Company Name: Walt Disney Co.
Public Availability Date: November 22, 2006
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
October 18, 2006
By 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: The Walt Disney CompanyNotice of Intent to Omit Shareholder Proposal from
Proxy Materials Pursuant to Rule 14a-8 Promulgated under the Securities Exchange
Act of 1934, as amended, and Request for No-Action Ruling
Ladies and Gentlemen:
On behalf of our client, The Walt Disney Company, a Delaware corporation (with
its consolidated subsidiaries, "Disney" or the "Company"), we are filing this
letter under Rule 14a-8(j) under the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), to notify the Securities and Exchange Commission
(the "Commission") of Disney's intention to exclude a shareholder proposal (the
"Proposal") from the proxy materials for Disney's 2007 Annual Meeting of
Shareholders (the "2007 Proxy Materials"). The Proposal was submitted by William
C. Thompson, Jr., Comptroller of the City of New York, on behalf of the Board of
Trustees of the New York City Teachers' Retirement System (the "Proponent").
Disney asks that the staff of the Division of Corporation Finance of the
Commission (the "Staff") not recommend to the Commission that any enforcement
action be taken if Disney excludes the Proposal from its 2007 Proxy Materials
under Rule 14a-8(i)(7), because the Proposal deals with matters relating to the
Company's ordinary business operations.
Disney received the Proposal on September 12, 2006. A copy of the Proposal and
related correspondence is attached to this letter as Exhibit A. In accordance
with Rule 14a-8(j), six copies of this letter and its attachments are enclosed.
Also, in accordance with Rule 14a-8(j), a copy of this letter and its
attachments is being mailed on this date to the Proponent, informing him of the
Company's intention to omit the Proposal from its 2007 Proxy Materials. Pursuant
to Rule 14a-8(j), this letter is being submitted not less than 80 days before
the Company files its definitive 2007 Proxy Materials with the Commission.
THE PROPOSAL
For the convenience of the Staff, the text of the Proposal is set forth below:
Whereas, a number of educational groups, including Teaching Tolerance (www.tolerance.org)
and Educators for Social Responsibility (www.esrnational.org), have drawn
attention to Disney's use of negative racial, ethnic and gender stereotypes in
its animated films and associated products, and
Whereas, we believe that negative generalizations that are assigned to groups of
people by race, class, gender, religion, or country of origin in Disney products
can have a harmful impact on the development of both children and adults, and
can also help foster negative impressions of U.S. cultural influence abroad,
Therefore, be it resolved that shareholders request that management report on
steps the company is undertaking and will undertake, to avoid the use of
negative racial, ethnic and gender stereotypes in its products.
The report should include:
1. A statement of company policy regarding the portrayal of racial and ethnic
minorities, and women, in all phases of production, marketing and promotion, and
the procedures used to inform company personnel of this policy; and
2. A description of the process for ensuring non-racist, non-sexist depictions
and images in all its products, irrespective of the geographic market of the
product.
REASONS FOR EXCLUSION
The Company may exclude the Proposal under Rule 14a-8(i)(7) because it deals
with matters relating to Disney's ordinary business operations.
The Company is a diversified worldwide entertainment company with operations in
four business segments: media networks, parks and resorts, studio entertainment
and consumer products. The Company produces and distributes animated films
through its studio entertainment segment. The Company's consumer products
segment partners with licensees, manufacturers, publishers and retailers
throughout the world to design, promote and sell a wide variety of products
based on existing and new Disney characters and other intellectual property.
The Company's quarrel here is not with the Proponent's stated goal of avoiding
racist or sexist depictions and images in its products. That is an objective the
Company shares. However, the Company believes that how it manages its business
toward that goal is properly addressed by management, rather than shareholders,
and that the Proposal, as a result, deals with a matter relating to the
Company's ordinary business operations.
Under Rule 14a-8(i)(7) of the Exchange Act, a shareholder proposal may be
omitted from a company's proxy statement if the proposal "deals with matters
relating to the company's ordinary business operations." In Exchange Act Release
No. 34-40018 (May 21, 1998) (the "1998 Release"), the Commission explained that
the ordinary business exclusion rests on two central policy considerations. The
first consideration is the subject matter of the proposal. The 1998 Release
provides that "[c]ertain tasks are so fundamental to management's ability to run
a company on a day-to-day basis that they could not, as a practical matter, be
subject to direct shareholder oversight." Id. The second consideration is the
degree to which the proposal attempts to "micro-manage" the company by "probing
too deeply into matters of a complex nature upon which shareholders, as a group,
would not be in a position to make an informed judgment." Id.
