Company Name: Bear Stearns
Public Availability Date: January 30, 2007
Document Sections:
[INQUIRY LETTER]
December 15, 2006
Office of Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, NE
Washington D.C. 20549
Re: The Bear Stearns Companies Inc. Stockholder Proposal
Ladies and Gentlemen:
On behalf of The Bear Stearns Companies Inc., a Delaware corporation (the
"Company"), and in accordance with Rule 14a-8(j) under the Securities Exchange
Act of 1934, as amended, we respectfully request the concurrence of the staff of
the Division of Corporation Finance (the "Staff") of the Securities and Exchange
Commission (the "Commission") that it will not recommend any enforcement action
to the Commission if the stockholder proposal described below (the "Proposal")
is excluded from the Company's proxy statement for the Company's 2007 Annual
Meeting of Stockholders (the "Proxy Statement"). The Annual Meeting is scheduled
for on or about April 18, 2007. A copy of the Proposal is attached hereto. As
required by Rule 14a-8(j), six copies of this letter, including all attachments,
are enclosed.
We are also sending a copy of this letter to Ms. Lucy M. Kessler to notify
her of the Company's intention to omit the Proposal from the Proxy Statement.
A. Factual Background
On November 10, 2006, the Company received a stockholder proposal from Lucy
M. Kessler (the "Proponent"). The Proposal reads as follows:
"RESOLVED, shareholders ask our board of directors to adopt a policy that
shareholders be given the opportunity to vote on an advisory management
resolution at each annual meeting to approve the Compensation Committee report
in the proxy statement."
The Proponent also included a supporting statement (the "Supporting
Statement"). The Proponent's full letter is attached hereto as Exhibit A.
B. Reasons for Omission
Rule 14a-8(i)(3) permits a registrant to omit a shareholder proposal if the
proposal or the supporting statement is contrary to any of the Commission's
proxy rules, including Rule 14a-9, which prohibits materially false or
misleading statements in proxy soliciting materials. The Proposal is excludable
under Rule 14a-8(i)(3) because it makes materially misleading statements in
violation of Rule 14a-9.
1. The Proposal Makes Materially Misleading Statements Regarding the
Effect of the Proposal.
The Proposal clearly envisions that an advisory stockholder vote on the
Compensation Committee Report (the "Report") will give stockholders more
"influence over pay practices," which could "help reduce excessive pay."
However, pursuant to the amended executive compensation disclosure rules of Item
402 of Regulation S-K, the Report is no longer required to include disclosure of
the Company's executive compensation practices and policies. Rather, pursuant to
new Item 407(e)(5), the Report must state whether the Company's Compensation
Committee (the "Committee") has reviewed and discussed with management the
Compensation Discussion and Analysis now required by Item 402(b) (the "CD&A"),
and whether based on such review and discussion, the Committee has recommended
to the board of directors that such CD&A be included in the proxy statement. The
Company is required to comply with these amended executive compensation
disclosure rules beginning with the proxy statement to be used in connection
with the Company's 2008 Annual Meeting, the first meeting during which an
advisory management resolution would be sought if the Proposal is approved.
As a result of these changes, a stockholder vote on the Report would merely
address the procedure of the Committee's review, discussion and recommendation,
and would not demonstrate stockholder approval or disapproval of the Company's
compensation practices. The Proposal is therefore materially misleading and
deceptive in implying that a stockholder vote on the Report will be a referendum
on executive compensation practices, a view which the Staff itself raised and
endorsed in Sara Lee Corp. (September 11, 2006), which involved a stockholder
proposal virtually identical to the one at hand. In Sara Lee, the Staff
determined that the proposal would have been excludable as misleading under Rule
14a-8(i)(3), but noting that Item 402 of Regulation S-K was revised following
the deadline for proposal submissions, permitted the stockholder to cure the
misleading nature of the proposal by changing the subject of the advisory vote
from the Report to the CD&A. The Staff has permitted a company to omit a
proposal, however, when the proposal cited to a prior version of a statute, the
amendments of which had already become effective. See State Street Corp.
