Company Name: Johnson & Johnson
Public Availability Date: February 12, 2007
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 21, 2006
Direct Dial (202) 955-8653
Fax No. (202) 530-9677
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal of Human Life International Exchange Act of 1934Rule
14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that our client, Johnson & Johnson (the "Company"),
intends to omit from its proxy statement and form of proxy for its 2007 Annual
Shareholders Meeting (collectively, the "2007 Proxy Materials") a shareholder
proposal and statements in support thereof (the "Proposal") received from Human
Life International (the "Proponent").
Pursuant to Rule 14a-8(j), we have:
enclosed herewith six (6) copies of this letter and its attachments;
filed this letter with the Securities and Exchange Commission (the
"Commission") no later than eighty (80) calendar days before the Company files
its definitive 2007 Proxy Materials with the Commission; and
concurrently sent copies of this correspondence to the Proponent.
Rule 14a-8(k) provides that shareholder proponents are required to send
companies a copy of any correspondence that the proponents elect to submit to
the Commission or the staff of the Division of Corporation Finance (the
"Staff"). Accordingly, we are taking this opportunity to inform the Proponent
that if the Proponent elects to submit additional correspondence to the
Commission or the Staff with respect to this Proposal, a copy of that
correspondence should concurrently be furnished to the undersigned on behalf of
the Company pursuant to Rule 14a-8(k).
THE PROPOSAL
The Proposal requests that the Company's Board of Directors implement a policy
of listing all of the Company's charitable contributions on its website, but it
particularly targets contributions to "Planned Parenthood, a group responsible
for almost two hundred fifty thousand abortions per year," and "charitable
groups involved in abortion" and "same sex marriages." A copy of the Proposal
and supporting statement, as well as related correspondence from the Proponent,
is attached to this letter as Exhibit A. We hereby respectfully request that the
Staff concur in our view that the Proposal may be excluded from the 2007 Proxy
Materials pursuant to Rule 14a-8(i)(7) because it deals with a matter relating
to the Company's ordinary business operations.
ANALYSIS
The Proposal May Be Excluded Under Rule 14a-8(i)(7)
Because It Addresses Matters Related To The Company's Ordinary Business
Operations.
Under well-established precedent, we believe that the Company may exclude the
Proposal pursuant to Rule 14a-8(i)(7) because it deals with matters relating to
the Company's ordinary business operations. Rule 14a-8(i)(7) permits a company
to exclude a proposal that "deals with a matter relating to the company's
ordinary business operations." The purpose of the exclusion is to reserve to
management and the board of directors the day-to-day operation of the company's
business, and to avoid involving shareholders in the details of the company's
routine operations by way of the proxy process. See Exchange Act Release No.
12999 (Nov. 22, 1976); Exchange Act Release No. 40018 (May 21, 1998).
New Jersey Business Corporation Act Section 14A: 3-4 grants every corporation
the specific power to "aid ... in the creation or maintenance of institutions or
organizations engaged in community fund, hospital, charitable, philanthropic,
educational, scientific or benevolent activities or patriotic or civic
activities conductive to the betterment of social and economic conditions...."
New Jersey law, therefore, considers the giving of contributions to be within
"ordinary business operations." Accordingly, decisions regarding the disclosure,
timing, amount and recipients of charitable contributions are, as a matter of
state law, ordinary business decisions of the Company.
The Proposal requests that the Company "implement a policy listing all
charitable contributions on [its] website." Although the Proposal appears
facially neutral, its preamble and supporting statement make clear that the
proposed policy is intended to target a particular kind of charitable
contribution, namely, contributions to Planned Parenthood and organizations that
support abortions and same-sex marriage.
The Staff has consistently found that proposals requesting a company to refrain
from making any contributions to specific types of organizations relate to a
company's ordinary business operations and may be excluded from proxy materials
pursuant to Rule 14a-8(i)(7) and its predecessor, Rule 14a-8(c)(7). See, e.g.,
Wachovia Corp. (avail. Jan. 25, 2005) (concurring that a proposal recommending
that the board disallow contributions to Planned Parenthood and related
organizations was excludable under Rule 14a-8(i)(7) because it related to
"contributions to specific types of organizations"). In contrast, the Staff has
determined that general proposals that do not single out any particular type of
organization are not excludable under Rule 14a-8(i)(7). See, e.g., Microsoft
Corp. (avail. Aug. 11, 2003) (denying exclusion of a proposal recommending that
the company refrain from making any charitable contributions). See also Johnson
& Johnson (avail. Jan. 13, 2004) (same).
