Company Name: Kroger Co.
Public Availability Date: March 29, 2006
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
February 14, 2006
VIA DHL EXPRESS
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 Fifth Street, N.E.
Washington, DC 20549
RE: Shareholder Proposal of the General Board of Pension and Health Benefits of
the United Methodist Church
Ladies and Gentlemen:
Enclosed for filing, pursuant to Rule 14a-8(j) under the Exchange Act, are the
following:
A. Six copies of this letter;
B. Six copies of a letter dated January 12, 2006, from the General Board of
Pension and Health Benefits of the United Methodist Church (the "Proponent"),
along with a shareholder proposal and supporting statement (the "Proposal") and
relevant correspondence between Kroger and the Proponent (Exhibit A); and
C. One additional copy of this letter along with a self-addressed return
envelope for purposes of returning a file-stamped receipt copy of this letter to
the undersigned.
The resolution portion of the Proposal reads as follows: "Resolved: shareholders
request the Board of Directors prepare, at reasonable expense and omitting
proprietary information, a Sustainability Report.1 A summary of the report
should be provided to shareholders by December 2006."
Kroger intends to mail to shareholders, on or about May 15, 2006, our definitive
proxy statement and form of proxy (the "Proxy Materials") in conjunction with
our 2006 Annual Meeting. That meeting currently is scheduled to be held on June
22, 2006. Kroger intends to file preliminary Proxy Materials with the Commission
on or about April 17, 2006, and intends to file definitive copies of the Proxy
Materials with the Commission at the same time the Proxy Materials are first
mailed to shareholders.
We believe that the Proposal may properly be omitted from the Proxy Materials
pursuant to Rules 14a-8(i)(3) and (10), and Kroger intends to exclude the
Proposal from the Proxy Materials. By a copy of this letter to the Proponent, we
are notifying the Proponent of our intentions. Please confirm that no
enforcement action will be recommended if the Proposal is excluded.
Introduction
In 2004, Kroger received a substantially similar proposal from the Proponent and
the Staff agreed that it could be excluded from our proxy materials based on
Rule 14a-8(i)(3). See, The Kroger Co. (March 19, 2004). The key difference in
this year's Proposal is that the Proponent deleted the requirement that the
sustainability report be based on the Global Reporting Initiative's
sustainability guidelines ("GRI Guidelines") and instead relegated that
"requirement" to the supporting statement. The Staff considers the supporting
statement to be an integral part of a shareholder proposal and will allow
exclusion of the entire proposal when the supporting statements violate the
proxy rules. See, Staff Legal Bulletin No. 14B (September 15, 2004). The
Proponent likely moved the reference to GRI Guidelines to the supporting
statement in hopes that it would cure the fatal flaw in its 2004 proposal. The
Proponent is wrong. Like the Staff, Kroger believes the GRI Guidelines are
vague, indefinite and misleading.
In December of 2005, prior to receipt of the Proposal, the Public
Responsibilities Committee of our Board of Directors authorized Kroger to
prepare a sustainability report and to publish the report on our website. As of
this date, the first draft of that report is completed and Kroger committed to
our Board to publish it before the end of 2006, as also requested in the
Proposal. The report includes numerous areas of corporate governance, social
responsibility and environmental impact. In drafting a report and committing to
publish it by December 2006 Kroger has done all that Proponent requests in the
Proposal. Including the Proposal in our Proxy Materials and putting it to a
shareholder vote would accomplish nothing more.
Kroger has communicated all of this to the Proponent, but despite its
acknowledgement of our commitment to implement the Proposal, its refusal to
withdraw the Proposal clearly indicates that it is looking for more. The
Proponent's supporting statement and correspondence with us demonstrates that
what it seeks is a sustainability report based on the GRI Guidelines. The Staff,
time and again, has rejected this approach. See, The Ryland Group, Inc. (January
19, 2005); Terex Corporation (March 1, 2004); ConAgra Foods, Inc. (July 1,
2004); and The Kroger Co. (March 19, 2004).
