Company Name: Merck & Co., Inc.
Public Availability Date: January 4, 2005
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER
[INQUIRY LETTER]
Tel. & Fax: 239 591 2651
e-mail: allerrep@aol.com
Via fax to 202 942 9634 - 3 pages
27 November 2005
SEC Complaint Center
100 F Street NE
Washington DC 20549-0213
Re: Merck & Co., Inc. Shareholder proposal from Dr. Donald J. Perrella (the
"Proponent")
To the Appropriate Members of the SEC Complaint Center:
Recently I submitted a shareholder proposal to Merck & Co., Inc (Merck). Merck
is attempting to omit my stockholder proposal and Merck attorney Bruce Ellis
sent a letter to the SEC via Fedex on 17 November 2005 seeking your concurrence.
I have submitted a statement to the SEC in opposition to Merck's action.
Omitting my proposal is now a contested inter-parties matter.
I AM NOT COMPLAINING ABOUT MERCK'S ACTION TO OMIT MY PROPOSAL.
A copy of Ellis' two-page letter sent to the SEC on 17 November 2005 follows. I
am complaining about the following sentence on page 2 of Ellis' letter
(indicated by left and right hand marginal notations):
"If the Staff believes that it will not be able to concur in our view that the
Proposal may be omitted, we very much would appreciate the opportunity to
discuss this issue in more detail with the appropriate persons before issuance
of a formal response."
This request is, in my opinion, inappropriate, unethical and unwarramed in a
contested matter. I ask that the SEC Complaint Center reprimand Merck attorney
Bruce Ellis as well as Merck itself for this request. I ask further that the SEC
Complaint Center take any additional action or actions that it deems suitable in
this matter.
Very truly yours,
/s/
[INQUIRY LETTER]
November 17, 2005
VIA FEDEX
Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporate Finance
100 F Street, N.E.
Washington, DC 20549
Re: Merck & Co., Inc. Shareholder Proposal from Dr. Donald J. Perrella (the
"Proponent")
Ladies and Gentlemen:
Merck & Co., Inc. (the "Company"), a New Jersey corporation, has received a
shareholder's proposal (the "Proposal") from the Proponent for inclusion in the
Company's proxy materials for the 2006 Anmial Meeting of Stockholders (the
"Proxy Materials"). We believe that the Proposal may be omitted under Rule
14a-8(i)(5) (relevance).
The Proposal provides:
RESOLVED: The shareholders request the Board of Directors to adopt a policy of
banning the obtaining and distribution to participants in the Partnership for
Giving Campaign of gifts obtained from the PRC [Peoples Republic of China].
The Proposal and supporting statement are included as Appendix A.
The Company is a global research-driven pharmaceutical company that discovers,
develops, manufactures and markets a broad range of innovative products to
improve human and animal health, directly and through its joint ventures.
The Proposal relates to thank you gifts sent from time to time by the Company in
connection with its Partnership for Giving. Through the Partnership for Giving,
the Company helps employees and retired employees support community efforts and
organizations that are important to them. The Company does not intend to send
gifts in 2006. The Company did send inscribed paperweight gifts to certain
participants in the past. In the aggregate, the total amount paid by the Company
for these gifts was about $8,400 in 2005.
A proposal is excludible under Rule 14a-8(i)(5) if it relates to operations
which account for less than 5 percent of a company's total assets at the end of
its most recent fiscal year, and for less than 5 percent of its net earnings and
gross sales for its most recent fiscal year, and is not otherwise significantly
related to a company's business.
According to the Company's Annual Report for 2004, its most recently completed
fiscal year,
Total assets were approximately $42.57 billion.
Net income was approximately $5.81 billion
Gross sales were approximately $22.93 billion
In other words, the amount spent on thank you gifts in the aggregate was only
about 0.0001 percent of net income, the smallest relevant measure. Therefore,
the Proposal relates to an operation that accounts for much less than 5 percent
of the Company's assets, net earnings and gross sales. The Proposal is not
otherwise significantly related to the Company's business as a global
research-driven pharmaceutical company that discovers, develops, manufactures
and markets a broad range of innovative products to improve human and animal
health. The Proposal does not appear to implicate any significant policy issue.
