Company Name: Northern Trust Corp.
Public Availability Date: February 13, 2006
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
[INQUIRY LETTER]
December 21, 2005
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
RE: Northern Trust Corporation Omission of Stockholder Proposal Pursuant to Rule
14a-8
Ladies and Gentlemen:
In accordance with Rule 14a-8(j) under the Securities Exchange Act of 1934, as
amended, we hereby enclose six copies of the following:
1. A letter dated October 25, 2005 from Thomas P. V. Masiello, on behalf of the
Massachusetts Laborers' Pension Fund (the "Proponent"), the beneficial owner of
at least $2,000 in market value of voting securities of Northern Trust
Corporation (the "Company"), including the Proponent's proposal for action at
the Company's forthcoming annual meeting and the statement of the Proponent in
support thereof (collectively, the "Proposal").
2. This statement setting forth the reason why the Proposal may properly be
omitted from the Company's proxy statement (the "Proxy Statement") for the 2006
annual meeting of stockholders (the "2006 Meeting") pursuant to Rules
14a-8(i)(9) and 14a-8(i)(10).
We wish to inform you (and, by copy of this letter, the Proponent) of the
intended omission and to explain the reasons for the Company's position.
I. The Proposal
The Proponent has requested that the following Proposal being included in the
Proxy Statement:
That the shareholders of the Company hereby request that the Board of Directors
initiate the appropriate process to amend the Company's governance documents
(certificate of incorporation or bylaws) to provide that directors nominees
shall be elected by the affirmative vote of the majority of votes cast at an
annual meeting of shareholders.
The full text of the Proposal is set forth in the letter from the Proponent
attached hereto as Exhibit A.
II. Summary
As discussed more fully below, the Company believes that it may properly omit
the Proposal from the Company's Proxy Statement pursuant to Rules 14a-8(i)(9)
and 14a-8(i)(10) as the Proposal directly conflicts with one of the Company's
own proposals to be submitted to shareholders at the 2006 Meeting and has been
substantially implemented.
III. The Proposal May be Omitted Pursuant to Rule 14a-8(i)(9) Because the
Proposal Directly Conflicts with One of the Company's Own Proposals to Be
Submitted to Shareholders at the 2006 Meeting
Pursuant to Rule 14a-8(i)(9), a company may exclude a shareholder proposal if
such proposal directly conflicts with one of the Company's own proposals to be
submitted to shareholders at the same meeting. Under Rule 14a-8(i)(9) and its
predecessor, Rule 14a-8(c)(9), the Staff has consistently permitted companies to
exclude shareholder proposals if there is some basis for concluding that the
shareholder proposal and the company's proposal present alternative and
conflicting decisions for shareholders and that submitting both proposals to a
vote could provide inconsistent and ambiguous results.
The Company intends to submit to shareholders a proposal to amend the Company's
charter to eliminate cumulative voting so that the Board of Directors can amend
the bylaws to do the same and adopt a corporate governance provision providing
for the submission of a letter of resignation by any director in an uncontested
election who receives a majority of the votes cast "withheld" from such
director. The Proposal conflicts with the Company's proposal because the
Proposal simply instructs the Company to initiate a process to amend the
documents, whereas the Company's proposal requests approval to actually amend
the documents. If the Proposal is submitted in addition to or rather than the
Company's proposal, it could result in a year long delay while the Board of
Directors "initiate the appropriate process" to do what the Company's proposal
would do immediately. Because of this conflict, the Proposal may be properly
excluded from the Company's Proxy Statement pursuant to Rule 14a-8(i)(9).
IV. The Proposal May be Omitted Pursuant to Rule 14a-8(i)(10) Because the
Proposal Has Already Been Substantially Implemented By the Company
Pursuant to Rule 14a-8(i)(10), a company may exclude a shareholder proposal if
the company has already substantially implemented such proposal. The
substantially implemented standard replaced the predecessor rule allowing the
omission of a proposal that was "moot." It also clarified the Staff's
interpretation of the predecessor rule that the proposal need not be "fully
effected" by the company to meet the mootness test, so long as it is
substantially implemented. The Staff has consistently taken the position that a
stockholder proposal has been substantially implemented when a company already
has taken steps to fulfill the underlying goal of the proposal.