Kroger's preparation of a report and commitment to publishing the report by
December 2006 either satisfies the Proposal or, as Proponent's correspondences
suggests, the Proponent is attempting to require implementation of the GRI
Guidelines. In either case, the Proposal properly may be excluded from the Proxy
Materials based on Rule 14a-8(i)(10) or Rule 14a-8(i)(3).
I. KROGER ALREADY HAS SUBSTANTIALLY IMPLEMENTED THE PROPOSAL, AND IT MAY BE
EXCLUDED UNDER RULE 14a-8(i)(10).
Rule 14a-8(i)(10) permits the omission of a shareholder proposal from the proxy
soliciting materials if "the company has already substantially implemented the
proposal." The Staff consistently has taken the position that shareholder
proposals have been substantially implemented within the meaning of Rule
14a-8(i)(10) when the company already 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. Xcel Energy, Inc. (February 17,
2004) (where proposal requested an assessment and report regarding reduction of
emissions which had already been initiated by the company), Telular Corp.
(December 5, 2003); See also Cisco Systems, Inc. (March 11, 2003) (where
proposal asked the Board to consider executive compensation plan that has
already been considered and approved); Intel Corporation (March 11, 2003)
(proposal to require shareholder vote on all equity compensation plan amendments
excludable where board had adopted resolutions establishing similar policy).
In recent no-action rulings that closely mirror Kroger's request, the Staff
permitted Raytheon Company, ConAgra Foods, Inc., Albertson's, Inc. and Lowe's
Companies, Inc. to omit proposals that are virtually identical to the Proposal
submitted to Kroger. The Staff permitted the exclusions, noting Raytheon's,
ConAgra's, Albertson's and Lowe's representations that they already prepare and
publish equivalent reports. See, Raytheon Company (January 25, 2006), ConAgra
Foods, Inc. (June 20, 2005) Albertson's, Inc. (March 23, 2005) and Lowe's
Companies, Inc. (March 21, 2005). Kroger realizes that we have not yet published
our report but we have committed to our Board to publish it by the end of the
year, which is also the timeframe required in the Proposal.
Kroger is aware that in Terex Corporation (March 18, 2005), the Staff did not
permit exclusion on substantial implementation grounds of a proposal that was
also basically identical to the Proposal. However, 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 SEC. Kroger's claim of
substantial implementation may be distinguished from Terex's because Kroger is
not relying on vague disclosures in our SEC reports and on our website regarding
our corporate responsibility. Kroger's Board has authorized a sustainability
report. The report has been drafted and is in the process of being edited.
Kroger has committed to publishing the report by December 2006. The Proposal
seeks preparation of a report (which has been done) and publishing of the report
by December 2006 (which of necessity must occur in the future, and which Kroger
has committed to do). The Proposal has been substantially implemented.
Kroger also recognizes that in Burlington Resources, Inc. (February 4, 2005),
the Staff did not permit exclusion on substantial implementation grounds of a
proposal that was practically identical to the Proposal. However, at the time of
that proposal, Burlington Resources, Inc. had only commissioned a Corporate
Social Responsibility ("CSR") initiative, and "envisioned" that a "CSR Report"
would be an outgrowth of that initiative. Burlington "assumed" that their
current initiatives and the "envisioned" report would address the shareholders'
issues. In contrast, Kroger's Board has in fact authorized a sustainability
report. The report has been drafted and is in the process of being edited.
Kroger has committed to publishing the report by December 2006. For the reasons
set forth above, the Proposal has been substantially implemented.