(March 1, 2005) (exclusion of entire proposal permitted because the proponent's
proposal and supporting statement cited outdated sections of state law which
months earlier had been reorganized into new sections by the state legislature,
and such incorrect references caused the proposal to be misleading). The facts
surrounding the Proposal are similar to State Street. The Company's deadline for
submission of stockholder proposals under Rule 14a-8 was November 10, 2006, well
after the Commission's widely publicized adoption of the revised disclosure
rules on August 29, 2006. The Proposal therefore cites to the incorrect section
of the proxy statements that the Company will prepare once the advisory
management resolution requirement is implemented, if the Proposal is approved.
As a result, the Proposal may mislead stockholders into believing that its
effect will be different from the limited impact that it could achieve in
reality. Accordingly, we believe that the Proposal is excludable under Rule
14a-8(i)(3).
2. The Supporting Statement is Irrelevant to Executive Compensation and is
Manipulative.
We believe that the Proposal may be omitted from the Company's Proxy
Statement pursuant to Rule 14a-8(i)(3) because a majority of the Supporting
Statement is unrelated to the Proposal and the Company's stockholders may be
misled as to what they are voting for. Staff Legal Bulletin No. 14B, dated
September 15, 2004 ("SLB 14B"), provides that Rule 14a-8(i)(3) is a viable basis
for excluding a proposal or a supporting statement where "substantial portions
of the supporting statement are irrelevant to a consideration of the subject
matter of the proposal, such that there is a strong likelihood that a reasonable
stockholder would be uncertain as to the matter on which she is being asked to
vote." SLB 14B affirms numerous Staff determinations. See, e.g.
Burlington Northern Santa Fe Corp. (January 31, 2001) (permitting exclusion of
supporting statements involving racial and environmental policies as irrelevant
to a proposal seeking stockholder approval of poison pills); Boise Cascade Corp.
(January 23, 2001) (permitting exclusion of supporting statements regarding the
director election process, environmental and social issues and other topics
unrelated to a proposal calling for the separation of the CEO and chairman).
Although the Proposal attempts to provide the Company's stockholders with a
voice over executive compensation, the Supporting Statement is little more than
a list of the Company's purported corporate governance deficiencies. A majority
of these alleged deficiencies are wholly irrelevant to the Proposal and its
subject matter. For example, in a series of bullet points, the Proponent states
that the Company does not have an independent chairman, that various directors
have potential conflicts of interest, that the Company's stockholders do not
have the right to call special meetings, the number of board meetings held and
that directors are elected by a plurality without cumulative voting. The
Proponent also alleges various independence, succession and director
over-commitment concerns and provides the Company's governance ratings given by
The Corporate Library. The Proponent does not make any attempt to explain how
such statements and allegations relate to an advisory vote on executive
compensation. In fact, these accusations do little to inform stockholders of the
import of the Proposal.
In addition to being irrelevant, the Supporting Statement is manipulative and
therefore falls squarely under SLB 14B because it may leave a reasonable
stockholder "uncertain as to the matter on which she is being asked to vote." By
stating that it is "important to take one step forward and support this proposal
since our 2006 governance standards were not impeccable," the Proponent not only
attempts to use the hot topic of corporate governance to encourage the Company's
stockholders to support her proposal on executive compensation, but also
suggests that a vote for the Proposal will help to correct the Company's alleged
governance deficiencies. This suggestion is outright false and may deceive the
Company's stockholders into believing that they are actually voting to address
the governance issues the Proponent includes in the Supporting Statement.
Supporting a proposal that provides a right to stockholders to approve of the
Committee's compensation policies does not address and will not influence any of
the Company's corporate governance policies or practices.
In response to recent corporate and accounting scandals, many stockholders
are focusing on corporate governance issues and are supporting proposals that
alter a company's governance policies and practices to ensure independence,
transparency and integrity with respect to the board of directors. The mere
mention of potential corporate governance issues may therefore create a negative
perception of the Company and serve to incite the Company's stockholders and
manipulate their votes. The Proponent should therefore not be permitted to
include her unsubstantiated concerns in such a biased presentation in order to
solicit votes on an unrelated proposal relating to executive compensation. If
the Proponent would like any of the specific elements of the Company's
governance structure to be altered, then the Proponent needs to submit a
stockholder proposal that specifically addresses such elements (i.e., the
separation of the chairman from the chief executive officer). We note, however,
that it is too late for the Proponent to revise the Proposal to address her
governance concerns or to submit additional proposals, as the Company's deadline
for submission of stockholder proposals under Rule 14a-8 elapsed on November 10,
2006.