The Company has taken steps to fulfill the underlying goal of the proposal by
preparing and planning to submit to shareholders a proposal to amend the
Company's charter to eliminate cumulative voting so that the Board of Directors
can amend the bylaws to do the same and adopt a corporate governance provision
providing for the submission of a letter of resignation by any director in an
uncontested election who receives a majority of the votes cast "withheld" from
such director. The Company's proposal substantially implements what the Proposal
requests that the Board of Directors "initiate the appropriate process" to do.
Therefore, the Proposal may be properly excluded pursuant to Rule 14a-8(i)(10).
V. Conclusion
Based on the foregoing, the Company believes the Proposal may be excluded in its
entirety from the Company's Proxy Statement for the 2006 Meeting. The Company
seeks a determination by the staff of the Division of Corporation Finance that
it will not recommend enforcement action to the Commission if the Company
excludes the Proposal from its proxy materials. If you have any questions or
need additional information, please contact the undersigned at (312) 557-8265.
Sincerely,
Northern Trust Corporation
By: /s/
Name: Kelly R. Welsh
Title: Executive Vice President and General Counsel
[INQUIRY LETTER]
October 25, 2005
Ms. Rose A. Ellis
Corporate Secretary
Northern Trust
50 South LaSalle Street
Chicago, IL 60675
Dear Ms. Ellis,
On behalf of the Massachusetts Laborers' Pension Fund ("Fund"), I hereby submit
the enclosed shareholder proposal ("Proposal") for inclusion in the Northern
Trust ("Company") proxy statement to be circulated to Company shareholders in
conjunction with the next annual meeting of shareholders. The Proposal is
submitted under Rule 14(a)-8 (Proposals of Security Holders) of the U.S.
Securities and Exchange Commission's proxy regulations.
The Fund is the beneficial owner of approximately 2,000 shares of the Company's
common stock, which have been held continuously for more than a year prior to
this date of submission. The Proposal is submitted in order to promote a
governance system at the Company that enables the Board and senior management to
manage the Company for the long-term. Maximizing the Company's wealth generating
capacity over the long-term will best serve the interests of the Company
shareholders and other important constituents of the Company.
The Fund intends to hold the shares through the date of the Company's next
annual meeting of shareholders. The record holder of the stock will provide the
appropriate verification of the Fund's beneficial ownership by separate letter.
Either the undersigned or a designated representative will present the Proposal
for consideration at the annual meeting of shareholder.
If you have any questions or wish to discuss the Proposal, please contact our
Corporate Governance Advisor, Linda Priscilla at (202) 942-2359. Copies of
correspondence or a request for a "no-action" letter should be forwarded to
Linda Priscilla, Laborers' International Union of North America Corporate
Governance Project, 905 16thStreet, NW, Washington, DC 20006.
Very truly yours,
/s/
Thomas P. V. Masiello
Administrator
TPVM/dmk
Enclosure
Cc: Linda Priscilla
Director Election Majority Vote Standard Proposal
Resolved: That the shareholders of Northern Trust ("Company") hereby request
that the Board of Directors initiate the appropriate process to amend the
Company's governance documents (certificate of incorporation or bylaws) to
provide that director nominees shall be elected by the affirmative vote of the
majority of votes cast at an annual meeting of shareholders.
Supporting Statement: Our Company is incorporated in Delaware. Delaware law
provides that a company's certificate of incorporation or bylaws may specify the
number of votes that shall be necessary for the transaction of any business,
including the election of directors. (DGCL, Title 8, Chapter 1, Subchapter VII,
Section 216). The law provides that if the level of voting support necessary for
a specific action is not specified in a corporation's certificate or bylaws,
directors "shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors."
Our Company presently uses the plurality vote standard to elect directors. This
proposal requests that the Board initiate a change in the Company's director
election vote standard to provide that nominees for the board of directors must
receive a majority of the vote cast in order to be elected or re-elected to the
Board.
We believe that a majority vote standard in director elections would give
shareholders a meaningful role in the director election process. Under the
Company's current standard, a nominee in a director election can be elected with
as little as a single affirmative vote, even if a substantial majority of the
votes cast are "withheld" from that nominee. The majority vote standard would
require that a director receive a majority of the vote cast in order to be
elected to the Board.
The majority vote proposal received high levels of support last year, winning
majority support at Advanced Micro Devices, Freeport McMorgan, Marathon Oil,
Marsh and McClennan, Office Depot, Raytheon, and others. Leading proxy advisory
firms recommended voting in favor of the proposal.