Based on the Staff's precedent, for the reasons set forth above, Proponent's
intentional relegation of the requirement that the sustainability report be
based on the GRI Guidelines to the supporting statement in this year's Proposal
further establishes that Kroger has already implemented the Proposal. The Staff
has shown a trend to allow more flexible proposals on preparing sustainability
reports to be included in proxy materials while permitting the exclusion on
vagueness grounds of those proposals tied to the constraints of the GRI
Guidelines. (See, The Ryland Group, Inc. (January 19, 2005); Terex Corporation
(March 1, 2004); ConAgra Foods, Inc. (July 1, 2004); and The Kroger Co. (March
19, 2004), where the Staff allowed exclusions for sustainability report
proposals based on GRI Guidelines on Rule 14-8(i)(3) grounds; but also see,
Wal-Mart Stores, Inc. (February 17, 2004) and Johnson Controls, Inc. (November
14, 2002), where the Staff denied exclusions on Rule 14-8(i)(3) grounds for more
general sustainability report proposals.) Kroger believes that the Staff
intentionally differentiates between the general proposals and the GRI
Guideline-based proposals when determining whether they withstand Rule14-8(i)(3)
exclusion requests. We think the Staff interprets the general proposals as
giving the company the flexibility to decide how to best implement the
resolution and determine its own form of report. See Albertson's, Inc. (March
23, 2005). In Kroger's case, the Proponent intentionally moved the GRI Guideline
requirement from the resolution to the supporting statement in an attempt to
avoid once again its exclusion for vagueness on Rule 14-8(i)(3) grounds. The
resolution simply requests that Kroger prepare a "Sustainability Report" and
that "a summary of the report be provided to shareholders by December 2006."
Based on past rulings, the Staff should consider that Kroger has the flexibility
to best decide how to implement the Proposal and deem Kroger's preparation of a
report and commitment to publish it within the timeframe requested by the
Proponent to have satisfied the Proposal.
For the reasons stated above, there is no further need to submit this matter for
a shareholder vote. The Proposal has been substantially implemented and may be
excluded based on Rule 14a-8(i)(10).
II. IF KROGER HAS NOT IMPLEMENTED THE PROPOSAL AS STATED, THEN THE REQUIRMENTS
OF THE PROPOSAL ARE VAGUE, INDEFINITE AND MISLEADING; THEREFORE IT MAY BE
EXCLUDED BASED ON RULE 14a-8(i)(3).
If Kroger has not substantially implemented the Proposal, then the Proposal
properly is excludable under Rule 14a-8(i)(3). The Staff has consistently taken
the position that a company may exclude a proposal pursuant to Rule 14a-8(i)(3)
if the proposal is vague, indefinite and, therefore, potentially misleading. A
proposal is sufficiently vague, indefinite and misleading to justify exclusion
where "neither the shareholders voting on the proposal, nor a company in
implementing the proposal (if adopted), would be able to determine with any
reasonable certainty exactly what actions or measures the proposal requires."
Philadelphia Electric Co. (July 30, 1992) (proposal relating to election of
committee of small shareholders that will present the board with a plan that
will in some measure equate gratuities bestowed upon management, directors or
other employees was excludable as vague and indefinite). See also Alcoa, Inc.
(December 24, 2002) (proposal requesting company commit "to the full
implementation of" a set of human rights standards excludable); McDonald's Corp.
(March 13, 2001) (same). See also, The Ryland Group, Inc. (January 19, 2005);
Terex Corporation (March 1, 2004); ConAgra Foods, Inc. (July 1, 2004); and The
Kroger Co. (March 19, 2004), Smithfield Foods, Inc. (July 18, 2003).
Although Proponent's resolution requires that Kroger "prepare... a
Sustainability Report..." the Proponent's Proposal, supporting statement, and
its subsequent correspondence with Kroger clearly illustrate that the Proponent
truly is looking for a sustainability report based on the GRI Guidelines. (See,
the last paragraph of the Proposal asking that Kroger base the report of the GRI
Guidelines and providing a website for the GRI Guidelines.) Since the Proposal
itself is precatory, the use of the word "recommend" in connection with the GRI
Guidelines, when viewed along with Proponent's follow-up correspondence, must be
considered a requirement of the Proposal.