Accordingly, because the Supporting Statement is both unrelated to the
Proposal and manipulative, we believe that the Proposal may properly be excluded
under Rule 14a-8(i)(3).
3. The Supporting Statement Makes Materially Misleading Statements.
SLB 14B also provides that a proposal or supporting statement may be excluded
from a proxy statement if "the company demonstrates objectively that a factual
statement is materially false or misleading."
The few statements included in the Supporting Statement that are arguably
related to the Proposal are misleading. The fourth line in the first bullet
point provides that The Corporate Library stated a "Very High Concern" in
executive pay due to the "$28 million CEO pay in one year." The Proponent does
not explain the components of the payment amount or provide any other basis on
which to assess such a claim. In fact, a comparison with some of the Company's
"peer companies" a concept that the Proposal seemingly advocateswould reveal
that in fiscal year 2005, the CEOs of Merrill Lynch, Goldman Sachs and Lehman
Brothers earned $37 million, $38.8 million and $34.5 million, respectively. By
omitting this crucial information, the Proponent's factual reference to the
compensation of the Company's CEO may mislead and deceive a stockholder into
believing that the Company's executive compensation is excessive.
The statement alleging that two of the Company's Committee members have
potential conflicts of interest is also misleading. In addition to failing to
mention that the Committee also includes two additional members with whom there
are no apparent concerns, the statement does not describe the alleged conflicts
or how they would be checked by an advisory stockholder referendum on the
Report. Without such a description, these statements may cause the Company's
stockholders to resort to speculation regarding the nature and extent of such
conflicts and to doubt the ability of such allegedly conflicted directors to
award appropriate executive compensation. Stockholders may also believe that the
Company has failed to fully inform them about the independence of the Company's
directors. In fact, the Company has disclosed the potential conflicts in its
2005 proxy statement. The Company has also disclosed its determination that
these two directors are independent pursuant to the rules of the New York Stock
Exchange (the "NYSE"). The Proposal's omission of these significant facts
therefore renders the Proposal materially misleading. Furthermore, pursuant to
SLB 14B, it is objectively demonstrable, by reference to the Company's proxy
statements, that these allegations are presented selectively in a way that is
misleading.
Taken as a whole, the Supporting Statement is materially misleading because
it focuses on various purported governance problems without supporting them with
facts and fails to mention that the Company is in full compliance with all
governance rules and regulations promulgated by the Commission and by the NYSE.
Further, the Company's policies with respect to the election of directors and
calling special meetings are in compliance with Delaware law. The contentions
suggesting otherwise constitute the core of the Supporting Statement, and we
believe they would require substantial revision to bring them into compliance
with the proxy rules. As stated in Staff Legal Bulletin No. 14, dated July 13,
2001 ("SLB 14"), "when a proposal and supporting statement will require detailed
and extensive editing in order to bring them into compliance with the proxy
rules, [the Staff] may find it appropriate for companies to exclude the entire
proposal, supporting statement, or both, as materially false or misleading." SLB
14B, in clarifying SLB 14, affirms that excluding an entire proposal due to the
materially misleading character of the proposal or supporting statement remains
an option. Applying this principal, the Staff in State Street concurred in
excluding the entire proposal where changes would have been required in several
paragraphs to cause the proposal to be no longer misleading. Here, changes
ranging from insertion of additional contextual information to deletion of
existing points will have to be made to cure the misleading nature of the
Proposal as a whole. Rather than subjecting the Staff to such extensive editing,
we believe that the appropriate remedy is to permit the exclusion of the entire
Proposal pursuant to Rule 14a-8(i)(3).
4. To be Included in the Proxy Statement, the Proposal Would Require
Substantial Revision.
Although we believe that the entire Proposal may be excluded based on the
foregoing, if the Staff does not concur, then we request that the Staff direct
the Proponent to substantially revise the Proposal. The proxy rules prohibit a
company from soliciting by means of a proxy statement that contains any
statement that is false or misleading with respect to any material fact or that
omits to state any material fact necessary in order to make the statements
therein not false or misleading. The Staff has consistently recognized that
portions of a proposal may be revised or excluded under Rule 14a-8(i)(3).
