Company Name: Kohl's Corp.
Public Availability Date: January 8, 2007
Document Sections:
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER
[INQUIRY LETTER]
December 6, 2006
VIA DHL EXPRESS
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal
Ladies and Gentlemen:
In accordance with Rule 14a-8(j) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), Kohl's Corporation, a Wisconsin corporation
("Kohl's") hereby gives notice of its intention to omit from its proxy statement
for its 2007 annual meeting of shareholders (the "Proxy Statement") a
shareholder proposal (the "Proposal") submitted by The Nathan Cummings
Foundation and two co-sponsors, Catholic Healthcare West and the Dominican
Sisters of Springfield, Illinois (collectively, the "Proponent"). A copy of the
Proposal together with the Proponent's supporting statement is attached as
Attachment A.
The Proposal requests Kohl's to "report (at reasonable cost and omitting
proprietary information) on the implications of rising health care expenses and
how it is positioning itself to address this public policy issue without
compromising the health and productivity of its workforce. The report should be
completed by June 30, 2007 and need not address specific benefit offerings."
Kohl's respectfully requests confirmation that the staff of the Division of
Corporate Finance ("Staff") of the Securities and Exchange Commission (the
"Commission") will not recommend any enforcement action to the Commission if
Kohl's omits the Proposal from the Proxy Statement, pursuant to Rule 14a-8(i)(7)
of the Exchange Act. Kohl's believes that the Proposal may be properly omitted
because it relates to the conduct of Kohl's ordinary business operations.
The Proposal Relates to Kohl's Ordinary Business Operations.
While the Proposal draws no direct connection between Kohl's and the "public
policy issue" of "rising health care expenses", one must assume that the
Proposal seeks information on the methodologies behind the health care plan
designs and the management of the health care benefits Kohl's provides to its
employees. Read together with the supporting statement, the Proponent is asking
for a risk assessment of the changing competitive landscape in the health care
arena. To the extent the Proposal seeks a report on the management of employee
benefits provided to Kohl's general workforce, it clearly relates to Kohl's
ordinary business operations. Proposals of this type have consistently been
deemed by the Staff as excludable pursuant to Rule 14a-8(i)(7).
Exchange Act Release No. 40018 (May 21, 1998) (the "1998 Release"), states that
"the general underlying policy of [the ordinary business] exclusion is
consistent with the policy of most state corporate laws: to confine the
resolution of ordinary business problems to management and the board of
directors, since it is impracticable for shareholders to decide how to solve
such problems at an annual shareholders meeting." The 1998 Release further
states that "the policy underlying the ordinary business exclusion rests on two
central considerations. The first relates to the subject matter of the proposal.
Certain tasks are so fundamental to management's ability to run a company on a
day-to-day basis that they could not, as a practical matter, be subject to
direct shareholder oversight. Examples include the management of the workforce,
such as the hiring, promotion, and termination of employees, decisions on
production quality and quantity, and the retention of suppliers.... The second
consideration relates to the degree to which the proposal seeks to
"micro-manage" the company by probing too deeply into matters of a complex
nature upon which shareholders, as a group, would not be in a position to make
an informed judgment" (emphasis added).
The Proposal clearly deals with the management of Kohl's workforce. One of the
most fundamental functions performed by management is attracting and retaining
the highest quality talent available. Decisions with respect to the benefit
packages to be offered to Kohl's employees, which directly affect the ability to
attract and retain employees, are inherently based on complex business
considerations that are outside the knowledge and expertise of shareholders.
These decisions and considerations cannot practicably be subject to direct
shareholder oversight and micro-management.
In the ordinary course of its business, Kohl's actively monitors and attempts to
control all of its expenses, including the costs of health care. Like many
business considerations, healthcare benefit policy decisions cannot be made in a
vacuum. Each of these decisions can have profound workforce implications, and
must be made with a full knowledge and understanding of the competitive
landscape. These decisions involve detailed analytical assessments of the risks
and rewards of offering various benefit plan designs. Kohl's Human Resources
executives and their advisors consider these complex issues on an ongoing basis.