Therefore, we believe the Proposal should be excludible under Rule 14a-8(i)(5).
The Staff agreed that a similar proposal from the Proponent was excludible on
the basis of Rule 14a-8(i)(5) in 2004. Merck & Co., Inc. (January 27, 2004).
In accordance with Rule 14a-8(j)(2), we have enclosed six copies of this letter
and the Proposal including the statements in support thereof. An additional copy
is included, which we ask that you use to acknowledge receipt of this submission
by date stamping and returning to me in the enclosed self-addressed envelope.
If the Staff believes that it will not be able to concur in our view that the
Proposal may be omitted, we very much would appreciate the opportunity to
discuss this issue in more detail with the appropriate persons before issuance
of a formal response.
By copy of this letter, the Company is notifying the Proponent of its intention
to omit the Proposal from the Proxy Materials.
For the Staff's information, the Company expects to print its Proxy Statement on
or about March 1, 2006.
If you have any questions regarding this matter or require further information,
please contact me at (908) 423-5671.
Thank you for your time and consideration.
Very truly yours,
MERCK & CO., INC.
By: /s/
Bruce Ellis
Assistant Counsel
Enc.
CC: Dr. Donald J. Perrella
[INQUIRY LETTER]
Tel. & Fax: 239 591 2651
e-mail: allerrep@aol.com
21 November 2005
Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporate Finance
100 F Street
Washington, DC 20549
Re: Merck & Co., Inc. Shareholder proposal from Dr. Donald J. Perrella (the
"Proponent")
Ladies and Gentlemen:
This is my response to the letter sent to you VIA FEDEX on 17 November 2005 from
Merck attorney Bruce Ellis.
1. Appendix A attached to attorney Ellis' letter is NOT, repeat NOT, my current
Proposal.
On 10.25.2005 I submitted a shareholder proposal to Merck & Co., Inc. This was
my original Proposal. On 11.07.2005 I received a letter dated 11.04.2005 from
Debra A. Bollwage, Merck's Senior Assistant Secretary (copy attached in attorney
Ellis' letter to you of 11.17.2005 as Appendix A) advising that my original
Proposal (copy attached in attorney Ellis' letter to you Of 11.17.2005 as
Appendix A) was subject to exclusion on procedural grounds as it contained over
500 words. I then revised my original Proposal to reduce its word number to less
than 500 and faxed it to Ms. Bollwage on 9.11.2005. A copy of my 9.11.2005
letter of transmittal to her is attached hereto as Appendix 1. This revised
Proposal is now my only Proposal.
2. Merck attorney Ellis, Merck Senior Assistant Secretary Nancy Van Allen, and
Merck's Board of Directors all responded to my related 2004 Proposal by stating
that Merck would no longer send thank-you gifts. All such statements were false.
The third sentence of the penultimate paragraph on page 1 of Attorney Ellis'
letter to the SEC of 11.17.2005 states: "The Company does not intend to send
gifts in 2006." Attorney Ellis said the same thing in his 16 12.2003 letter to
the SEC regarding my related 2004 proposal [decided on completely different
grounds in Merck & Co., Inc. (01.27.2004)]. His statement then was "[Merck] no
longer sends thank you gifts to donors for its giving campaign. Instead the
Company now sends thank-you letters." This statement has been proven false by
the gift I received early in 2005. Why should Merck attorney Ellis be believed
now?
Also with regard to my related 2004 proposal Proponent received a letter dated
12.02.2003 from Nancy Van Allen, Senior Assistant Secretary, advising that:
"... Merck has changed its policy regarding sending gifts to certain [P4GC]
Donors. Beginning with the recently-completed Campaign, a thank-you letter from
the managerial chairperson of the Campaign will be sent instead of a gift during
the first quarter of 2004."
This statement has been proven false by the gift I received early in 2005.