Some companies have adopted board governance policies requiring director
nominees that fail to receive majority support from shareholders to tender their
resignations to the board. We believe that these policies are inadequate for
they are based on continued use of the plurality standard and would allow
director nominees to be elected despite only minimal shareholder support We
contend that changing the legal standard to a majority vote is a superior
solution that merits shareholder support.
Our proposal is not intended to limit the judgment of the Board in crafting the
requested governance change. For instance, the Board should address the status
of incumbent director nominees who fail to receive a majority vote under a
majority vote standard and whether a plurality vote standard may be appropriate
in director elections when the number of director nominees exceeds the available
board sears.
We urge your support for this important director election reform.
[INQUIRY LETTER]
January 20, 2006
Office of Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Subject: Response to Northern Trust Corporation's Request for No-Action Advice
Concerning the Massachusetts Laborers' Pension Fund's Shareholder Proposal
Dear Sir or Madam:
The Massachusetts Laborers' Pension Fund ("Fund") hereby submits this letter in
reply to Northern Trust Corporation's ("Northern Trust" or "Company") Request
for No-Action Advice to the Security and Exchange Commission's Division of
Corporation Finance staff ("Staff") concerning the Fund's Director Election
Majority Vote Standard shareholder proposal ("Proposal") and supporting
statement submitted to the Company for inclusion in its 2006 proxy materials.
The Fund respectfully submits that the Company has failed to satisfy its burden
of persuasion under both Rules 14a-8(i)(9) and (i)(10) and should not be granted
permission to exclude the Proposal. Pursuant to Rule 14a-8(k), six paper copies
of the Fund's response are hereby included and a copy has been provided to the
Company.
The Company argues that the Proposal may be omitted under Rule 14a-8(i)(9)
because it conflicts with one of the Company's own proposals to be submitted to
shareholders at the same meeting. However, such is not the case and the
Company's request should be denied.
The Company states:
The Company intends to submit to shareholders a proposal to amend the Company's
charter to eliminate cumulative voting so that the Board of Directors can amend
the bylaws to do the same and adopt a corporate governance provision providing
for the submission of a letter of resignation by any director in an uncontested
election who receives a majority of the votes cast 'withheld' from such
director. The Proposal conflicts with the Company's proposal because the
Proposal simply instruct the Company to initiate a process to amend the
documents, whereas the Company's proposal requests approval to actually amend
the documents.
This argument appears almost to be arguing that the Company has substantially
implemented the Proposal because the "Company proposal requests approval to
actually amend the documents." As we will show below, the Staff has recently
rejected companies' request to omit the Proposal on substantial implementation
grounds. Most important, this argument by the Company that it is seeking to
"actually amend the documents" overlooks the critical fact, which is that the
amendment to the document the Proposal seeks provides that directors be elected
by a majority of votes cast and has nothing whatsoever to do with cumulative
voting or director resignation policies.
The Proposal submitted by the Fund provides:
Resolved, That the shareholders of Northern Trust ("Company") hereby request
that the Board of Directors initiate the appropriate process to amend the
Company's governance documents (certificate of incorporation or bylaws) to
provide that director nominees shall be elected by the affirmative vote of the
majority of votes cast at an annual meeting of shareholders.
The Proposal relates to the standard for being elected to the board of
directors. The Fund seeks a standard that would have directors be elected by a
majority of the vote cast rather than the current plurality standard. The fact
that the Company intends to submit a proposal to eliminate cumulative voting and
then adopt a director resignation policy is irrelevant to the standard for
election to the board.
Cumulative voting relates to the manner in which shareholder votes are
allocated. Northern Trust's most recent proxy statement provides in pertinent
part:
You may vote cumulatively in the election of directors, a process described
below under "Election of Directors."
....
The directors will be elected at the annual meeting by a plurality of all the
votes cast (i.e., the 12 nominees for director who receive the most votes will
be elected). Votes to "withhold" authority for a nominee or nominees will have
no effect on the election of directors, and it is not anticipated that there
will be any broker non-votes on this proposal since brokers will have discretion
to vote in the election of directors....
....
The enclosed proxy card provides instructions on how to vote for all nominees or
to withhold authority to vote for all or one or more nominees. You have
cumulative voting rights in the election of directors, meaning that your total
number of votes equals the number of your shares of common stock multiplied by
12, the number of directors to be elected. You may allocate these cumulative
votes equally among the nominees or otherwise as you specify on the enclosed
proxy card. Unless you choose a different allocation and so mark on your proxy
card, it is expected that the proxy holders will allocate cumulative votes
equally among all nominees for whom authority to vote has not been withheld.