They assess the balance between the costs and benefits of offering varying
levels of compensation and benefits to attract and retain the highest quality
associates. With respect to health care benefits, consideration must be given
not only to the raw cost of the services, but to the quality and availability of
the services of each provider in Kohl's various provider networks. Moreover, the
health care benefits are just one component of an entire compensation package,
so with each decision on health care benefits, consideration must also be given
to the potential impact on all of the other components of the package. Due to
the complexity of these issues, Kohl's shareholders, no matter how intelligent
they are, would not be in a position to make any informed judgment from the
materials in the requested report. Staff recently concurred with these views in
Wal-Mart Stores, Inc. (March 24, 2006) ("Wal-Mart") (proposal requesting that
"the Board of Directors report on the public health services used by the Company
in its domestic operations" was excludable).
The Proponent is likely to argue that the Proposal is not excludable because it
focuses on "significant public policy issues" which would "transcend the
day-to-day business matters", as described in the 1998 Release. Such is not the
case in this instance, and as described in Wal-Mart and the other matters cited
below, the clear precedent of the Staff has been to reject such arguments with
respect to proposals seeking the same type of report on employee benefits
requested in the Proposal.
Additionally, Staff Legal Bulletin No. 14C (June 28, 2005) ("SLB 14C") provides
"To the extent that a proposal and supporting statement focus on the company
engaging in an internal assessment of the risks or liabilities that the company
faces as a result of its operations that may adversely affect the environment or
the public's health, we concur with the company's view that there is a basis for
it to exclude the proposal under Rule 14a-8(i)(7) as relating to an evaluation
of risk." As discussed above, decisions with respect to compensation and
employee benefit offerings involve a risk assessment of the cost versus the
competitive advantages of numerous variations of the subject benefit. While the
proponent was obviously careful not to use the word "risk", the supporting
statement of the Proposal makes numerous references to the risks to Kohl's of
escalating health care expenses:
"The provision of health insurance is crucial to productivity-the HR Policy
Association estimates that the annual cost of reduced productivity stemming from
the lack of coverage is at least $87 billion-and can be critical to attracting
and retaining talented workers....
...
... Health insurance costs are now among the fastest-growing business expenses
for American corporations. In fact, The McKinsey Quarterly predicted that the
average Fortune 500 company could see health benefit spending equal profits as
soon as 2008.
...
... American companies are confronted with a 15 percent cost disadvantage versus
firms from countries with universal health care.
...
... The Economist recently speculated that many American executives harbor
similar sentiments and the US. Chamber of Commerce has identified the cost of
health care as an issue affecting the ability of U.S. corporations to compete in
global markets.
..."
Under the clear guidance of SLB 14C, the Proposal can and should be omitted,
notwithstanding its vague attempt to couch the issues in terms of a significant
policy issue while avoiding the use of the word "risk".
Staff has Consistently Deemed Similar Proposals Excludable.
The above-described outcome of Wal-Mart was entirely consistent with the Staff's
long history of allowing exclusion of proposals that deal with employee health
care benefits. Most notably, in International Business Machines Corporation
(January 13, 2005) Staff allowed exclusion of a proposal that requested IBM to
"prepare and, make available to shareholders, within six months, a report
examining the competitive impact of rising health insurance costs." Similar
proposals have consistently been deemed excludable by Staff. See General Motors
Corporation (March 24,2005) (proposal to establish a directors' committee to
develop specific reforms for "the health care problem" was excludable); and
International Business Machines Corporation (January 21, 2002) (proposal to
require the company to provide information about health benefit costs and
support the establishment of a national health insurance system was excludable).
Staff's precedent and prior guidance on this matter is extremely clear.