Decisions involving the nature, content and presentation of the Company's
animated films and the marketing and promotion of the films and related products
are the essence of the ordinary business operations of the Company's studio
entertainment and consumer products segments. As recently as 2004, the Staff
concurred that the Company could exclude under Rule 14a-8(i)(7) proposals
relating to the content of its news and entertainment products, agreeing that
the Company could exclude one proposal requesting that Disney establish "a
policy of eliminating liberal bias in its television news programming and its
political content films," The Walt Disney Company (avail. Nov. 9, 2004), and a
separate proposal requesting that the Company prepare a report to shareholders
on the impact on "adolescent health arising from their exposure to smoking in
movies... released or distributed" by the Company and "any plans to minimize
such impacts in the future," The Walt Disney Company (avail. Dec. 7, 2004). See
also The Walt Disney Company (avail. Nov. 10, 1997) and The Walt Disney Company
(avail. Nov. 4, 1997).
The Staff consistently has affirmed that shareholder proposals concerning the
nature, presentation and content of programming and film production, including
proposals relating to alleged racial, ethnic, religious or gender matters, are
excludable under Rule 14a-8(i)(7) as matters relating to the conduct of ordinary
business operations. See, e.g., General Electric Company (avail. Jan. 6,
2005)(Staff concurrence with the exclusion of a proposal requesting that GE's
Board publicly state its policies on race and guest courtesy, as relating to the
nature, presentation and content of television programming); General Electric
Company (avail. Jan. 10, 2002)(Staff concurrence with the exclusion of a
proposal requesting that NBC produce and present television programming that
would present the Polish-American image in a positive light and thereby offset
the negative and stigmatized image of Polish-Americans); General Electric
Company (avail. Jan. 21, 1998)(Staff concurrence with the exclusion of a
proposal requesting that NBC follow a television code requiring "special
sensitivity" in the use of material relating to sex, race, color, age, creed,
religion and national or ethnic origin on the basis that it related to the
ordinary business function of the content of programming). See also Gannett Co.,
Inc. (avail. Jan. 21, 1997)(Staff concurrence with the exclusion of a proposal
requesting that the company establish a policy prohibiting its newspapers from
publishing anti-Catholic and anti-Semitic material and that such policy be
overseen by an ecumenical group with power to censure as constituting ordinary
business directed at the editorial and related policies for the company's
newspapers).
The Staff also consistently has concurred that proposals relating to the manner
in which a company advertises its products, including proposals concerning
racial, ethnic, religious or gender matters in advertising, marketing and
packaging of products and related promotional activities concern ordinary
business operations. See, e.g., Federated Department Stores, Inc. (avail. Mar.
27, 2002) and Tootsie Roll Industries, Inc. (avail. Jan. 31, 2002)(in each case,
Staff concurrence with the exclusion of a proposal requesting that the company,
among other things, identify and dissociate from any offensive imagery to the
American Indian community in product marketing, advertising, endorsements,
sponsorships and promotions); The Quaker Oats Co. (avail. March 16, 1999)(Staff
concurrence with the exclusion of a proposal requesting that the company review
all advertising contracts for content that demeans or slanders any people based
on race, ethnicity or religion); RJR Nabisco Holdings Corp. (avail. Feb. 23,
1998) and PepsiCo, Inc. (avail. Feb. 23, 1998)(in each case, Staff concurrence
with the exclusion of a proposal requesting that the company prepare a report
describing the company's policy and practice to assure, both domestically and
globally, that the company use only non-racist portrayals and designations and
that the company report to shareholders how it will monitor and enforce these
policies); General Mills, Inc. (avail. July 14, 1992)(Staff concurrence with the
exclusion of a proposal requesting that the company (i) establish a policy of
not advertising on the Geraldo Rivera show and other "trash TV" programs or on
any programs which are insulting to people of any racial, ethnic or religious
group and (ii) establish a special management committee to implement these
policies); H.J. Heinz (avail. June 14, 1991)(Staff concurrence with the
exclusion of a proposal requesting that the company refrain from labeling
products with characters, signs or symbols of any specific race, religion,
culture or creed as ordinary business operations); Consolidated Foods
Corporation (avail. July 21, 1983)(Staff concurrence with the exclusion of a
proposal requesting that the company advertise its products in a manner which
enhances the image of women); and Columbia Pictures Industries Incorporated
(avail. Aug. 29, 1975)(Staff concurrence with the exclusion of a proposal to
improve female screen roles "since it involves a request that the Board of
Directors take action with respect to a matter relating to the conduct of
ordinary business operations of the [c]ompany (viz., the formulation of
guidelines related to the attistic [sic] character of [c]ompany products)").
