Company Name: Citigroup Inc.
Public Availability Date: March 9, 2007
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
APPENDIX 3
INQUIRY LETTER
INQUIRY LETTER
APPENDIX 4
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 30, 2007
U.S. Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporation Finance
100 F Street, N.E.
Washington, DC 20549
Re: Stockholder Proposal Submitted to Citigroup Inc. by International
Brotherhood of Teamsters (the "Proponent")
Dear Sir or Madam:
Pursuant to Rule 14a-8(d) of the rules and regulations promulgated under the
Securities and Exchange Act of 1934, as amended (the "Act"), enclosed herewith
for filing are six copies of a stockholder proposal and supporting statement
submitted by Proponent for inclusion in the proxy to be furnished to
stockholders by Citigroup in connection with its annual meeting of stockholders
to be held on April 18, 2006. Also enclosed for filing are six copies of a
statement outlining the reasons Citigroup deems the omission of the attached
stockholder proposal from its proxy statement and form of proxy to be proper
pursuant to Rule 14a-8(i)(10) promulgated under the Act.
Rule 14a-8(i)(10) provides that a registrant may omit a proposal if the company
has substantially implemented the proposal.
By copy of this letter and the enclosed material, Citigroup is notifying the
Proponent of its intention to omit the proposal from its proxy statement and
form of proxy. Citigroup currently plans to file its definitive proxy soliciting
material on or about March 13, 2007.
Kindly acknowledge receipt of this letter and the enclosed material by stamping
the enclosed copy of this letter and returning it to me in the enclosed
self-addressed, stamped envelope. If you have any comments or questions
concerning this matter, please contact me at (212) 793 7396.
Very truly yours,
/s/
Shelley J. Dropkin
General Counsel, Corporate Governance
cc: C. Thomas Keegel, General Secretary-Treasurer
International Brotherhood of Teamsters
25 Louisiana Avenue, N.W.
Washington, D.C. 20001
[APPENDIX 1]
STATEMENT OF INTENT TO OMIT STOCKHOLDER PROPOSAL
Citigroup Inc., a Delaware corporation ("Citigroup" or the "Company"), intends
to omit the stockholder proposal and supporting statement, a copy of which is
annexed hereto as Exhibit A ("Proposal"), submitted by the International
Brotherhood of Teamsters (the "Proponent") for inclusion in its proxy statement
and form of proxy (together, the "2007 Proxy Materials") to be distributed to
stockholders in connection with the Annual Meeting of Stockholders to be held on
April 17, 2007.
The Proposal urges the Company to "provide a report, updated semi-annually,
disclosing the Company's:
1. Policies and procedures for political contributions and expenditures (both
direct and indirect) made with corporate funds.
2. Monetary and non-monetary political contributions and expenditures not
deductible under Section 162(e)(1)(B) of the Internal Revenue Code, including
but not limited to contributions to or expenditures on behalf of political
candidates, political parties, political committees and other political entities
organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and
any portion of any dues or similar payments made to any tax exempt organization
that is used for an expenditure or contribution if made directly by the
corporation would not be deductible under section 162(e)(1)(B) of the Internal
Revenue Code. The report shall include the following:
a. An accounting of the Company's funds that are used for political
contributions or expenditures as described above;
b. Identification of the person or persons in the Company who participated in
making the decisions to make the political contribution or expenditure; and
c. The internal guidelines or policies, if any, governing the Company's
political contributions and expenditures.
The report shall be presented to the Board of Directors' audit committee or
other relevant oversight committee and posted on the Company's website to reduce
costs to shareholders."
It is the Company's belief that the Proposal may be omitted pursuant to Rule
14a-8(i)(10). Rule 14a-8(i)(10) provides that a proposal may be omitted if "the
company has substantially implemented the proposal."
THE PROPOSAL MAY BE OMITTED BECAUSE THE COMPANY HAS SUBSTANTIALLY IMPLEMENTED IT
On January 17, 2007, the Company's Board of Directors adopted the Citigroup
Political Contributions Policy ("Policy"). As the text of the Policy
substantially mirrors the matters requested in the Proposal, the Proposal may be
omitted from the 2007 Proxy materials. The Policy is annexed hereto as Exhibit
B.