See, e.g. U.S. Bancorp (January 27, 2003) (excluding as misleading
generalized and unsubstantiated points in supporting statement); Sysco Corp.
(September 4, 2002) (excluding as misleading portions of supporting statement
that were unverifiable and irrelevant to the proposal's thrust); Wal-Mart Stores
(March 14, 2003) (excluding portions of supporting statement that were
irrelevant or unverified, and requiring citation to factual sources for
unsubstantiated claims); Mirant Corp. (January 28, 2003) (excluding
unsubstantiated accusation regarding the effect of certain bonuses as inciting
stockholder anger, and hence misleading); First Mariner Bancorp (March 3, 2003)
(excluding as misleading a portion of the supporting statement as irrelevant and
more likely to anger than to inform the stockholders). As set forth above, we
believe that the majority of the points raised by the Supporting Statement are
misleading in that they are either irrelevant to the Proposal, raised in an
uninformative manner aimed at confusing and inciting stockholders, or both. We
therefore believe that in the event that the entire Proposal may not be omitted
from the Proxy Statement, the portion of the Supporting Statement beginning with
"It is also important to note" through the end should be excluded pursuant to
Rule 14a-8(i)(3).
C. Request
Based on the foregoing, the Company believes that it may omit the Proposal
from the Proxy Statement, and we respectfully request that the Staff not
recommend any enforcement action if the Proposal is omitted from the Proxy
Statement. If you have any questions or if the Staff is unable to concur with
our conclusions without additional information or discussion, we respectfully
request the opportunity to confer with members of the Staff prior to the
issuance of a written response to this letter. Please do not hesitate to contact
the undersigned at (212) 504-5555. Thank you for your consideration.
Very truly yours,
/s/
Dennis J. Block
cc: Lucy M. Kessler
[APPENDIX]
[Rule 14a-8 Proposal, November 6, 2006]
3 - Shareholder Vote on Executive Pay
RESOLVED, shareholders ask our board of directors to adopt a policy that
shareholders be given the opportunity to vote on an advisory management
resolution at each annual meeting to approve the Compensation Committee report
in the proxy statement.
The policy should provide that appropriate disclosures will be made to ensure
that stockholders fully understand that the vote is advisory, will not affect
any person's compensation and will not affect the approval of any
compensation-related proposal submitted for a vote of stockholders at the same
or any other meeting of stockholders.
It is essential that the disclosure for this annual vote include disclosure
of the percentage of total executive pay and benefits that are performance-based
- meaning linked to demonstrable performance criteria measured by our company's
performance compared to its peer companies.
Lucy M. Kessler, 7802 Woodville Road, Mt. Airy, MD 21771 sponsors this
proposal.
The current rules governing senior executive compensation do not give
stockholders enough influence over pay practices. In the United Kingdom, public
companies allow stockholders to cast an advisory vote on the "directors
remuneration report." Such a vote is not binding, but allows stockholders a
clear voice which could help reduce excessive pay. Stockholders do not have any
mechanism for providing ongoing input at our company. See "Pay Without
Performance" by Lucian Bebchuk and Jesse Fried.
It is also important to take one step forward and support this proposal since
our 2006 governance standards were not impeccable. For instance in 2006 it was
reported (and certain concerns are noted):
The Corporate Library (TCL) http://www.thecorporatelibrary.com/ an
independent investrnent research firm rated our company:
"D" in Corporate Governance.
"Very High Concern" in executive pay - $28 million CEO pay in one year.
"High" in Overall Governance Risk Assessment.
We had no independent chairman.
Plus our lead director, Mr. Tese, had a potential conflict of interest, was
designated as an "Accelerated Vesting" director, served on 6 boards total and
served on 3 boards rated D or F by The Corporate Library
Five directors had 16 to 21 years tenure - Independence concern.
We had no right to call a special meeting
Our full board met only 6 times in a year.
There were 4 insiders on our board - Independence concern.
Additionally:
Three directors (Mr. Glickman, Mr. Tese and Mr. Novelly) had potential
conflicts of interest.
Two directors (Mr. Salerno and Mr. Tese) held 6 board seats each - Over
commitment concern.
Cumulative voting was not allowed.