The Staff consistently has permitted the exclusion of facially neutral proposals
addressing charitable contributions under Rule 14a-8(i)(7) as relating to
ordinary business if the statements surrounding the proposed resolution indicate
that the proposal, in fact, would serve as a shareholder referendum on donations
to a particular charity or type of charity. See American Home Products Corp.
(avail. Mar. 4, 2002) (permitting exclusion of proposal to form a committee to
study contributions because surrounding statements indicated opposition to
Planned Parenthood and abortion); Bank of America Corp. (avail. Jan. 24, 2003)
(permitting exclusion of proposal to cease making charitable contributions
because majority of preamble and supporting statement referenced abortion and
religious beliefs).
In American Home Products Corp. (avail. Mar. 4, 2002), a facially neutral
proposal requested that the board "form a committee to study the impact
charitable contributions have on the business of the company and its share
value." Notwithstanding the facially neutral language of the proposed
resolution, the Staff concurred that because five of the six "Whereas" clauses
preceding the resolution referenced abortion and organizations that support or
perform abortions, the measure was directed toward charitable contributions to a
specific type of organization (abortion-related organizations) and could,
therefore, be excluded under Rule 14a-8(i)(7). The preamble to the American Home
Products proposal included the following statements:
"Whereas, some charitable groups are involved in controversial activities like
abortion[;]"
"Whereas, Planned Parenthood is the [sic] charitable organization and the
single largest provider of abortions in the United States[;]" and
"Whereas, our company or its affiliated foundation, has given money to Planned
Parenthood and other charities."
The proposal in American Home Products, which is structured similarly to the
Proposal, was an attempt to veil a proposal aimed at a specific type of
charitable contribution with a facially neutral proposal. Finding this proposal
to be related to "charitable contributions directed to specific types of
organizations," the Staff concurred that it could be omitted from the company's
proxy materials pursuant to Rule 14a-8(i)(7).
Similarly, in Schering-Plough Corp. (avail. Mar. 4, 2002), a facially neutral
proposal requested that the company "form a committee to study the impact
charitable contributions have on the business of the company and its share
value." Schering-Plough argued that the proposal was "clearly designed to
involve the [c]ompany in the issue of abortion," since each of the five
statements in the proposal's preamble referenced abortion in some way, and the
supporting statement centered around a discussion of Planned Parenthood. The
Staff concurred that the proposal could be omitted from the company's proxy
materials in reliance on Rule 14a-8(i)(7) because the proposal related to the
company's "ordinary business operations (i.e., charitable contributions directed
to specific types of organizations)."
Further, in The Walt Disney Co. (Burnside) (avail. Nov. 10, 1997), a facially
neutral proposal requested that the company "refrain from making any charitable
contributions." However, the proposal's supporting statement read, in part, as
follows:
Gifts to groups advocating domestic partner health benefits and same sex
marriages can produce large amounts of bad will toward the company. The
perception that the company is advocating homosexual causes through these
contributions is not good business. Let us return to the time when Walt Disney
Company was synonymous with family entertainment and the idea of a family did
not include adults who preferred to have sex with members of their own sex.
Read in this context, the Staff recognized that the proposal was specifically
"directed at contributions to groups advocating domestic partner health
benefits," and accordingly, the Staff concurred that the proposal could be
omitted from the company's proxy materials pursuant to Rule 14a-8(i)(7) as it
related to the company's ordinary business operations.
As the American Home Products, Schering-Plough, and Walt Disney no-action
letters evidence, the Staff historically has looked beyond a facially neutral
shareholder proposal in order to determine whether the proposal is actually
directed toward contributions to specific types of charitable organizations. In
each of these no-action letters, facially neutral proposals were found to be
directed toward specific kinds of charitable giving and therefore were
excludable under Rule 14a-8(i)(7) (or its predecessor, Rule 14a-8(c)(7)) as
relating to ordinary business.