In addition, in a letter dated 02.05.2004 from Merck Senior Assistant Secretary
Nancy Van Allen transmitted the opposition Statement of the Board of Directors
to my related 2004 statement:
"In 2003, the Company discontinued its practice of sending gifts to Employee
Giving Campaign Donors. The Company now sends thank you letters to Donors in
appreciation of their participation....that this change renders the stockholder
proposal moot, and that shareholder action is therefore unnecessary.
The Board of Directors recommends a vote AGAINST this proposal."
This statement of the Board of Directors has been proven false by the gift I
received early in 2005.
3. Attorney Ellis' letter to the SEC of 11.17.2005 does not contradict,
controvert, deny or traverse any statement in my original Proposal.
4. The question for the SEC is whether Merck is justified in using the
negligible exclusion section of Rule 14a-8(I((5) to cover-up, and to conceal
from shareholders deliberate false statements by a corporate attorney, a
corporate officer and the Board of Directors themselves.
To suggest as Merck attorney Ellis is doing that my Proposal should be dismissed
because the cost of the thank you gift is a negligible expense to a billion
dollar company like Merck is truly shocking. If the SEC agrees it is saying that
is it ethically acceptable to issue false statements about financially
negligible matters. False statements by a corporate attorney, by a Senior
Assistant Secretary, and especially not by the Board of Directors can never be
justified by claims that the amount of money involved is negligible. To allow
Merck to remove my revised Proposal gives Merck the license to act unethically
to say one thing but do the opposite forever! The cumulative effect of multiple
'negligible expenses', however, could be financially significant. Where does one
draw the line? How can Merck ethically justify such deliberate falsehoods? The
SEC can approve Merck's arrogant, high-handed, self-justifying action only if it
concludes that it is relevant for Merck to issue false statements about any and
all financially negligible matters at any time!
I object to any bilateral discussions by SEC Staff with Merck attorney Ellis, as
he has requested in his letter, or with any other Merck representative. Such
consultation would negate both the appearance and the actuality of fairness and
impartiality. I also demand and insist that copy of the decision of the SEC be
sent directly to me.
I urge you to reject Merck's request as a blatant attempt to use, unethically
and unfairly, a rule allowing exclusion of negligible amounts in order to
conceal, to hide from shareholder scrutiny, deliberate false statements by high
level corporate employees and even its Board of Directors.
Sincerely yours,
/s/
c: Merck attorney Bruce Ellis
[INQUIRY LETTER]
November 17, 2005
VIA FEDEX
Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporate Finance
100 F Street, N.E.
Washington, DC 20549
Re: Merck & Co., Inc. Shareholder Proposal from Dr. Donald J. Perrella (the
"Proponent")
Ladies and Gentlemen:
Merck & Co., Inc. (the "Company"), a New Jersey corporation, has received a
shareholder's proposal (the "Proposal") from the Proponent for inclusion in the
Company's proxy materials for the 2006 Annual Meeting of Stockholders (the
"Proxy Materials"). We believe that the Proposal may be omitted under Rule
14a-8(i)(5) (relevance).
The Proposal provides:
RESOLVED: The shareholders request the Board of Directors to adopt a policy of
banning the obtaining and distribution to participants in the Partnership for
Giving Campaign of gifts obtained from the PRC [Peoples Republic of China].
The Proposal and supporting statement are included as Appendix A.
The Company is a global research-driven pharmaceutical company that discovers,
develops, manufactures and markets a broad range of innovative products to
improve human and animal health, directly and through its joint ventures.
The Proposal relates to thank you gifts sent from time to time by the Company in
connection with its Partnership for Giving. Through the Partnership for Giving,
the Company helps employees and retired employees support community efforts and
organizations that are important to them. The Company does not intend to send
gifts in 2006. The Company did send inscribed paperweight gifts to certain
participants in the past. In the aggregate, the total amount paid by the Company
for these gifts was about $8,400 in 2005.
A proposal is excludible under Rule 14a-8(i)(5) if it relates to operations
which account for less than 5 percent of a company's total assets at the end of
its most recent fiscal year, and for less than 5 percent of its net earnings and
gross sales for its most recent fiscal year, and is not otherwise significantly
related to a company's business.
According to the Company's Annual Report for 2004, its most recently completed
fiscal year,
Total assets were approximately $42.57 billion.