Kroger held discussions with the Proponent and believed that Proponent would
withdraw the Proposal based on the substantial implementation of the Proposal by
Kroger. Confirmation of the discussions led to requests for more information and
additional questions seeking to ensure compliance with the GRI Guidelines. (See,
Kroger's and Proponent's correspondence dated February 6, 2006.)
The Proponent recognized that "Kroger is making an honest effort to fulfill the
spirit of the sustainability report resolution." (See, the Proponent's
correspondence dated February 6, 2006.) Despite this acknowledgement, the
Proponent does not appear to accept Kroger's form of report. If Kroger's form of
report does not satisfy the Proposal to "prepare a Sustainability Report," then
the Proposal of necessity is requiring criteria (namely the GRI Guidelines) that
are vague, indefinite and misleading. See, The Ryland Group, Inc. (January 19,
2005); Terex Corporation (March 1, 2004); ConAgra Foods, Inc. (July 1, 2004);
and The Kroger Co. (March 19, 2004).
Conclusion
We respectfully urge that the Staff once again determine that the Proposal may
be omitted from the Proxy Materials because (i) it already has been
substantially implemented by Kroger, and (ii) alternatively, if the Staff does
not consider Kroger's actions to have fulfilled the intent of the Proposal, then
the Proposal's requirements are so vague, indefinite and misleading the
shareholders and Kroger would be unable to determine what further action should
be taken if it is adopted. If you disagree with the conclusions contained in
this request, I would appreciate the opportunity to confer with you prior to the
issuance of the Staff's response. Please call me at (513) 762-4425 if you
require additional information or wish to discuss this submission further.
Very truly yours,
/s/
Jill V. Mclntosh
encl.
cc: Ms. Vidette Bullock Mixon
-----FOOTNOTES-----
1 While Proponent fails to clearly define "Sustainability Report" for purposes
of its Proposal, we can only assume that a report that discusses social
responsibility, environmental issues and corporate governance issues is a
"Sustainability Report".
[INQUIRY LETTER]
January 12, 2006
Lynn Marmer
Group Vice President, Corporate Affairs
Kroger
1014 Vine Street
Cincinnati, OH 45202-1100
RE: Shareholder Proposal
Dear Ms. Marmer:
I am writing on behalf of the General Board of Pension and Health Benefits,
beneficial owner of 76,350 shares of Kroger common stock. I am filing the
enclosed shareholder proposal for consideration and action at your 2006 Annual
Meeting. In brief, the proposal requests Kroger to provide a sustainability
report regarding social and environmental issues. Per Regulation 14A-12 of the
Securities and Exchange Commission (SEC) Guidelines, please include our proposal
in the proxy statement.
In accordance with SEC Regulation 14A8, the General Board has continuously held
Kroger shares totaling at least $2,000 in market value for at least one year
prior to the date of this filing Proof of ownership is enclosed. It is the
General Board's intent to maintain ownership of Kroger stock through the date of
the 2006 Annual Meeting.
Increasingly, progressive companies are recognizing the relationships and
interdependencies between financial returns and environmental and social
impacts. Over 700 compames now publish sustainability reports based on the
Global Reporting Initiative (GRI) guidelines.
The General Board feels that as one of the country's largest grocery chains,
Kroger has a responsibility as an industry leader to report on the environmental
and social impacts of its business and on how environmental and social issues
affect our company.
Please feel free to contact Dan Nielsen, Manager, Socially Responsible
Investing, by email at daniel nielsen@gbophb.org or by phone at 847-866-4592 if
you have questions or comments regarding the proposal.
Thank you in advance for your time and attention. I look forward to engaging in
fruitful dialogue with you and/or members of your staff regarding the issues
raised in this proposal.
Sincerely,
/s/
Vidette Bullock Mixon
Director, Corporate Relations
Enclosures
[APPENDIX]
Sustainability Report for Shareholders - Kroger
Whereas, Investors increasingly seek disclosure of companies' environmental,
social, and governance 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 generate incremental
financial returns, be more stable during turbulent economic and political
conditions, and enjoy long-term business success.