Even though matters of race, religion and gender may have public policy
implications, in the context of media businesses like the Company, proposals
relating to creative content and advertising are excluded because content and
advertising are at the core of their ordinary business. See, e.g., General
Electric Company (avail. Jan. 6, 2005).
In each of the above cited no-action requests, the proponent sought action by
the company or a report of practices or plans relating to racial, ethnic,
religious or gender matters in programming or advertising. Such matters involve
difficult judgments depending on specific and changing factual circumstances,
including:
what portrayals might be construed as stereotyping in the various different
markets in which the Company operates;
the effect of the context in which the portrayals are made; the relative risk
that a portrayal will be seen as negative or offensive in light of the artistic
judgments of the producers, writers, directors and actors involved in the
project;
contractual requirements that may limit the Company's influence over the
content of products it distributes; and
the overall relationship of the Company and those involved in the production
with the racial, ethnic, religious or gender community involved.
Judgments such as these, made by management familiar with the changing factual
landscape and the interaction of various aspects of the Company's business, are
precisely the type of judgments management - not shareholders - must make.
Moreover, management must be free to make these judgments in light of sometimes
rapidly changing circumstances that cannot be anticipated. Such judgments
therefore need to be made in an environment free of constraints that may be or
become inappropriate in a given set of circumstances. Shareholder proposals will
necessarily restrict the ability of management to exercise the judgment
necessary in these circumstances.
The limitation of a proposal to a request for a report does not render more
acceptable a proposal that deals with matters within the ordinary business
judgment of the company. The Commission has stated that the Staff "will consider
whether the subject matter of the special report... involves a matter of
ordinary business" and "where it does, the proposal will be excluded." See
Exchange Act Release No. 34-20091 (Aug. 16, 1983). In accordance with this
directive, the Staff consistently has permitted the exclusion of proposals
seeking the preparation of reports on matters of ordinary business. See, e.g.,
AT&T Corp. (avail. Feb. 21, 2001); The Mead Corporation (avail. Jan. 31, 2001);
General Electric Company (avail. Jan. 27, 2000); Johnson Controls, Inc. (avail.
Oct. 26, 1999); Wal-Mart Stores, Inc. (avail. Mar. 15, 1999); Nike, Inc. (avail.
July 10, 1997); and General Electric Company (avail. Feb. 2, 1993).
CONCLUSION
For the reasons set forth above, the Company hereby respectfully requests that
the Staff confirm that it will not recommend enforcement action if the Proposal
is excluded from the Company's 2007 Proxy Materials. Please do not hesitate to
call me at (202) 663-6644 or Roger Patterson of Disney at (818) 560-6126 if you
require additional information or wish to discuss this submission further.
Please acknowledge receipt of this letter by stamping the enclosed additional
copy of this letter and returning it to me in the enclosed stamped,
self-addressed envelope.
We request that you transmit your response by facsimile to the undersigned at
(202) 663-6363 and understand that you can transmit your response to the
Proponent care of Patrick Doherty at (212) 669-4072.
Thank you for your attention to this matter.
Sincerely,
/s/
Meredith B. Cross
Attachment: Exhibit A
cc: Alan N. Braverman - Senior Executive Vice President, General Counsel and
Secretary, The Walt Disney Company
Roger J. Patterson - Vice President, Counsel, The Walt Disney Company
Patrick Doherty - Office of the Comptroller of New York City
[INQUIRY LETTER]
September 12, 2006
Mr. David Thompson
Sr. Vice President, Deputy General Counsel and Secretary
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521
Dear Mr. Thompson:
The Office of the Comptroller of New York City is the custodian and trustee of
the New York City Teachers' Retirement System (the "fund"). The fund's board of
trustees has authorized me to inform you of our intention to offer the enclosed
proposal for consideration of stockholders at the next annual meeting.