However, the proxy holders will have the discretion to allocate cumulative votes
differently among those for whom authority to vote has not been withheld, so as
to elect all or as many nominees as possible depending on the circumstances at
the annual meeting. If you wish to exercise your right to cumulative voting, you
must provide us with written instructions on the enclosed proxy card; you may
not exercise this right by voting by telephone or through the Internet.
Whether the Company maintains a system of cumulative voting or not is irrelevant
to the standard for being elected to the Board of Directors. Whether or not
votes are cumulated, under the Company's plurality system the nominee receiving
more votes than his or her opponent - and virtually all elections are
uncontested - will be elected to the Board, even if 99% of votes are withheld
from that nominee. As the Company's proxy statement noted, "Votes to 'withhold'
authority for a nominee or nominees will have no effect on the election of
directors." Further, whether or not the Board has adopted an informal corporate
governance guideline that elected directors receiving less than a majority of
votes cast will submit their resignation is likewise irrelevant. Cumulative
voting relates to how votes are allocated; a director resignation policy relates
to post-election procedures dealing with the resignations of legally elected
directors. The Proposal relates to the standard for being elected to the Board,
a completely different matter. The Company's argument under Rule 14a-8(i)(9)
should fail because our Fund's proposal requesting the Board move toward a
majority voting standard in no way conflicts with the Board deciding to
eliminate cumulative voting.
The Company's argument that the Proposal should be omitted under Rule 14a-8(i)
(10) should also be rejected because elimination of cumulative voting and
adoption of an informal corporate governance guideline on director resignations
does not substantially implement the Proposal, which seeks a change in the legal
standard for being elected to the Board of Directors. We note that the Staff has
recently rejected substantial implementation arguments raised by companies
seeking to omit this exact proposal based on their adoption of director
resignation policies. (See, e.g., Gannet Co., Inc. January 10, 2006). While
other cases may not have presented the precise fact pattern of eliminating
cumulative voting, the logic is the same. The Fund's Proposal requesting that
the Board initiate the appropriate process to amend the Company's certificate of
incorporation or bylaws to provide that director nominees shall be elected by a
majority of votes cast is not substantially implemented by a company adopting an
informal corporate governance guideline, which could be changed at any time,
that seeks the resignation of certain directors legally elected to the Board.
We respectfully submit that the Company has failed to satisfy its burden under
Rules 14a-8(i) (9) and (10) and its request should be denied.
Sincerely,
/s/
Thomas P. V. Masiello
Administrator
TPVM/dmk
Cc: Ms. Rose Ellis, Corporate Secretary Linda Priscilla
[INQUIRY LETTER]
February 9, 2006
VIA FEDERAL EXPRESS
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
RE: Northern Trust Corporation Withdrawal of Request in Letter dated December
21, 2005
Ladies and Gentlemen:
We are writing to withdraw our request for no action relief, made in a letter to
you dated December 21, 2005 and attached hereto as Exhibit A, regarding the
omission of a stockholder proposal submitted by the Massachusetts Laborers'
Pension Fund (the "Proponent") from our proxy statement pursuant to Rule 14a-8.
The issues we raised in such request are now moot due to the Proponent's
decision to withdraw its proposal as set forth in the letter attached hereto as
Exhibit B.
If you have any questions regarding this matter, please do not hesitate to
contact the undersigned at (312) 444-3714.
Sincerely,
Northern Trust Corporation
By: /s/
Name: Rose A. Ellis
Title: Assistant General Counsel and Corporate Secretary
[INQUIRY LETTER]
February 13, 2006
Rose A. Ellis
Assistant General Counsel and Corporate Secretary
Northern Trust Corporation
50 South La Salle Street
Chicago, IL 60675
Re: Northern Trust Corporation
Dear Ms. Rose:
This is in regard to your letter dated February 9, 2006 concerning the
shareholder proposal submitted by the Massachusetts Laborers' Pension Fund for
inclusion in Northern Trust's proxy materials for its upcoming annual meeting of
security holders. Your letter indicates that the proponent has withdrawn the
proposal, and that Northern Trust therefore withdraws its December 21, 2005
request for a no-action letter from the Division. Because the matter is now
moot, we will have no further comment.
Sincerely,
/s/
Ted Yu
Special Counsel
cc: Thomas P. V. Masiello
Administrator
Massachusetts Laborers' Pension Fund
14 New England Executive Park
Suite 200
P.O. Box 4000
Burlington, MA 01803-0900
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