We believe that improved reporting on environmental, social, and governance
issues will strengthen our company and the people it serves. Furthermore, we
believe this information is necessary for making well-informed investment
decisions as it speaks to the vision and stewardship of management and can have
significant impacts on our company's reputation and on shareholder value.
According to Dow Jones, "Corporate Sustainability is a business approach that
creates long-term shareholder value by embracing opportunities and managing
risks deriving from economic, environmental, and social developments. Corporate
sustainability leaders achieve long-term shareholder value by gearing their
strategies and management to harness the market's potential for sustainability
products and services while at the same time successfully reducing and avoiding
sustainability costs and risks."
(http://www.sustainability-index.com/htmle/sustainability/corpsustainability.html)
An October 6, 2004 statement published by social research analysts reported that
they value public reporting because "we find compelling the large and growing
body of evidence linking companies' strong performance addressing social and
environmental issues to strong performance in creating long-term shareholder
value. We believe that companies can more effectively communicate their
perspectives and report performance on complex social and environmental issues
through a comprehensive report than through press releases and other ad hoc
communications." (www.socialinvest.org)
The 2004 Motorola Global Citizenship Report provides a compelling rational for
sustainability reporting: "Environmental responsibility, supporting our
communities, a strict code of ethics and business conduct, encouraging these
values in our supply chain and exceeding customers' expectations all make us a
stronger and more competitive company."
Resolved: shareholders request the Board of Directors prepare, at reasonable
expense and omitting proprietary information, a Sustainability Report. A summary
of the report should be provided to shareholders by December 2006.
Supporting Statement
We believe the report should include:
1. The company's operating definition of sustainability.
2. A review of current company policies and practices related to social,
environmental, and economic sustainability.
3. A summary of long-term plans to integrate sustainability objectives
throughout company operations.
We recommend that Kroger join the over 700 companies who have issued
sustainability reports based on the Global Reporting Initiative's (GRI)
Sustainability Reporting Guidelines (www.globalreporting.org).
We urge shareholder to vote FOR this proposal.
[INQUIRY LETTER]
March 6, 2006
Securities & Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Att: Mark Vilardo, Esq.
Office of the Chief Counsel
Division of Corporation Finance
Re: Shareholder Proposal Submitted to The Kroger Company
Via fax 202-772-9201
Dear Sir/Madam:
I have been asked by the General Board of Pensions and Health Benefits of The
United Methodist (which is hereinafter referred to as the "Proponent"), which is
the beneficial owner of shares of common stock of The Kroger Company
(hereinafter referred to either as "Kroger" or the "Company"), and which has
submitted a shareholder proposal to Kroger, to respond to the letter dated
February 14, 2006, sent to the Securities & Exchange Commission by the Company,
in which Kroger contends that the Proponent's shareholder proposal may be
excluded from the Company's year 2006 proxy statement by virtue of Rules
14a-8(i)(10) and 14a-8(i)(3).
We note that, in violation of Rule 14a-8(j), the Company failed to provide the
Proponent with a "copy of its submission" in that it failed to supply the
Proponent with a copy of its "Exhibit A". Although in many instances this would
be arguably immaterial, in the instant case the Company specifically relies on
this correspondence (see first full paragraph on page 3 of the Company's letter
and the second, third and fourth paragraphs of Section II of its letter (pp.
5-6)). We therefore deem this failure a material breach of the rules concerning
no-action requests under Rule 14a-8 and suggest that consequently the Company
has failed to comply with the 80 day requirement of Rule 14a-8(j)(1).
On the merits, I have reviewed the Proponent's shareholder proposal, as well as
the aforesaid letter sent by the Company, and based upon the foregoing, as well
as upon a review of Rule 14a-8, it is my opinion that the Proponent's
shareholder proposal must be included in Kroger's year 2006 proxy statement and
that it is not excludable by virtue of either of the cited rules.