Shortly after adoption of the Policy, the Company forwarded a copy to the
Proponent, but in a letter dated January 25, 2007, attached hereto as Exhibit C,
the Proponent advised Citigroup that it would not withdraw the Proposal because
it claimed the Policy "does not go far enough with respect to disclosure of
trade association payments and soft money contributions." A plain reading of the
Proposal indicates that it is silent with respect to trade association payments.
Even if a reference to such payments could be inferred from language in the
Proposal, which is not at all clear upon a plain reading of the Proposal, that
would be the only item not covered in the Citigroup policy. Indeed, contrary to
the proponent's assertion in its January 25, 2007 letter, the Policy adopted
does include disclosure of all PAC and corporate political contributions, which
covers "soft money contributions." The Company has, therefore, substantially
implemented the proposal.
Rule 14a-8(i)(10) permits the omission of a stockholder proposal if "the Company
has substantially implemented the proposal." It is Citigroup's belief that since
the Proposal has been fully implemented it may be omitted consistent with recent
no-action letters issues by the staff of the Securities and Exchange Commission.
See Citigroup Inc. (March 10, 2006, January 16, 2004, and February 6, 2003); Sun
Microsystems, Inc. (September 12, 2006); General Motors Corporation (April 5,
2006); Exxon Mobil Corporation (March 17, 2006); Talbots Inc. (April 5, 2002);
and Puerto Rican Cement Company, Inc. (March 25, 2002).
[APPENDIX 2]
RESOLVED
That the shareholders of Citigroup Inc. ("Company") hereby request that the
Company provide a report, updated semi-annually, disclosing the Company's:
1. Policies and procedures for political contributions and expenditures (both
direct and indirect) made with corporate funds.
2. Monetary and non-monetary political contributions and expenditures not
deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including
but not limited to contributions to or expenditures on behalf of political
candidates, political parties, political committees and other political entities
organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and
any portion of any dues or similar payments made to any tax exempt organization
that is used for an expenditure or contribution if made directly by the
corporation would not be deductible under section 162 (e)(1)(B) of the Internal
Revenue Code. The report shall include the following:
a. An accounting of the Company's funds that are used for political
contributions or expenditures as described above;
b. Identification of the person or persons in the Company who participated in
making the decisions to make the political contribution or expenditure; and
c. The internal guidelines or policies, if any, governing the Company's
political contributions and expenditures.
The report shall be presented to the Board of Directors' audit committee or
other relevant oversight committee and posted on the Company's website to reduce
costs to shareholders.
[INQUIRY LETTER]
October 11, 2006
Mr. Michael S. Helfer
Corporate Secretary
Citigroup Inc.
399 Park Avenue
New York, NY 10043
Dear Mr. Helfer:
Teamster-Affiliated Pension and Benefit funds hold roughly $100 billion in
equity assets representing the retirement security of roughly 1.4 million active
and 600,000 retired members of the International Brotherhood of Teamsters (IBT).
To protect our members' assets we carefully monitor the corporate governance
practices of the companies where we invest. The funds of the International Union
alone hold 70,250 shares at Citigroup Inc.
According to the Center for Political Accountability (CPA), Citigroup is the
largest and most aggressive corporate political donor of the money center banks.
Additionally, CPA reported that some of Citigroup's donations have ended up at
groups that were indicted for violating state campaign finance laws, were
criticized for hiding the source of contributions, or gave to candidates with
positions that contradicted key policies and practices that enhanced the
company's reputation.
Our concern about these contributions led us to file a resolution with the
company last year. We are still troubled that these contributions may not be in
the best interest of our shareholders and that the failure to disclose the
company's political contributions threatens shareholder's ability to accurately
assess our investment. According to a recent survey of shareholder beliefs and
attitudes, conducted by the non-partisan Mason-Dixon Polling and Research about
corporate political spending, shareholders overwhelmingly support measures by
companies that assure transparency and accountability in corporate political
activity. We are enclosing a copy of the survey for your review as well as a
Wall Street Journal article referencing some of the survey's findings.