Consistent with this precedent and guidance, Kohl's believes that the Proposal
clearly deals with issues and considerations that involve its ordinary business
operations. Consequently, the matters addressed by the Proposal are not matters
that should be subject to direct shareholder control. Therefore, Kohl's believes
that the Proposal may be omitted from its Proxy Statement in accordance with
Rule 14a-8(i)(7).
Kohl's respectfully requests that the Staff confirm that it will not recommend
any enforcement action if the Proposal is omitted from Kohl's Proxy Statement.
By copy of this request letter, Kohl's is advising the Proponent of its intent
to exclude the Proposal from the Proxy Statement. If there are any questions
relating to this submission, please do not hesitate to contact me at (262)
703-2787. Please acknowledge receipt of this letter by date stamping the
enclosed copy of the first page and returning it in the enclosed self-addressed
stamped envelope.
Thank you for your attention to this matter.
Sincerely,
/s/
Richard D. Schepp
Executive Vice President
General Counse/Secretary
cc: Laura Shaffer, The Nathan Cummings Foundation
Sister Linda Hayes, Dominican Sisters of Springfield Illinois
Susan Vickers, Catholic Healthcare West
[APPENDIX]
ATTACHMENT A
The provision of health insurance is crucial to productivity-the HR Policy
Association estimates that the annual cost of reduced productivity stemming from
the lack of coverage is at least $87 billion-and can be critical to attracting
and retaining talented workers. Employer-based coverage is an essential part of
America's health insurance system and will continue to be so for the near term.
However, the cost of employer-sponsored health plans has increased by nearly 75
percent since 2000, with premiums increasing more rapidly than either inflation
or wage growth. Health insurance costs are now among the fastest-growing
business expenses for American corporations. In fact, The McKinsey Quarterly
predicted that the average Fortune 500 company could see health benefit spending
equal profits as soon as 2008.
According to Business Week, "The biggest issue for Corporate America in 2005 and
beyond is getting out from under the crushing burden of costly medical-care
benefits." Soaring costs are putting upward pressure on cost structures and
cutting into profits. They also make it difficult for American companies to
compete in the global market place.
A study by the Manufacturers Alliance and the National Association of
Manufacturers found that structural costs, of which the largest component by far
is health care, add almost 23 percent to the price of doing business in the
United States. Wilbur Ross, the investor responsible for restructuring Bethlehem
Steel, estimated in a recent issue of The New Yorker that American companies are
confronted with a 15 percent cost disadvantage versus firms from countries with
universal health care.
Major American corporations are feeling the effects. General Motors' CEO
recently lamented that, "[GM's] health care expense represents a significant
disadvantage versus our foreign-based competitors. Left unaddressed, this will
make a big difference in our ability to compete in investment, technology and
other key contributors to our future success." GM's CEO is not alone. The
Economist recently speculated that many American executives harbor similar
sentiments and the US. Chamber of Commerce has identified the cost of health
care as an issue affecting the ability of U.S. corporations to compete in global
markets.
According to the Deloitte Center for Health Solutions, current attempts to hold
down the cost of coverage are not demonstrating appreciable results. And
eliminating benefits altogether is not a viable option either. According to
Ford's 2004/5 Sustainability Report, "Long-term, national solutions are needed."
In the meantime, state legislatures are beginning to address health coverage.
Four states have passed universal health care bills, at least eight more are
under consideration and an additional seven states are studying the possibility
of a universal system.
Resolved: Shareholders request that the company report (at reasonable cost and
omitting proprietary information) on the implications of rising health care
expenses and how it is positioning itself to address this public policy issue
without compromising the health and productivity of its workforce. The report
should be completed by June 30, 2007 and need not address specific benefit
offerings.