Net income was approximately $5.81 billion
Gross sales were approximately $22.93 billion
In other words, the amount spent on thank you gifts in the aggregate was only
about 0.0001 percent of net income, the smallest relevant measure. Therefore,
the Proposal relates to an operation that accounts for much less than 5 percent
of the Company's assets, net earnings and gross sales. The Proposal is not
otherwise significantly related to the Company's business as a global
research-driven pharmaceutical company that discovers, develops, manufactures
and markets a broad range of innovative products to improve human and animal
health. The Proposal does not appear to implicate any significant policy issue.
Therefore, we believe the Proposal should be excludible under Rule 14a-8(i)(5).
The Staff agreed that a similar proposal from the Proponent was excludible on
the basis of Rule 14a-8(i)(5) in 2004. Merck & Co., Inc. (January 27, 2004).
In accordance with Rule 14a-8(j)(2), we have enclosed six copies of this letter
and the Proposal including the statements in support thereof. An additional copy
is included, which we ask that you use to acknowledge receipt of this submission
by date stamping and returning to me in the enclosed self-addressed envelope.
If the Staff believes that it will not be able to concur in our view that the
Proposal may be omitted, we very much would appreciate the opportunity to
discuss this issue in more detail with the appropriate persons before issuance
of a formal response.
By copy of this letter, the Company is notifying the Proponent of its intention
to omit the Proposal from the Proxy Materials.
For the Staff's information, the Company expects to print its Proxy Statement on
or about March 1, 2006.
If you have any questions regarding this matter or require further information,
please contact me at (908) 423-5671.
Thank you for your time and consideration.
Very truly yours,
MERCK & CO., INC.
By: /s/
Bruce Ellis
Assistant Counsel
Enc.
CC: Dr. Donald J. Perrella
[INQUIRY LETTER]
OVERNIGHT DELIVERY
November 4, 2005
Dr. Donald J. Perrella
2760 Island Pond Lane
Naples, FL 34119-7526
Dear Dr. Perrella:
This is to acknowledge your letter to Ms. Celia A. Colbert dated October 17,
2005 and your stockholder proposal regarding "gifts to donors", which was
submitted for inclusion in the proxy materials for the 2006 Annual Meeting of
Stockholders.
Rule 14a-8(b) of the SEC's Regulation 14A for the Solicitation of Proxies
requires that in order to be eligible to submit a proposal, a shareholder must
have continuously held at least $2,000 in market value of Company (Merck)
securities for at least one year by the date of submitting the proposal. Since
you do not appear in the Company's records as a registered holder, you must
provide a written statement from the "record" holder of the Merck securities
(usually a broker or bank) verifying that you have held at least $2,000 in
market value of Merck securities continuously for one year as of the date the
proposal was submitted. In addition, you must provide a written statement that
you will continue to hold the requisite market value of Merck securities through
the date of the Annual Meeting.
Rule 14a-8(d) provides that the "proposal, including any accompanying supporting
statement, may not exceed 500 words." The Proposal including its supporting
statement exceeds 500 words. To avoid exclusion on procedural grounds, you must
resubmit the proposal in a form that complies with Rule 14a-8(d).
In order to complete the eligibility and procedural requirements in connection
with the submission of the stockholder proposal, a response must be postmarked,
or faxed to (908) 735-1224, within 14 calendar days from the date you receive
this letter. Please direct a response to my attention.
Very truly yours,
/s/
Debra A. Bollwage
Senior Assistant Secretary
[INQUIRY LETTER]
Tel. & Fax: 239 591 2651
e-mail: allerrep@aol.com
17 October 2005
Celia A. Colbert
Vice President, Secretary & Assistant General Counsel
Merck & Co., Inc.
One Merck Drive
Whitehouse Station, NJ 08889-0100
Dear Ms. Colbert:
I am submitting herewith the following Shareholder resolution for submission at
the 2006 Annual Meeting of Shareholders.