Three directors were age 71 to 79 - Succession concern.
Our directors can be elected with one yes-vote from our 120 million shares
under plurality voting.
The above status shows there is room for improvement and reinforces the
reason to take one step forward now and vote yes for:
Shareholder Vote on Executive Pay Yes on 3
Notes:
The above format is requested for publication without re-editing or
re-formatting.
The company is requested to assign a proposal number (represented by "3"
above) based on the chronological order in which proposals are submitted. The
requested designation of "3" or higher number allows for ratification of
auditors to be item 2.
This proposal is believed to conform with Staff Legal Bulletin No. 14B (CF),
September 15, 2004 including:
Accordingly, going forward, we believe that it would not be appropriate for
companies to exclude supporting statement language and/or an entire proposal in
reliance on rule 14a-8(i)(3) in the following circumstances:
the company objects to factual assertions because they are not supported;
the company objects to factual assertions that, while not materially false
or misleading, may be disputed or countered;
the company objects to factual assertions because those assertions may be
interpreted by shareholders in a manner that is unfavorable to the company, its
directors, or its officers; and/or
the company objects to statements because they represent the opinion of the
shareholder proponent or a referenced source, but the statements are not
identified specifically as such.
See also: Sun Microsystems, Inc. (July 21, 2005).
Please note that the title of the proposal is part of the argument in favor
of the proposal. In the interest of clarity and to avoid confusion the title of
this and each other ballot item is requested to be consistent throughout all the
proxy materials.
Please advise if there is any typographical question.
Stock will be held until after the annual meeting and the proposal will be
presented at the annual meeting.
Please acknowledge this proposal by email within 14-days and advise the most
convenient fax number and email address for the Corporate Secretary's office.
[INQUIRY LETTER]
January 29, 2007
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Bear Steams Companies Inc. (BSC)
#2 Shareholder Position on Company No-Action Request Rule 14a-8 Proposal:
Shareholder Vote on Executive Pay Lucy Kessler
Ladies and Gentlemen:
This is a second response to the company December 15, 2006 no action request.
It is egregious that this no action request would be forwarded to the
shareholder party one month after it was forwarded to the Staff. The company
letter to the Staff is dated December 15, 2006 yet it was not forwarded to the
shareholder party until January 17, 2007. The complete company no action request
included a 7-page letter and 3-pages for exhibits.
Furthermore the company has not responded for the explanation requested in
the January 26, 2007 email included in Exhibit A below.
The Staff said in Sara Lee Corporation (September 11, 2006) in regard to
permitting to a simllarly worded rule 14a-8 proposals to be updated:
"Accordingly, a proposal that is revised to replace the phrase`report of the
Compensation and Employee Benefits Committee' with the phrase `the Compensation
Discussion and Analysis' may not be omitted under rule 14a-8(i)(3)."
Thus it appears that the Sara Lee precedent shows that the topic of this
proposal is a valid rule 14a-8 topic and sets a precedent to update the text of
rule 14a-8 proposals in conformance with recent rule changes. I believe that
such an opportunity to update rule 14a-8 proposal text should apply to at least
proposals submitted for the 2007 proxy season most of which were required to
already be submitted and were thus submitted within 3-months of the Sara Lee
definitive proxy date of September 22, 2006.
In discussing Rule 14a-8(i)(3) SLB 14B states:
"We have had, however, a long-standing practice of issuing no-action
responses that permit shareholders to make revisions that are minor in nature
and do not alter the substance of the proposal. We adopted this practice to deal
with proposals that comply generally with the substantive requirements of rule
14a-8, but contain some minor defects that could be corrected easily."
Like Sara Lee this rule 14a-8 proposal should thus be allowed to conform to
the new disclosure rules because the change is minor in nature and does not
alter the substance of the proposal.
The company seems to incorrectly suggest that in drafting a rule 14a-8
proposal a shareholder should be as currently informed on company executive
compensation disclosure rules as a company securities lawyer.
The company does not claim that the significance of Sara Lee Corporation
(September 11, 2006) was widely reported. The company does not claim that one
proxy season has elapsed since the new CD&A reporting requirement.
The company does not claim that the proponent of the Sara Lee rule 14a-8
proposal was given any special consideration because it was a small entity that
does not regularly retain attorneys.