[INQUIRY LETTER]
January 2, 2007
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Attention: Chief Counsel, Division of Corporation Finance
Re: Request by Kohl's Corporation to omit shareholder proposal submitted by The
Nathan Cummings Foundation
Dear Sir/Madam,
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, The Nathan
Cummings Foundation (the "Foundation") and two co-sponsors submitted a
shareholder proposal (the "Proposal") to Kohl's Corporation ("Kohl's" or the
"Company"). The Proposal asks Kohl's to report on the implications of rising
health care expenses and how the Company is positioning itself to address this
public policy issue without compromising the health and productivity of its
workforce.
By letter dated December 6, 2006, Kohl's stated that it intends to omit the
Proposal from the proxy materials to be sent to shareholders in connection with
the 2007 annual meeting of shareholders and asked for assurance that the Staff
would not recommend enforcement action if it did so. Kohl's claims that it is
entitled to exclude the Proposal in reliance on Rule 14a-8(i)(7), as relating to
Kohl's ordinary business operations. As we discuss more fully below, Kohl's has
not met its burden of proving it is entitled to omit the Proposal; its request
for relief should accordingly be denied.
Rule 14a-8(i)(7) allows a company to exclude a proposal that "deals with a
matter related to the company's ordinary business operations." Kohl's argues
that the Proposal is excludable on ordinary business grounds for three reasons.
First, Kohl's claims that the Proposal seeks to micromanage the Company's
provision of employee benefits to its workforce. Exchange Act Release No. 40018
(May 21, 1998)(the "1998 Release"), explains that certain day-to-day tasks,
including "the management of the workforce," can not, "as a practical matter, be
subject to direct shareholder oversight" and thus are excludable. The 1998
Release states that "matters of a complex nature upon which shareholders, as a
group, would not be in a position to make an informed judgment," are not
suitable topics for shareholder proposals.
Neither of these considerations militate in favor the Proposal's exclusion.
Contrary to Kohl's assertion, the Proposal does not seek "information on the
methodologies behind the health care plan designs and the management of the
health care benefits Kohl's provides to its employees." Instead, the Proposal
asks Kohl's to assess the strategic impact of spiraling health care costs on
Kohl's and Kohl's responses to this challenge. Such an evaluation would fall
within the purview of the board and Kohl's most senior management, not the
lower-level personnel responsible for plan design, vendor selection and benefits
policy. Thus, the Proposal is not concerned with day-to-day workforce
management.
Similarly, the Proposal does not ask shareholders to make determinations
regarding Kohl's health care benefits, as Kohl's argues. Direct shareholder
oversight of health care benefits would be unwieldy and unworkable. But the
Proposal does not try to impose such oversight. It operates at a much higher
level of generality and seeks only a report on Kohl's overall approach to the
problem. As a result, the concerns articulated by the Commission in the 1998
Release are not present here.
Second, Kohl's contends that the Proposal asks for a "risk assessment" and is
thus excludable under a line of Staff decisions and a Staff Legal Bulletin
interpreting the ordinary business exclusion as precluding proposals dealing
with certain kinds of risks or liabilities. The Proposal does not once mention
the word "risk," and it does not use the cost-benefit language of risk
assessment. Kohl's nonetheless claims that the challenge mounting health care
costs pose to Kohl's constitutes a risk, transforming the Proposal's request
into a risk assessment.
As an initial matter, the Staff Legal Bulletin relied on by Kohl'sStaff Legal
Bulletin 14Cconfines the "risk assessment" reasoning to proposals dealing with
"the risks or liabilities that the company faces as a result of its operations
that may adversely affect the environment or the public's health." The Proposal
addresses neither environmental nor public health issues.
More broadly, Kohl's logic would turn any proposal about a challenge facing a
company, from sweatshop labor to employment discrimination to harmful
productsall of which have been deemed permissible topics for shareholder
proposalsinto an excludable "risk assessment" proposal. The exception should
not be permitted to swallow the rule in this manner.