The proposal requests the Company to prepare a Sustainability Report and
suggests that the requested report should include (i) the Company's definition
of sustainability; (ii) a review of the Company's "policies and practices
related to social, environmental and economic sustainability"; and (iii) how the
Company will integrate sustainability objectives throughout its operations.
RULE 14a-8(i)(10)
We fail to understand how a proposal that requests a report can be rendered moot
by a report that does not exist.
The reason for our perplexity is very simple. At the present time it is
impossible for the Proponent, or the Staff, to evaluate whether the non-existent
report (i) includes the Company's definition of sustainability or (ii) contains
an actual review of the Company's policies and practices with respect to
sustainability or (iii) describes how the Company will integrate sustainability
objectives throughout its operations. Neither the Proponents nor the Staff can
ascertain whether the contemplated "report" will be a short, meaningless PR job
consisting of a couple of paragraphs of generalities or a genuine substantive
report on sustainability. In other words, the Staff and the Proponents are
expected to buy a pig-in-a-polk. The Staff has previously rejected the ability
of such non-reports to moot a proposal. Burlington Resources, Inc. (February 4,
2005). [We note in passing that on page 2 of the Company's no-action letter
request it states that it has prepared a first draft of a report despite the
fact that no such draft, if it exists, has been offered to either the Staff or
the Proponents for their perusal.]
In the instant case, the only information made available to the Proponent and to
the Staff about the contents of the report is a listing of various topic
headings. (See bottom of page one of the Company's letter of February 6, 2006,
sent to the Proponent, appended as Annex B.) Even that list of topic headings is
explicitly said by the Company's letter to be subject to change. In light of the
paucity of information about what the proposed report would contain, it is not
surprising that the Proponent's response was to tell the Company that it would
not withdraw the proposal without "additional information about the report".
(See Proponent's answering letter of February 6, 2006, appended as Annex A.)
It was undoubtedly just to preclude such anticipatory mootness arguments that
caused the Commission to add the word "already" in Rule 14a-8(i)(10), which
reads as follows: "If the company has already substantially implemented the
proposal." (Emphasis supplied.)
Topic headings, especially those subject to change without notice, do not
constitute a report.
Since Kroger has not "already" implemented the proposal, it cannot be excluded
pursuant to Rule 14a-8(i)(10).
RULE 14a-8(i)(3)
The Company sets up a straw person and then tries to shoot it down (with
Vice-Presidential aim, we might add).
The straw person is the claim that the proposal is "really" a GRI proposal, and
therefore inherently vague. The bad aim is that an almost identical proposal,
using very much the same language (other than omitting that the requested report
include item (iii)) was very recently held by the Staff not to be a "vague" GRI
proposal. Wendy's International, Inc. (February 24, 2006)
It is a straw person because, even aside from the Wendy's letter, the
Proponent's shareholder proposal is not a GRI proposal. The Company's argument
that it is one is based solely on (i) a passing reference suggesting that Kroger
"join the 700 companies" whose sustainability report is based on the GRI and,
more fundamentally, on (ii) the Company's assertion that the Proponent's
"subsequent correspondence with Kroger clearly illustrate that the Proponent
truly is looking for a sustainability report based on GRI Guidelines". Since the
Company did not include its Exhibit A in the copy of its submission sent to the
Proponent one cannot be certain what correspondence is being relied upon by
Kroger. However, since the next two paragraphs reference the "Proponent's
correspondence dated February 6, 2006", we assume that that is the
correspondence (and the only correspondence) being relied on by the Company. An
examination of the Proponent's letter of February 6, however, rather than
supporting the Company's position, belies that position.
In that letter (appended hereto as Annex A), the Proponent enumerates why it is
unwilling to withdraw its proposal based on a list of topic headings, stating
that in order to withdraw the resolution, "we need additional information about
the report". The second thru sixth paragraphs of the letter then lists some of
the additional information needed. Questions are raised as to the substance of
the report, such as "detail about how [the topics] will be covered", whether
metrics will be used, whether there will be narrative descriptions, whether
there will be quantifiable data, whether there will there be future quantifiable
goals set, whether there will be policy goals set, whether there will be
reporting of areas that the Company acknowledges are in need of improvement etc.