The Journal article notes that a number of companies, including Morgan Stanley,
Coca-Cola, Eli Lilly and McDonald's, have agreed to address shareholder concerns
by publicly disclosing their political contributions. The companies have also
agreed to board-level oversight of their political expenditures. We encourage
you to join the list of companies who believe that such transparency and
accountability are in their long-term best interest. We are also enclosing a
shareholder resolution, which we plan on filing this year that lays out the
information we believe shareholders should have access to in order to make an
informed decision about whether to invest in Citigroup.
We look forward to hearing about the steps that our corporation is taking to
respond to these investor concerns. Please contact Noa Oren, Teamsters Capital
Strategies Department, at (202) 624-8990 to set up a meeting.
Sincerely,
/s/
C. Thomas Keegel
General Secretary-Treasurer
[APPENDIX 3]
RESOLVED
That the shareholders of Citigroup Inc. ("Company") hereby request that the
Company provide a report, updated semi-annually, disclosing the Company's:
1. Policies and procedures for political contributions and expenditures (both
direct and indirect) made with corporate funds.
2. Monetary and non-monetary political contributions and expenditures not
deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including
but not limited to contributions to or expenditures on behalf of political
candidates, political parties, political committees and other political entities
organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and
any portion of any dues or similar payments made to any tax exempt organization
that is used for an expenditure or contribution if made directly by the
corporation would not be deductible under section 162 (e)(1)(B) of the Internal
Revenue Code. The report shall include the following:
a. An accounting of the Company's funds that are used for political
contributions or expenditures as described above;
b. Identification of the person or persons in the Company who participated in
making the decisions to make the political contribution or expenditure; and
c. The internal guidelines or policies, if any, governing the Company's
political contributions and expenditures.
The report shall be presented to the Board of Directors' audit committee or
other relevant oversight committee and posted on the Company's website to reduce
costs to shareholders.
[INQUIRY LETTER]
February 20, 2007
Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporation Finance
100 F Street, NE
Washington, D.C. 20549
Re: Request by Citigroup, Inc. for Determination Allowing Exclusion of a
Shareholder Proposal Submitted by Teamsters General Fund
Dear Sir or Madam:
By letter dated January 30, 2007 (the "No-Action Request"), Citigroup, Inc.
("Citigroup" or the "Company") asked that the Office of the Chief Counsel of the
Division of Corporation Finance (the "Division") confirm that it will not
recommend enforcement action if Citigroup omits a shareholder proposal (the
"Proposal") submitted pursuant to the Commission's Rule 14a-8 by the Teamsters
General Fund (the "Fund") from Citigroup's proxy materials to be sent to
shareholders in connection with the 2007 annual meeting of shareholders (the
"2007 Annual Meeting").
The Proposal requests that Citigroup report semiannually on Citigroup's policies
and procedures on political contributions and expenditures and on certain
specific contributions or expenditures made directly or indirectly by Citigroup.
The Proposal recommends that the report be presented to the audit committee of
Citigroup's Board of Directors or other relevant oversight committee, and that
it be posted on the Company's web site.
Citigroup contends that it is entitled to exclude the Proposal1 in reliance on
Rule 14a-8(i)(10), arguing that the Company has substantially implemented the
Proposal by disclosing certain information regarding the Company's political
activity. As discussed more fully below, the Citigroup Policy does not
substantially implement the Proposal because it does not deal with trade
association political contributions and expenditures funded by member dues. As a
result, exclusion on substantial implementation grounds is inappropriate.
The Actions Requested in the Proposal Differ Significantly from Citigroup's
Current Policies and Practices
The Proposal asks Citigroup to provide a report on several types of data related
to corporate political activity. The Proposal seeks disclosure on Citigroup's
policies and procedures on political contributions and expenditures made with
corporate funds. The Proposal also asks Citigroup to provide more specific data
on monetary and non-monetary contributions and expenditures that are not
deductible under section 162(e)(1)(B) of the Internal Revenue Code (the "Code"),
including but not limited to contributions to or expenditures on behalf of
political candidates, political parties, political committees and other
political entities organized and operating under section 527 of the Code and any
portion of any dues or similar payments made to any tax exempt organization that
is used for an expenditure or contribution which if made directly by Citigroup
would not be deductible under section 162(e)(1)(B) of the Code.