Similarly, the Proposal, although facially neutral, is directed toward
particular kinds of charitable contributions, namely those to Planned Parenthood
and organizations that support abortion and same-sex marriage. In this regard, a
majority of the Proposal's preamble and supporting statement refer in some way
to abortion or same-sex marriage. In fact, many of the statements in the
Proposal are identical to statements in proposals that were excluded. See, e.g.,
Bank of America Corp. (avail. Jan. 24, 2003); American Home Products Corp.
(avail. Mar. 4, 2002). The following statements appear in the Proposal's
preamble and supporting statement:
"Whereas, our company has given money to charitable groups involved in
abortion and other activities[;]"
"Whereas, our company is the subject of a boycott by Life Decisions
International1 because of certain charitable contributions[;]"
"Whereas, mutual funds like the Timothy Plan2 and the Ave Maria Catholic
Values Fund3 will not invest in our company because of contributions to certain
groups[;]"
"Whereas, some potential recipients of charitable funds promote same sex
marriages[;]" and
"In fact, some [money] has gone to Planned Parenthood, a group responsible for
almost two hundred fifty thousand abortions per year."
The Proposal's references to these groups, as well as other statements in the
preamble and supporting statement, make clear the Proposal's true intentionto
force the Company to stop making donations to a particular charity or type of
charity. The Proposal differs from other shareholder proposals in which
exclusion was denied (for example, the proposal in Johnson & Johnson) because,
in contrast to the Proposal, those proposals employed neutral language
throughout the preamble and supporting statements. Moreover, statements made at
the Company's 2006 Annual Meeting of Shareholders by the Proponent's
representative further illustrate the underlying intent of the Proposal. See
Exhibit C. Specifically, as part of his remarks presenting a shareholder
proposal substantially similar to the Proposal voted on at the 2006 Annual
Meeting, Reverend Thomas J. Euteneuer, the Proponent's President and submitter
of the Proposal stated:
"We submitted our shareholder proposal this year concerning Johnson &
Johnson's funding of the organization that carries out the most egregious human
rights violations in this country, and indeed, around the world, and does so
under the auspices of charity. The organization of concern is the Planned
Parenthood Federation of America."
"Johnson & Johnson should not be assisting any organization that promotes
abortion."
"J&J should completely disavow any association with Planned Parenthood and any
other group profits from such drastic human rights violations."
Furthermore, in a 2006 letter to the Proponent's supporters (See, Exhibit D),
the Proponent's President reinforces the underlying intent of its shareholder
proposal. The letter states:
"Dear Friend and Benefactor of Human Life International,...
Today I am writing because I need your immediate help so HLI can thwart the
abortion movement here in the United States. Specifically:
HLI's effort to infiltrate the board rooms of corporate America and get American
businesses to stop funding Planned Parenthood.
To date,...you and HLI have helped convince 123 corporations to stop funding
Planned Parenthood....
This year I hope to add another company to that list: Johnson & Johnson!"
(emphasis in original)
Thus, the language of the Proposal and its supporting statements, as amplified
by the statements made by the Proponent's representative at the Company's 2006
Annual Meeting of Shareholders, emphasize that the Proposal is more similar to
the precedents discussed above where exclusion was permitted than it is to the
proposal the Company previously received where exclusion was denied.
For these reasons, it is evident that the Proposal is not directed at charitable
contributions generally, but rather at contributions to particular organizations
the Proponent disfavors. Just like the facially neutral proposals in the letters
cited above, the Proposal is directed at particular charitable contributions and
thus is excludable pursuant to Rule 14a-8(i)(7).
CONCLUSION
Based upon the foregoing analysis, we respectfully request that the Staff concur
that it will take no action if the Company excludes the Proposal from its 2007
Proxy Materials. We would be happy to provide you with any additional
information and answer any questions that you may have regarding this subject.
In addition, the Company agrees to promptly forward to the Proponent any
response from the Staff to this no-action request that the Staff transmits by
facsimile to the Company only.
If we can be of any further assistance in this matter, please do not hesitate to
call me at (202) 955-8653 or Steven M. Rosenberg, the Company's Corporate
Secretary, at (732) 524-2452.