Sincerely yours,
/s/
[APPENDIX]
Shareholder Resolution of Dr. Donald J. Perrella
WHEREAS: Earlier this year Proponent received a letter dated 14 March 2005 from
Ms Margaret G. McGlynn, R.Ph, President of Merck's USHH division and Chair,
Partnership for Giving Campaign enclosing, as a token of Merck's recognition of
his participation, a metallic, heart shaped object that was made for Merck in
The Peoples Republic of China (PRC).
WHEREAS: The PRC is not a true friend of the USA: it is the world's largest and
most powerful Communist country; and is determined to become the predominant
power in Asia. It has recently adopted legislation authorizing war against
Taiwan, a country the USA has pledged to defend.
According to the March 2005 official report of the US Government on trade
barriers, the PRC has not lived up to the market-opening promises it made in
2001 in order to join the WTO; and the PRC has failed to enforce its laws
against theft of American movies, computer software and other intellectual
property.
The PRC's policy of linking its currency directly to the dollar has grossly
undervalued the yuan as much as forty percent, giving Chinese companies a
tremendous competitive advantage.
The PRC is governed by a repressive Communist dictatorship that severely
curtails political and religious freedoms, and enforces it one-child policy by
what former Secretary of State Colin Powell characterized as 'coercive
abortion.'
The PRC disregards the rule of law when it is in its interest to do so as shown
by its actions in 2001 when an unarmed US surveillance plane was forced to
crash-land at a Chinese airbase after a Chinese fighter pilot recklessly caused
his jet to crash into the US plane; the PRC held all 24 US crew members for 12
days before releasing them, and then held the US plane for months while they
examined its top-secret equipment despite the plane's sovereign immunity status.
WHEREAS: In August 2003 Proponent submitted a Stockholder Proposal (subsequently
withdrawn) for consideration at the 2004 Annual Meeting of Stockholders asking
that future gifts to participants in the Partnership for Giving Campaign be
obtained from a source other than the PRC. Proponent then received a letter
dated 02 December 2003 from Nancy Van Allen, Senior Assistant Secretary,
advising:
"This is to confirm our telephone conversation yesterday in which I advised you
that Merck has changed its policy regarding sending gifts to certain Employee
Giving Campaign Donors. Beginning with the recently-completed Campaign, a
thank-you letter from the managerial chairperson of the Campaign will be sent
instead of a gift during the first quarter of 2004."
And in a letter dated 16 December 2003 Merck Assistant Counsel Bruce Ellis
stated "The Company no longer sends thank you gifts to donors for its giving
campaign. Instead the Company now sends thank-you letters."
In a letter to Proponent dated 05 February 2004 Nancy Van Allen advised that the
Statement of the Board of Directors Statement in Opposition to his Proposal was:
"In 2003, the Company discontinued its practice of sending gifts to Employee
Giving Campaign Donors. The Company now sends thank you letters to Donors in
appreciation of their participation. We believe that this change renders the
stockholder proposal moot, and that shareholder action is therefore unnecessary.
The Board of Directors recommends a vote AGAINST this proposal."
WHEREAS: As each of the statements from Nancy Van Allen, Bruce Ellis, and even
the Board of Directors has been shown to be false by Ms. McGlynn's letter to
Proponent of 14 March 2005 with its enclosed gift, the issue is now no longer
the appropriateness of such gifts but the veracity not only of senior company
employees but even its Board of Directors.
RESOLVED: The shareholders request the Board of Directors to adopt a policy
banning the obtaining and distribution to participants in the Partnership for
Giving Campaign of gifts obtained from the PRC.
[STAFF REPLY LETTER]
January 4, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Merck & Co., Inc.
Incoming letter dated November 17, 2005
The proposal requests that the Board of Directors adopt a policy banning the
obtaining and distribution to participants in Merck's Partnership for Giving
Campaign of gifts obtained from the People's Republic of China.
There appears to be some basis for your view that Merck may exclude the proposal
under rule 14a-8(i)(5). Accordingly, we will not recommend enforcement action to
the Commission if Merck omits the proposal from its proxy materials in reliance
on rule 14a-8(i)(5).
Sincerely,
/s/
Mary Beth Breslin
Special Counsel
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