Citigroup argues that it has substantially implemented the Proposal because it
has adopted a Political Contributions Policy (the "Citigroup Policy"). The
Citigroup Policy sets forth factors that are used in making contributions from
corporate or political action committee (PAC) funds; describes the Company's
lobbying efforts; specifies that contributions are approved by Citigroup's
Global Government Affairs staff; and, provides for annual disclosure of
political contributions on Citigroup's web site.
The Citigroup Policy falls short of the measures requested in the Proposal in
two ways. First, there is no indication that the Citigroup Policy itself will be
disclosed to shareholders, as the Proposal urges. Second, and most important,
the Citigroup Policy does not require disclosure of contributions or
expenditures made by a tax-exempt organization that is funded by dues or other
similar payments by Citigroup. This language in the Proposal is intended to
capture political activity engaged in through trade associations, which the Fund
views as critically important.
Trade association political activity has attracted a great deal of media
attention, though the full extent of this activity is difficult to measure
because it avoids election law regulation, including disclosure requirements.
(E.g., Jim VandeHei and Tom Hamburger, "Drug Firms Underwrite U.S. Chamber's TV
Ads," The Wall Street Journal, Oct. 6, 2000, at A24.) One campaign finance
expert has dubbed these contributions "the new soft money." (Tom Hamburger,
"Trade Groups Join Bush on Social Security," Los Angeles Times, Apr. 11, 2005.)
According to a report by Public Citizen, 501(c) groupsincluding associations
such as the Chamber of Commerce as well as ostensibly grassroots groups backed
by trade associationsspent at least $87.8 million in the 2000 and 2002 election
cycles (a figure that is almost certainly understated due to the paucity of
disclosure regarding their activities). (See Public Citizen, "The New Stealth
PACs: Tracking 501(c) Non-Profit Groups Active in Elections" (Sept. 2004)
available at http://www.stealthpacs.org/documents/StealthPACs.pdf).
News reports indicate that financial services firms were likely contributors to
groups set up to promote social security reform and individual retirement
accounts. (See Jim VandeHei, "A Big Push on Social Security," The Washington
Post (Jan. 1, 2005); Landon Thomas Jr., "Wall St. Lobby Quietly Tackles Social
Security," The New York Times (Dec. 21, 2004)). The Citigroup Policy's omission
of payments to and on behalf of trade associations thus constitutes a critical
difference from the much more comprehensive approach taken by the Proposal.
Last year, the Division refused to grant relief to Pfizer, Inc. on a challenge
very much like Citigroup's. The proposal submitted by the Fund to Pfizer was
substantially identical to the Proposal, and Pfizer argued that it had
substantially implemented the proposal by adopting a political contributions
policy. Like the Citigroup's Policy, Pfizer's policy did not provide for
disclosure of payments to trade associations, but Pfizer argued that this
difference was not sufficiently large to preclude exclusion on substantial
implementation grounds. The Staff disagreed. (See Pfizer, Inc. (publicly
available Feb. 9, 2006)).
Because the Citigroup Policy does not address the key issue of trade association
political activity funded by payments or dues from Citigroup, Citigroup has not
substantially implemented the Proposal. Accordingly, Citigroup's request for
relief should be denied.
The Fund is pleased to be of assistance to the Staff on this matter. If you have
any questions or need additional information, please do not hesitate to contact
Noa Oren, Projects Manager at (202) 624-8100.
Very truly yours,
/s/
C. Thomas Keegel
General Secretary-Treasurer
cc: Shelley J. Dropkin, General Counsel, Corporate Governance, Citigroup, Inc.
-----FOOTNOTES-----
1 The Proposal Citigroup reprints in its No-Action Request, which consists only
of a resolved clause, is not the full Proposal submitted by the Fund. On October
11, 2006, the Fund sent a letter to Citigroup (attached hereto as Exhibit A)
outlining the Fund's concerns regarding Citigroup's political activities. The
Fund enclosed a copy of the Proposal's resolved clause with this letter as an
illustration of "the information we believe shareholders should have access to."
The text of the October 11 letter stated that the Fund was considering
submitting a proposal, and contained none of the language, including
representations regarding intention to hold the requisite number of shares
through the annual meeting date, typical of a proposal submission cover letter.
