rucker
[STAFF REPLY LETTER]
January 30, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Jefferson-Pilot Corporation Incoming letter dated January 20, 2006
The proposal relates to Jefferson-Pilot putting itself on the market for a
certain minimum price per common-stock share.
There appears to be some basis for your view that Jefferson-Pilot may exclude
the proposal from its proxy materials for its special meeting under rule
14a-8(e)(3). We note in particular your representation that Jefferson-Pilot did
not receive the proposal until it was in the final stages preparatory to
commencing its proxy solicitation, with the result that there is not a
reasonable time for Jefferson-Pilot to consider the proposal without causing an
excessive delay in the distribution of its special meeting proxy materials to
stockholders. Under the circumstances, we will not recommend enforcement action
to the Commission if Jefferson-Pilot omits the proposal from its special meeting
proxy materials in reliance on rule 14a-8(e)(3). In reaching this position, we
have not found it necessary to address the alternative basis for omission upon
which Jefferson-Pilot relies.
We note that Jefferson-Pilot did not file its statement of objections to
including the proposal in its proxy materials at least 80 days before the date
on which it filed definitive proxy materials as required by rule 14a-8(j)(1).
Noting the circumstances of the delay, we grant Jefferson-Pilot's request that
the 80-day requirement be waived.
Sincerely,
/s/
Ted Yu
Special Counsel
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