In addition, questions are raised about the format of the report, such as its
accessibility on the Company's website, whether it would be downloadable and if
so as a whole or only page by page and whether it will be (as are some 700
sustainability reports issued by other companies) in a format compatible with
the GRI.
It is thus abundantly clear that, contrary to the Company's assertion, the core
of the Proponent's frustration with only being given a changeable list of topic
headings has nothing to do with a secret desire to require GRI reporting, but
rather tangentially with the format of disclosure and centrally with the absence
of any information on the substance of just what will be disclosed.
Subsequent to the Proponent's letter of February 6, 2006, there was an
additional set of correspondence between the Company and the Proponent. We are
unclear whether that correspondence was included in the Company's Exhibit A,
since the Proponent was not supplied with a copy of Exhibit A. In any event,
appended to this letter as Annex C is a copy of the subsequent (and final)
letter, dated February 9, 2006, sent by the Proponent to the Company prior to
Kroger's filing of its no-action letter request. In that letter, the Proponent
reemphasizes that it is unable to withdraw the proposal based on the scant
information about the yet to be drafted report that the Company had heretofore
supplied. The Proponent states that in order for it to withdraw the proposal it
needs "more detailed information that describes in greater depth the content of
the report and the process for its development" and requests that Kroger make
"more information available concerning the scope of the report and the
timeline". (Both quotations from second paragraph of the letter of February 9.)
The Proponent goes further and expresses its willingness to withdraw the
proposal, if information about content is not presently available, in return for
"a commitment from Kroger to engage in an on-going dialogue with shareholders",
including a discussion of the content of the report (third paragraph), and
suggests that opportunities be provided for review of the draft of the report as
well as post report dialogue (fourth paragraph). [The Company apparently was
unwilling to make a commitment for dialogue and instead filed its no-action
letter request.] Finally, the Proponent's letter continues (fifth paragraph):
I'm sure you can appreciate the General Board's perspective in that we are being
asked to withdraw based largely on the preliminary table of contents and with
the knowledge that "the final product could change substantially."
Most conspicuous by its absence is any reference to the GRI in this letter. If
it was not included in the Company' Exhibit A, perhaps that is the reason.
In short, nothing in the Proponent's correspondence with Kroger even remotely
supports the Company's argument, made up out of whole cloth, that the
Proponent's shareholder proposal is vague because it is "really" a GRI proposal.
In summary, the Proponent's shareholder report, requesting a sustainability
report, is neither vague nor indefinite nor misleading.
In conclusion, we request the Staff to inform the Company that the SEC proxy
rules require denial of the Company's no action request. We would appreciate
your telephoning the undersigned at 941-349-6164 with respect to any questions
in connection with this matter or if the staff wishes any further information.
Faxes can be received at the same number. Please also note that the undersigned
may be reached by mail or express delivery at the letterhead address (or via the
email address).
Very truly yours,
/s/
Paul M. Neuhauser
Attorney at Law
cc: Jill V. McIntosh, Esq.
Daniel Nielsen
Vidette Bullock-Mixon
Sister Pat Wolf
[STAFF REPLY LETTER]
March 29, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: The Kroger Co.
Incoming letter dated February 14, 2006
The proposal requests that the board prepare a sustainability report and provide
a summary of the report to shareholders.
We are unable to concur in your view that Kroger may exclude the proposal under
rule 14a-8(i)(3). Accordingly, we do not believe that Kroger may omit the
proposal from its proxy materials in reliance on rule 14a-8(i)(3).
We are unable to concur in your view that Kroger may exclude the proposal under
rule 14a-8(i)(10). Accordingly, we do not believe that Kroger may omit the
proposal from its proxy materials in reliance on rule 14a-8(i)(10).
Sincerely,
/s/
Mark F. Vilardo
Special Counsel
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