Finally, Kohl's states conclusorily that the Proposal does not involve a
significant social policy issue making application of the ordinary business
exclusion inappropriate under the 1998 Release. Assuming for argument's sake
that the impact of rapidly rising health care costs on U.S. companies was
properly considered not a significant policy issue in and before early 2005,
when the International Business Machines Corporation1 and General Motors
Corporation2 determinations Kohl's cites were issued, the landscape has now
changed.
In the 2006 mid-term elections that changed control of both the U.S. House of
Representatives and U.S. Senate, voters sent a strong message that the rising
cost of health care is a key issue. Voters polled by Americans for Health Care
in November 2006 identified rising health care costs as their top economic
concern. (See http://www.americansforhealthcare.com/docUploads/health%20care%20in%202006%20elections%2Epdf)
In December 2006, the Kaiser Family Foundation and Harvard School of Public
Health found health care tied for second place with economic concerns in a
survey of the public's policy priorities. (See http://www.kff.org/kaiserpolls
/pomr120806nr.cfm) The same survey identified health care as one of the three
issues Americans are most interested in for the 2008 election. A survey by the
Employee Benefit Research Institute in May and June 2006 found that 59% of
respondents rated the nation's health care system as "poor" or "fair."
(Christopher Lee, "Shift in Congress Puts Health Care Back on the Table," The
Washington Post (Dec. 25, 2006))
A number of Congressional initiatives related to health care and health
insurance coverage are expected to be put forward when Congress returns to
session in January 2007. Two of the House Democrats' top "Six for '06"
priorities related to health care. (See Lee, supra.) Senator Ron Wyden has
announced that he will introduce a bill to provide universal health insurance
when Congress reconvenes. (Ricardo Alonso-Zaldivar, "Health Plan Aims to Cut
Costs, Insure All," Los Angeles Times (Dec. 14, 2006))
There is also significant activity on the state level. Three statesMaine,
Massachusetts and Vermonthave enacted measures designed to provide universal
coverage to their residents. Similar legislation has been introduced in New
Jersey. (See Richard G. Jones, "Health Insurance for all is Considered in New
Jersey," The New York Times (Dec. 12, 2006)) Eight other states are considering
universal coverage legislation, and seven more are studying the matter. (See
www.ncsl.org/programs/health/ universalhealth2006.htm)
Senate Democrats in California proposed earlier this month to cover
approximately 4.2 million of that state's 6 million uninsured, using a tax on
both employers and employees. A proposal on the issue is expected from Governor
Schwarzenegger in January. ("Democrats Offer Health Plan; State Senators Propose
a Levy on Employers and Employees to Cover Most Uninsured Workers," Los Angeles
Times (Dec. 13, 2006)) Federal legislation has been proposed to facilitate
testing health-care reform ideas at the state level, then identifying the
best-performing ones for consideration at the federal level. (See Guy Boulton,
"Health Reform Looks to the States," Milwaukee Journal Sentinel (Nov. 26, 2006))
The cost of health care and health insurance is not only of intense interest to
lawmakers and the general public; it is a particularly urgent social policy
issue for U.S. companies that provide health benefits to their employees.
General Motors CEO Rick Wagoner has quantified the burden: He estimates that
$1,500 of the cost of every car GM sells is attributable to health care, a
surcharge he says companies in other countries do not bear. (Ceci Connolly, "US
Firms Losing Health Care Battle, GM Chairman Says," The Washington Post (Feb.
11, 2005)) In an increasingly global economy, U.S. companies' rapidly growing
health care costs put them at a competitive disadvantage, given the larger role
of government in providing health coverage in other countries.
The 2006 Kaiser/Health Research and Educational Trust employer survey reported
that the cost of health insurance rose 7.7% in 2006, well over the 3.5%
inflation rate. According to the survey, the cost of health insurance has
increased by 87% since 2000, with cost increases outpacing inflation since 1999.