Puzzlingly, on October 20, 2006, Citigroup sent a letter (attached hereto as
Exhibit B) stating that it "acknowledges receipt of the stockholder proposal
submitted by the International Brotherhood of Teamsters" and asking for proof of
ownership. On October 26, 2006, the Fund submitted the Proposal, together with a
formal submission cover letter (attached hereto as Exhibit C). The language of
the October 26 letter made clear that it was intended to serve as the submission
cover letter for the Proposal. The Proposal enclosed with the October 26 letter
is attached hereto as Exhibit D.
[INQUIRY LETTER]
October 26, 2006
BY FAX: 212-793-5300
BY UPS NEXT DAY
Mr. Michael S. Helfer
Corporate Secretary
Citigroup, Inc.
399 Park Avenue
New York, NY 10043
Dear Mr. Helfer:
I hereby submit the following resolution on behalf of the Teamsters General
Fund, in accordance with SEC Rule 14a-8, to be presented at the Company's 2007
Annual Meeting.
The General Fund has owned 1,900 shares of Citigroup, Inc., continuously for at
least one year and intends to continue to own at least this amount through the
date of the annual meeting. Enclosed is relevant proof of ownership.
Any written communication should be sent to the above address via U.S. Postal
Service, UPS, or DHL, as the Teamsters have a policy of accepting only Union
delivery. If you have any questions about this proposal, please direct them to
Noa Oren of the Capital Strategies Department, at (202) 624-8990.
Sincerely,
/s/
C. Thomas Keegel
General Secretary-Treasurer
[APPENDIX 4]
RESOLVED: That the shareholders of Citigroup, Inc., ("Company") hereby request
that the Company provide a report, updated semi-annually, disclosing the
Company's:
1. Policies and procedures for political contributions and expenditures (both
direct and indirect) made with corporate funds.
2. Monetary and non-monetary political contributions and expenditures not
deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including
but not limited to contributions to or expenditures on behalf of political
candidates, political parties, political committees and other political entities
organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and
any portion of any dues or similar payments made to any tax exempt organization
that is used for an expenditure or contribution if made directly by the
corporation would not be deductible under section 162 (e)(1)(B) of the Internal
Revenue Code. The report shall include the following:
a. An accounting of the Company's funds that are used for political
contributions or expenditures as described above;
b. Identification of the person or persons in the Company who participated in
making the decisions to make the political contribution or expenditure; and,
c. The internal guidelines or policies, if any, governing the Company's
political contributions and expenditures.
The report shall be presented to the Board of Directors' audit committee or
other relevant oversight committee and posted on the Company's website to reduce
costs to shareholders.
SUPPORTING STATEMENT: As long-term shareholders of Citigroup Inc., we support
policies that apply transparency and accountability to corporate spending on
political activities. Such disclosure is consistent with public policy and in
the best interest of shareholders.
Company executives exercise wide discretion over use of corporate resources for
political activities. These decisions involve political contributions, called
"soft money," and payments to trade associations and related groups that are
used for political activities. Most of these expenditures are not disclosed. In
2003-04, the last fully reported election cycle, the Company contributed at
least $1,012,915 in soft money. (Center for Public Integrity:
http://www.publicintegrity.org/527/db.aspx?act=main)
However, its payments to trade associations used for political activities are
undisclosed and unknown. These activities include direct and indirect political
contributions to candidates, political parties or political organizations;
independent expenditures; or electioneering communications on behalf of a
federal, state or local candidate. According to the Center for Political
Accountability, some of Citigroup's donations have ended up at groups that were
indicted for violating state campaign finance laws, were criticized for hiding
the source of contributions, or given to candidates with positions that
contradicted policies and practices that enhanced the Company's reputation.
The result: shareholders and management do not know how trade associations use
their Company's money politically. The proposal asks the Company to disclose
political contributions and payments to trade associations and other tax-exempt
organizations. Publicly available data does not provide a complete picture of
the Company's political expenditures. The Company's Board and its shareholders
need complete disclosure to be able to evaluate political use of corporate
assets.
We urge your support FOR this critical governance reform.