I submit the attached proposal to you in accordance with rule 14a-8 of the
Securities Exchange Act of 1934 and ask that it be included in your proxy
statement.
A letter from Bank of New York certifying the funds' ownership, for over a year,
of shares of Walt Disney Company common stock will follow. The fund intends to
continue to hold at least $2,000 worth of these securities through the date of
the annual meeting.
We would be happy to discuss this initiative with you. Should the board decide
to endorse its provisions as company policy, our fund will ask that the proposal
be withdrawn from consideration at the annual meeting. Please feel free to
contact me at (212) 669-2651 if you have any further questions on this matter.
Very truly yours,
/s/
Patrick Doherty
Enclosures
[APPENDIX]
Submitted by William C. Thompson, Jr., Comptroller, City of New York, on behalf
of the Boards of Trustees of the New York City Teachers' Retirement System
NEGATIVE STEREOTYPING IN DISNEY PRODUCTIONS
Whereas, a number of educational groups, including Teaching Tolerance (www.tolerance.org)
and Educators for Social Responsibility (www.esrnational.org), have drawn
attention to Disney's use of negative racial, ethnic and gender stereotypes in
its animated films and associated products, and
Whereas, we believe that negative generalizations that are assigned to groups of
people by race, class, gender, religion, or country of origin in Disney products
can have a harmful impact on the development of both children and adults, and
can also help foster negative impressions of U.S cultural influence abroad,
Therefore, be it resolved that shareholders request that management report on
steps the company is undertaking and will undertake, to avoid the use of
negative racial, ethnic and gender stereotypes in its products.
The report should include:
1. A statement of company policy regarding the portrayal of racial and ethnic
minorities, and women, in all phases of production, marketing and promotion, and
the procedures used to inform company personnel of this policy; and
2. A description of the process for ensuring non-racist, non-sexist depictions
and images in all its products, irrespective of the geographic market of the
product.
[INQUIRY LETTER]
September 22, 2006
VIA OVERNIGHT COURIER AND TELECOPY
Patrick Doherty
Bureau of Asset Management
Office of the Comptroller of the City of New York
1 Centre Street
New York, NY 10007-2341
Dear Mr. Doherty:
This letter will acknowledge that we received on September 12, 2006, your letter
dated September 12, 2006 submitting a proposal for consideration at the
Company's 2007 annual meeting of stockholders regarding negative stereotyping.
We have confirmed that you meet the eligibility requirements for submitting a
proposal set forth in Rule 14a-8(a) to (e), except that we have not yet received
confirmation from the Bank of New York certifying the funds' ownership, for over
a year, of shares of stock of The Walt Disney Company. As you know, we need to
receive this confirmation within 14 days of your receipt of this letter.
Assuming we receive the necessary confirmation, as the time for the annual
meeting comes closer, we will be in touch with you further regarding our
response to your proposal.
Sincerely yours,
/s/
Roger J. Patterson
[INQUIRY LETTER]
September 28, 2006
Mr. Roger J. Patterson
Vice President and Counsel
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521
Dear Mr. Patterson:
As follow up to Comptroller William C. Thompson Jr.'s letter of September 12,
2006 which informed you of the New York City Teachers' Retirement System's
intention to submit a proposal dealing with negative stereotyping at the next
annual meeting, enclosed is the referenced letter from The Bank of New York
certifying that the fund has owned, for over a year, 1,999,317 shares of Walt
Disney Company common stock. The fund intends to hold at least $2,000 worth of
these shares through the date of the company's next annual meeting.
Sincerely,
/s/
Kenneth B. Sylvester
Attachment
[STAFF REPLY LETTER]
November 22, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: The Walt Disney Company Incoming letter dated October 18, 2006
The proposal requests a report on steps Disney is undertaking and will undertake
to avoid the use of negative racial, ethnic and gender stereotypes in its
products.
There appears to be some basis for your view that Disney may exclude the
proposal under rule 14a-8(i)(7), as relating to its ordinary business operations
(i.e., the nature, presentation and content of programming and film production).
Accordingly, we will not recommend enforcement action to the Commission if
Disney omits the proposal from its proxy materials in reliance on rule
14a-8(i)(7).
Sincerely,
/s/
Ted Yu
Special Counsel
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