Sincerely,
/s/
Amy L. Goodman
ALG/amc
Enclosures
cc: Rev. Thomas J. Euteneuer, Human Life International
-----FOOTNOTES-----
1 Life Decisions International is an organization that, according to its
website, "brings together many of North America's leading experts for its
primary mission of challenging the agenda of Planned Parenthood worldwide." The
organization seeks to accomplish this, at least in part, by "refusing to do
business with corporations that fund [Planned Parenthood's] deadly agenda."
2 According to its website, the Timothy Plan is a mutual fund that considers
itself to be "America's first pro-life, pro-family, biblically-based mutual fund
group." The fund seeks to serve those who are "concerned with the moral issues
(abortion, pornography, anti-family entertainment, non-married lifestyles,
alcohol, tobacco and gambling) that are destroying children and families ...."
3 The Ave Maria Catholic Values Fund is part of the Ave Maria Mutual Funds
family, the website for which indicates that Ave Maria's funds are "designed
specifically for morally responsible investors who are looking for financially
sound investments in companies that do not violate the core teachings of the
Catholic Church." In selecting its investments, the organization's Catholic
Advisory Board "eliminate[s] those companies connected with abortion or
pornography, or that offer their employees non-marital partner `benefits.'" The
website passages referenced above are attached hereto as Exhibit B.
[INQUIRY LETTER]
November 6, 2006
Mr. Michael Ullmann
Secretary
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933
Dear Mr. Ullmann:
We are the owners of 100 shares of Johnson & Johnson common stock. We have
continuously owned these shares for over one year and intend to own them through
the time of the next annual meeting. At that meeting, we will present the
following proposal:
Whereas, Thomas Jefferson said in A Bill for Establishing Religious Freedom, "To
compel a man to furnish contributions of money for the propagation of opinions
which he disbelieves is sinful and tyrannical."
Whereas, charitable contributions should serve to enhance shareholder value.
Whereas, our company has given money to charitable groups involved in abortion
and other activities.
Whereas, our company respects diverse religious beliefs. It should try not to
offend these beliefs wherever possible.
Whereas, our company is the subject of a boycott by Life Decisions International
because of certain charitable contributions.
Whereas, mutual funds like the Timothy Plan and the Ave Maria Catholic Values
Fund will not invest in our company because of contributions to certain groups.
Whereas, some potential recipients of charitable funds promote same sex
marriages.
Resolved, The shareholders request the Board of Directors to implement a policy
listing all charitable contributions on the company's website.
Supporting Statement: Full disclosure is integral to good corporate governance.
Shareholder money is entrusted to the Board of Directors to be invested in a
prudent manner for the benefit of the shareholders. People did not invest in
this company so a portion of their investment could be given to someone else's
favorite charity. In fact, some has gone to Planned Parenthood, a group
responsible for almost two hundred fifty thousand abortions per year. How such
contributions enhance shareholder value would be difficult to quantify. In
contrast, the subsequent boycotts caused by these contributions could hardly be
considered beneficial.
Sincerely,
/s/
Reverend Thomas J. Euteneur
President
[INQUIRY LETTER]
January 11, 2007
VIA FEDERAL EXPRESS
Office of Chief Counsel
Division of Corporation Finance
Security and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Johnson and Johnson, Inc. Questionable Ethical Handling of Shareholder
Proposal of Human Life International; Exchange Act of 1934Rule 14a-8 Formal
Complaint and Request for Warning
Dear Ladies and Gentlemen:
This letter is to inform you of what this corporation (Human Life International,
Inc.; hereafter, HLI) considers to be the questionable, if not unethical,
handling of a shareholder proposal by Johnson and Johnson, Inc. (hereafter,
J&J). In addition, we would like to lodge a formal complaint against J&J for
this action and request that the Security and Exchange Commission issue a formal
warning against any such future actions by J&J.
On November 6, 2006 HLI, a J&J stockholder, issued a stockholder proposal
concerning J&J's charitable contributions. The proposal was worded exactly the
same as the HLI proposal in 2005.