[INQUIRY LETTER]
February 28, 2007
U.S. Securities and Exchange Commission
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Stockholder Proposal to Citigroup Inc. of the International Brotherhood of
Teamsters ("Proponent")
Dear Sir or Madam:
The Proponent has submitted a letter to the Securities and Exchange Commission
dated February 20, 2007, a copy of which is attached hereto as Exhibit A
("Proponent's Letter" or the "Letter"). The Letter is a response to a no-action
petition (the "Petition") filed by Citigroup Inc. ("Citigroup" or the "Company")
on January 30, 2007 to exclude the stockholder proposal (the "Proposal")
submitted by the Proponent, which requests that the Company prepare a report
semi-annually disclosing (i) its policies and procedures for making political
contributions and expenditures, as well as (ii) its monetary and non-monetary
political contributions and expenditures "not deductible under Section 162 (e)
(1) (B) of the Internal Revenue Code, including but not limited to contributions
to or expenditures on behalf political candidates, political parties, political
committees and other political entities organized and operating under 26 USC
Sec. 527 of the Internal Revenue Code and any portion of any dues or similar
payments made to any tax exempt organization that is used for an expenditure or
contribution if made directly by the corporation would not be deductible under
section 162 (e)(1)(B of the Internal Revenue Code." The Proposal also mandates
that the report "shall be presented to the Board of Directors' audit committee
or other relevant oversight committee and posted on the Company's website to
reduce costs to shareholders."
Citigroup has reviewed the Proponent's Letter and believes that, notwithstanding
any statements to the contrary contained in such letter, the arguments stated in
the Petition fully support the exclusion of the Proposal from its proxy
statement and form of proxy (together, the "2007 Proxy Materials") under Rule
14a-8(i)(10).
The Proponent's Letter asserts that, "there is no indication that the Citigroup
policy itself will be disclosed to shareholders, as the Proposal urges." It is
unclear why the Proponent questions Citigroup's good faith, especially in light
of the fact that the Company has already posted on its website both its
Political Contributions Policy and all of the detailed political contribution
information for 2006 in its possession, as requested in the Proposal, at
http://www.citigroup.com/corporategovernance/index.htm.
The Letter goes into great detail explaining that trade association political
activity is "difficult to measure because it avoids election law regulations,
including disclosure requirements" and insists that Citigroup should include the
political activity of trade associations in its report on political giving. The
Letter does not explain why Citigroup, rather than Congress or state
legislatures, should remedy this perceived difficulty and why it would be
appropriate for Citigroup to assume responsibility for decisions made by a third
party as to its giving strategies. Specifically, there is no way for Citigroup
to know the extent of trade association political expenditures.
Citigroup acknowledges that the detailed political contribution information on
its website does not include trade association contributions; however, the
Company strongly believes that such disclosure would be misleading to
stockholders and the public because decisions related to political contributions
made by trade associations are outside the scope of Citigroup's control and
decision-making, and, therefore, cannot be fairly described as reflecting, in
whole or in part, Citigroup's support of any such contributions. To satisfy the
Proponent's request with respect to trade association political expenditures,
the trade association must be compelled to notify its members what percentage of
its dues were used for non-deductible expenses, but that information would also
be misleading because such expenses cover both political expenditures and
lobbying expenditures.
Unlike contributions made to political parties and political elections where the
individual's or entity's positions are public and contributions can fairly be
cast as supporting such positions, whether in whole or in part, monetary support
to trade associations cannot be characterized in the same way. Trade
associations do not generally publicize a platform and seek contributions by
people and companies in support of their positions as politicians and political
parties do. In addition, trade associations do not function exclusively as
vehicles to fund political strategies, nor do they seek funding from their
membership to support specific political contributions. This aspect of the
Proposal, rather than requiring the Company to increase transparency in its
political giving, which the Company has already done, is a circuitous approach
to forcing the disclosure of trade association giving. This would more
appropriately be achieved by efforts addressed directly to trade associations.
The Company's position, as set forth here and in greater detail in the Petition,
clearly demonstrates the manner and extent to which the Company has
substantially implemented the Proposal. For the foregoing reasons, the Proposal
should be excluded from Citigroup's 2007 Proxy Materials pursuant to Rule
14a-8(i)(10).