The company does not claim that "only" prefaced this text in Sara Lee
Corporation (September 11, 2006): "because the requirements for the Compensation
Committee Report were revised following the deadline for submitting proposals,
we believe that the proposal may similarly be revised to make clear that the
advisory vote would relate to the description of the company's objectives and
policies regarding named executive officer compensation that is included in the
Compensation Discussion and Analysis."
Excluding this topic by disallowing an update of five words would seem to be
counter to the increasing interest of the Securities and Exchange Commission in
addressing excessive executive pay as highlighted in this article, "SEC puts
bosses' pay in spotlight," which includes a quote by SEC Chairman Christopher
Cox:
"SEC puts bosses' pay in spotlight
"10 Jan 2007
"Compensation & Benefits. CSR & Governance.
Investors in American corporations are to get a much clearer idea of the
sorts of rewards being lavished on top executives, and whether they are worth
it, under new disclosure rules.
"The pay and perks of America's top executives are to come under much closer
scrutiny following the agreement of new rules by the Securities and Exchange
Commission.
"The new system of disclosure is expected to show more clearly, and in much
greater detail, what sort of compensation, salaries and bonuses senior
executives in listed companies are taking home.
"The scorecard disclosures, outlined in annual reports and proxy statements,
will come closer than ever to a full accounting of total compensation for
companies' top two executives and the next three highest-paid executives, said
the Associated Press.
"OEThe new disclosure requirements will be easier for companies to prepare
and for investors to understand,' said SEC Chairman Christopher Cox.
"OEThe SEC, in a very short amount of time for a regulator, has pushed
through very sweeping pay disclosures that, for the first time, will give
investors a very clear picture of CEO pay,' added Amy Borrus, deputy director of
the Council of Institutional Investors. OEThe big picture is a very big win for
investors.'
"Investors wondering whether top executives are earning their pay have always
been able to look for evidence in annual reports and proxies but key parts of
this information often were buried in footnotes. S"
The full text of the Sara Lee Staff Response Letter is:
September 11, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Sara Lee Corporation Incoming letter dated June 29, 2006 The proposal
urges the board to adopt a policy that stockholders be given the opportunity at
each annual meeting to vote on an advisory resolution to approve the report of
the Compensation and Employee Benefits Committee.
There appears to be some basis for your view that the proposal may be
materially false or misleading under rule 14a-8(i)(3). In arriving at this
position, we note that the Board's Compensation Committee Report will no longer
be required to include a discussion of the compensation committee's "policies
applicable to the registrant's executive officers" (as required previously under
Item 402 (k) (1) of Regulation S-K) and, instead, will be required to state
whether: (a) the compensation committee has reviewed and discussed the
Compensation Discussion and Analysis with management; and (b) based on the
review and discussions, the compensation committee recommended to the board of
directors that the Compensation Discussion and Analysis be included in the
company's annual report on Form 10-K and, as applicable, the company's proxy or
information statement. The proposal's stated intent to "allow stockholders to
express their opinion about senior executive compensation practices" would be
potentially materially misleading as shareholders would be voting on the limited
content of the new Compensation Committee Report, which relates to the review,
discussions and recommendations regarding the Compensation Discussion and
Analysis disclosure rather than the company's objectives and policies for named
executive officers described in the Compensation Discussion and Analysis.
However, because the requirements for the Compensation Committee Report were
revised following the deadline for submitting proposals, we believe that the
proposal may similarly be revised to make clear that the advisory vote would
relate to the description of the company's objectives and policies regarding
named executive officer compensation that is included in the Compensation
Discussion and Analysis. Accordingly, a proposal that is revised to replace the
phrase "report of the Compensation and Employee Benefits Committee" with the
phrase "the Compensation Discussion and Analysis" may not be omitted under rule
14a-8(i)(3).
We are unable to concur in your view that Sara Lee may exclude the proposal
under rule 14a-8(i)(2). Accordingly, we do not believe that Sara Lee may omit
the proposal from its proxy materials in reliance on rule 14a-8(i)(2).
We are unable to concur in your view that Sara Lee may exclude the proposal
under rule 14a-8(i)(7). Accordingly, we do not believe that Sara Lee may omit
the proposal from its proxy materials in reliance on rule 14a-8(i)(7).