In a letter dated November 13 (but actually received by HLI by Certified Mail
fifteen days later on November 28th), HLI was informed that we were to "comply
with all aspects of Rule 14a-8 ... with respect to Shareholder Proposals." In
the letter it was stated that this Rule requires HLI to "furnish [J&J] within
fourteen days of your receipt of this letter, a written statement that you
intend to provide proof of ownership of the requisite amount of securities
through April 26, 2007 and written confirmation that either you or an authorized
representative will be present at our shareholder meeting to present your
proposal." I note again that the J&J letter was actually received by HLI fifteen
days after its date. The paragraph ended by stating that "this will enable the
proposal to be validly submitted for inclusion in our proxy materials."
HLI's representative in this matter, Mr. Thomas Strobhar, immediately phoned J&J
legal counsel, Mr. Douglas Chia, with the following concerns and objections;
namely, that:
1. The SEC Rule 14a-8 does not require that a stockholder provide to a company
proof of stock ownership through the time of the shareholders meeting;
2. In HLI's submission of the proposal, HLI already did state that HLI will be
present at the meeting. This is also a non-requirement of the SEC Rule 14a-8;
In fact, the SEC's Division of Corporation Finance: Staff Legal Bulletin No. 14
(July 13, 2001), #4.a, states quite clearly that to request such a statement was
"inappropriate." "The Commission stated in Release No. 34-20091 that
shareholders are no longer required to provide the company with a written
statement of intent to appear and present a shareholder proposal. The Commission
eliminated this requirement because "it serve[d] little purpose" and only
encumbered shareholders. We, therefore, view it as inappropriate for companies
to solicit this type of written statement from shareholders for the purposes of
rule 14a-8." (Emphasis added.)
3. J&J did not, however, ask in the letter for proof that HLI owns the shares
and are in compliance to validate submission in the proxy. This indeed is an SEC
requirement. Furthermore,
4. In our submission of the identically-worded proposal in the year 2005, there
were no such demands, misinformation or omissions. Quite to the contrary; the
November 7, 2005 letter from Michael H. Ullman concerning HLI's 2005 shareholder
proposal stated simply, "This will acknowledge receipt of your letter by our
office in November 3, 2005 and the shareholder proposal with respect to
Charitable Contributions." See Exhibit A.
Immediately following Mr. Strobhar's conversation with Mr. Chia, a new letter,
dated December 1, 2006, was issued from J&J legal counsel apologizing for "any
confusion created" by the previous letter and correcting the errors in fact
about Rule 14a-8 and the omission. Mr. Chia did not comment on the discrepancy
of the date of the letter (November 13th) arriving one day after the requested
response by HLI was due. See Exhibit B.
We note that J&J has since submitted a request for the exclusion of HLI's
shareholder proposal under the rubric of "ordinary business operations," a
reason that was not presented by J&J to the SEC last year, although the exact
same proposal was submitted by HLI.
In light of the significant public relations difficulties created for J&J by
HLI's 2005 shareholder proposal, the late arrival of the letter, the absence of
request for exclusion in 2005 although the proposal is exactly the same and the
fact that J&J legal counsel misrepresented the terms of SEC Rule 14a-8 in their
November 13th letter, HLI believes that the letter itself was an attempt to
intimidate a shareholder making a legally valid proposal.
HLI objects in the strongest terms to what we consider to be unethical behavior
on the part of J&J, the corporation of which HLI shares ownership by our stock
holdings.
In addition to this, we ask that the Security and Exchange Commission issue a
warning to J&J for such attempts to mislead and intimidate a legal shareholder
so that this type of action may not be repeated by J&J or any other corporate
entity.
Very truly yours,
/s/
Rev. Thomas J. Euteneuer
President/CEO
Cc: Steven M. Rosenberg
Thomas Strobhar
Encl. Exhibit A: November 7, 2005 Letter from J&J Corporate Counsel
Exhibit B: December 1, 2006 Letter from J&J Corporate Counsel
[STAFF REPLY LETTER]
February 12, 2007
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Johnson & Johnson Incoming letter dated December 21, 2006
The proposal requests that the board implement a policy listing all charitable
contributions on the company's website.
There appears to be some basis for your view that
Johnson & Johnson may exclude the proposal under rule 14a-8(i)(7), as relating
to Johnson & Johnson's ordinary business operations (i.e., contributions to
specific types of organizations). Accordingly, we will not recommend enforcement
action to the Commission if Johnson & Johnson 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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