If you have any comments or questions concerning this matter, please contact me
at 212 793 7396.
Very truly yours,
/s/
Shelley J. Dropkin
General Counsel, Corporate Governance
Attachment
cc: Mr. C. Thomas Keegel, General Secretary-Treasurer
International Brotherhood of Teamsters
25 Louisiana Avenue, N.W.
Washington, D.C. 20001
[INQUIRY LETTER]
February 20, 2007
Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporation Finance
100 F Street, NE
Washington, D.C. 20549
Re: Request by Citigroup, Inc. for Determination Allowing Exclusion of a
Shareholder Proposal Submitted by Teamsters General Fund
Dear Sir or Madam:
By letter dated January 30, 2007 (the "No-Action Request"), Citigroup, Inc.
("Citigroup" or the "Company") asked that the Office of the Chief Counsel of the
Division of Corporation Finance (the "Division") confirm that it will not
recommend enforcement action if Citigroup omits a shareholder proposal (the
"Proposal") submitted pursuant to the Commission's Rule 14a-8 by the Teamsters
General Fund (the "Fund") from Citigroup's proxy materials to be sent to
shareholders in connection with the 2007 annual meeting of shareholders (the
"2007 Annual Meeting").
The Proposal requests that Citigroup report semiannually on Citigroup's policies
and procedures on political contributions and expenditures and on certain
specific contributions or expenditures made directly or indirectly by Citigroup.
The Proposal recommends that the report be presented to the audit committee of
Citigroup's Board of Directors or other relevant oversight committee, and that
it be posted on the Company's web site.
Citigroup contends that it is entitled to exclude the Proposal1 in reliance on
Rule 14a-8(i)(10), arguing that the Company has substantially implemented the
Proposal by disclosing certain information regarding the Company's political
activity. As discussed more fully below, the Citigroup Policy does not
substantially implement the Proposal because it does not deal with trade
association political contributions and expenditures funded by member dues. As a
result, exclusion on substantial implementation grounds is inappropriate.
The Actions Requested in the Proposal Differ Significantly from Citigroup's
Current Policies and Practices
The Proposal asks Citigroup to provide a report on several types of data related
to corporate political activity. The Proposal seeks disclosure on Citigroup's
policies and procedures on political contributions and expenditures made with
corporate funds. The Proposal also asks Citigroup to provide more specific data
on monetary and non-monetary contributions and expenditures that are not
deductible under section 162(e)(1)(B) of the Internal Revenue Code (the "Code"),
including but not limited to contributions to or expenditures on behalf of
political candidates, political parties, political committees and other
political entities organized and operating under section 527 of the Code and any
portion of any dues or similar payments made to any tax exempt organization that
is used for an expenditure or contribution which if made directly by Citigroup
would not be deductible under section 162(c)(1)(B) of the Code.
Citigroup argues that it has substantially implemented the Proposal because it
has adopted a Political Contributions Policy (the "Citigroup Policy"). The
Citigroup Policy sets forth factors that are used in making contributions from
corporate or political action committee (PAC) funds; describes the Company's
lobbying efforts; specifies that contributions are approved by Citigroup's
Global Government Affairs staff; and, provides for annual disclosure of
political contributions on Citigroup's web site.
The Citigroup Policy falls short of the measures requested in the Proposal in
two ways. First, there is no indication that the Citigroup Policy itself will be
disclosed to shareholders, as the Proposal urges. Second, and most important,
the Citigroup Policy does not require disclosure of contributions or
expenditures made by a tax-exempt organization that is funded by dues or other
similar payments by Citigroup. This language in the Proposal is intended to
capture political activity engaged in through trade associations, which the Fund
views as critically important.
Trade association political activity has attracted a great deal of media
attention, though the full extent of this activity is difficult to measure
because it avoids election law regulation, including disclosure requirements.
(E.g., Jim VandeHei and Tom Hamburger, "Drug Firms Underwrite U.S. Chamber's TV
Ads," The Wall Street Journal, Oct. 6, 2000, at A24.) One campaign finance
expert has dubbed these contributions "the new soft money." (Tom Hamburger,
"Trade Groups Join Bush on Social Security," Los Angeles Times, Apr. 11, 2005.)