Sincerely,
/s/
Ted Yu
Special Counsel
In regard to the company argument on the Supporting Statement:
Supporting statements, with information that show that this proposal is
consistent with other efforts to improve the corporate governarice of the
company, are relevant to this proposal. Additional evidence of lack of
accountability at the company is also relevant to this proposal because this
proposal is attempting to increase company accountability.
In other words, the more things that are broken at the company, the more
important it is to fix the one item at hand now.
Companies have often validated this very method of argument in their
management position statements in response to rule 14a-8 proposals. For
instance, in opposing a specific shareholder proposal, it is well-known that
companies will often elaborate on a list of existing good governance practices,
unrelated to the proposal at hand, that supposedly water down the need to make
the one change called for in the rule 14a-8 proposal.
The company is in effect demanding that only companies be able to cite the
quality level of a list of corporate governance practices to support their
position on the rule 14a-8 proposal topic.
Thus the proponent should not be denied the opportunity to express the
category of argument regarding the overall quality level of a list of corporate
governance practices, and that the company needs to start improvement by
adopting this one proposal in the right direction.
In PACCAR Inc. (December 27, 2004) text regarding additional defects in the
company corporate governance, which was argued to be irrelevant by the company,
did not receive Staff concurrence for exclusion. The company does not cite any
case involving the undersigned where PACCAR has been reversed.
The PACCAR precedent was also cited in Hewlett-Packard Co. (December 21,
2006):
(Abstract) ... A shareholder proposal, which would amend this company's
by-laws or charter to require this company's board of directors to redeem any
future or current poison pill unless it is submitted to a shareholder vote as
soon as practicable, may not be omitted from the company's proxy material under
rule 14a-8 (i) (3) or (i) (10).
For the above reasons it is respectfully requested that concurrence not be
granted to the company. And if necessary an opportunity be granted to make
revisions" as in Sara Lee Corporation (September 11, 2006) and in accordance
with SLB 14B. In the Sara Lee precedent, the proponent did not even ask for the
opportunity "to make revisions" in accordance with SLB 14B, yet the proponent
was granted the opportunity.
It is also respectfully requested that the shareholder have the last
opportunity to submit material in support of including this proposal since the
company had the first letter.
Sincerely,
John Chevedden
cc:
Lucy Kessler
Kenneth L. Edlow<kedlow@bear.com>
Corporate Secretary
Elizabeth Ventura<eventura@bear.com>
Exhibit A
--- Forwarded Message
From: J<olmsted7p@earthlink.net>
Date: Fri, 26 Jan 2007 23:08:09 -0800
To: "Kenneth L. Edlow" <kedlow@bear.com>
Cc: "CFLETTERS@SEC.GOV" <CFLETTERS@SEC.GOV>
Subject: Re Bear Stearns Companies Inc. (BSC) Shareholder Position on Company
No-Action Request (Lucy Kessler)
Mr. Kenneth L. Edlow
Corporate Secretary
Bear Stearns Companies Inc. (BSC)
383 Madison Ave
New York NY 10179
Phone: 212 272-2000
Phone: 212-272-9251
Fax: 212 272-4785
Mr. Edlow,
Please confirm by email on January 29, 2007 that the 10-page December 15,
2006 no action request forwarded to me one-month late (January 17, 2007) is the
entire Bear Stearns no action submission. Please advise the reason for the
one-month delay.
Sincerely,
John Chevedden
cc:
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
Lucy Kessler
[STAFF REPLY LETTER]
January 30, 2007
Response of the Office of Chief Counsel Division of Corporation
Finance
Re: The Bear Stearns Companies Inc. Incoming letter dated December 15,
2006
The proposal asks the board to adopt a policy that shareholders be given the
opportunity at each annual meeting to vote on an advisory management resolution
to approve the report of the Compensation Committee in the proxy statement.
There appears to be some basis for your view that Bear Stearns may exclude
the proposal under rule 14a-8(i)(3), as materially false or misleading under
rule 14a-9. Accordingly, we will not recommend enforcement action to the
Commission if Bear Stearns omits the proposal from its proxy materials in
reliance on rule 14a-8(i)(3).
Sincerely,
/s/
Gregory S. Belliston
Attorney-Adviser
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