According to a report by Public Citizen, 501(c) groupsincluding associations
such as the Chamber of Commerce as well as ostensibly grassroots groups backed
by trade associations--spent at least $87.8 million in the 2000 and 2002
election cycles (a figure that is almost certainly understated due to the
paucity of disclosure regarding their activities). (See Public Citizen, "The New
Stealth PACs: Tracking 501(c) Non-Profit Groups Active in Elections" (Sept.
2004) available at http://www.stealthpacs.org/documents/StealthPACs.pdf).
News reports indicate that financial services firms were likely contributors to
groups set up to promote social security reform and individual retirement
accounts. (See Jim VandeHei, "A Big Push on Social Security," The Washington
Post (Jan. 1, 2005); Landon Thomas Jr., "Wall St. Lobby Quietly Tackles Social
Security," The New York Times (Dec. 21, 2004)). The Citigroup Policy's omission
of payments to and on behalf of trade associations thus constitutes a critical
difference from the much more comprehensive approach taken by the Proposal.
Last year, the Division refused to grant relief to Pfizer, Inc. on a challenge
very much like Citigroup's. The proposal submitted by the Fund to Pfizer was
substantially identical to the Proposal, and Pfizer argued that it had
substantially implemented the proposal by adopting a political contributions
policy. Like the Citigroup's Policy, Pfizer's policy did not provide for
disclosure of payments to trade associations, but Pfizer argued that this
difference was not sufficiently large to preclude exclusion on substantial
implementation grounds. The Staff disagreed. (See Pfizer, Inc. (publicly
available Feb. 9, 2006)).
Because the Citigroup Policy does not address the key issue of trade association
political activity funded by payments or dues from Citigroup, Citigroup has not
substantially implemented the Proposal. Accordingly, Citigroup's request for
relief should be denied.
The Fund is pleased to be of assistance to the Staff on this matter. If you have
any questions or need additional information, please do not hesitate to contact
Noa Oren, Projects Manager at (202) 624-8100.
Very truly yours,
/s/
C. Thomas Keegel
General Secretary-Treasurer
cc: Shelley J. Dropkin, General Counsel, Corporate Governance, Citigroup, Inc.
-----FOOTNOTES-----
1 The Proposal Citigroup reprints in its No-Action Request, which consists only
of a resolved clause, is not the full Proposal submitted by the Fund. On October
11, 2006, the Fund sent a letter to Citigroup (attached hereto as Exhibit A)
outlining the Fund's concerns regarding Citigroup's political activities. The
Fund enclosed a copy of the Proposal's resolved clause with this letter as an
illustration of "the information we believe shareholders should have access to."
The text of the October 11 letter stated that the Fund was considering
submitting a proposal, and contained none of the language, including
representations regarding intention to hold the requisite number of shares
through the annual meeting date, typical of a proposal submission cover letter.
Puzzlingly, on October 20, 2006, Citigroup sent a letter (attached hereto as
Exhibit B) stating that it "acknowledges receipt of the stockholder proposal
submitted by the International Brotherhood of Teamsters" and asking for proof of
ownership. On October 26, 2006, the Fund submitted the Proposal, together with a
formal submission cover letter (attached hereto as Exhibit C). The language of
the October 26 letter made clear that it was intended to serve as the submission
cover letter for the Proposal. The Proposal enclosed with the October 26 letter
is attached hereto as Exhibit D.
[STAFF REPLY LETTER]
March 9, 2007
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Citigroup Inc. Incoming letter dated January 30, 2007
The proposal requests that Citigroup prepare a report, updated semi-annually,
disclosing its policies for political contributions and its monetary and
non-monetary political contributions, including the portion of any dues or
similar payments made to any tax-exempt organization that is used for an
expenditure or contribution that would not be deductible by Citigroup under
section 162(e)(1)(B) of the Internal Revenue Code if Citigroup had made the
payment directly.
We are unable to concur in your view that Citigroup may exclude the proposal
under rule 14a-8(i)(10). Accordingly, we do not believe that Citigroup may omit
the proposal from its proxy materials in reliance upon rule 14a-8(i)(10).
Sincerely,
/s/
Ted Yu
Special Counsel
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