(See http://www.kff.org/ insurance/7527/index.cfm) In the Business Roundtable's
Fourth Quarter 2006 CEO Economic Outlook Survey, over half of CEOs identified
health care costs as the greatest cost pressure facing their businesses, for the
fourth year in a row. (See http://www.businessroundtable.org/newsroom/Document.aspx?
qs=5916BF807822B0F1ADC478122FB51711FCF50C8)
Some efforts to increase coverage have singled out employers to finance reforms.
"Fair share" legislation, which effectively imposes a surcharge on large
businesses that do not provide a specified level of health coverage to their
employees, was passed over a gubernatorial veto in Maryland in January 2006, and
has been proposed in other states. (See http://www.aflcio.org/issues/legislativealert/stateissues/healthcare/ns01052006.cfm)
(The Maryland statute's validity is currently being litigated.) Even absent such
legislation, employers bear a significant portion of the cost of our health
insurance crisis. A study by the Commonwealth Fund estimated that employers that
provide health care coverage spend $31 billion per year to cover their
employees' uninsured family members. (Id.) In the current environment, then, it
is difficult to imagine a more pressing social policy issue facing U.S.
companies, including Kohl's, than the relentless growth of health care costs.
In sum, the Proposal does not seek to micromanage Kohl's health benefits or
impose direct shareholder oversight of these programs. It asks Kohl's to report
to shareholders on the implications of rapidly rising health care costs and how
Kohl's is managing this challenge, matters shareholders can comprehend without
difficulty. Moreover, the changed political climate both in Washington and at
the state level, together with the upward march in the number of uninsured and
continuing frustration of even insured Americans, have brought greater media
attention and activity by political actors to the issue. Accordingly, the
Proposal does not involve Kohl's ordinary business, and Kohl's request for
no-action relief should be denied.
If you have any questions or need anything further, please do not hesitate to
call me at (212) 787-7300. The Foundation appreciates the opportunity to be of
assistance to the Staff in this matter.
Very truly yours,
/s/
Laura J. Shaffer
Manager of Shareholder Activities
cc: Richard Schepp
Kohl's Corporation
262-703-7274
-----FOOTNOTES-----
1 International Business Machines Corporation (Jan. 13, 2005 and Jan. 21, 2002).
2 General Motors Corporation (Mar. 24, 2005).
[INQUIRY LETTER]
January 3, 2007
VIA FACSIMILE - (202) 772-9217 & DHL EXPRESS
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal
Ladies and Gentlemen:
With this letter, I am forwarding a copy of correspondence received by Kohl's
Corporation from the co-sponsors of the shareholder proposal which is the
subject of my December 6, 2006 "no-action" letter request. This correspondence
was inadvertently excluded from my December 6 request. Note that one of the
co-sponsors, Catholic Healthcare West, has subsequently withdrawn as a
co-sponsor.
Please advise if any further information is needed. Thank you for your attention
to this matter.
Sincerely,
/s/
Richard D. Schepp
Executive Vice President
General Counsel/Secretary
cc: Laura Shaffer, The Nathan Cummings Foundation
Sister Linda Hayes, Dominican Sisters of Springfield Illinois
[INQUIRY LETTER]
November 20, 2006
Richard D. Schepp
Secretary & General Counsel
Kohl's Department Stores
N56 W17000 Ridgewood Drive
Menomonee Falls, WI 53051
Dear Mr. Schepp:
The Nathan Cummings Foundation is an endowed institution with approximately $500
million of investments. As a private foundation, the Nathan Cummings Foundation
is committed to the creation of a socially and economically just society and
seeks to facilitate sustainable business practices by supporting the
accountability of corporations for their actions. As an institutional investor,
the Foundation believes that the way in which a company approaches major public
policy issues has important implications for long-term shareholder value.
It is with these considerations in mind that we submit this resolution for
inclusion in Kohl's proxy statement under Rule 14a-8 of the general rules and
regulations of the Securities Exchange Act of 1934. We would appreciate an
indication in the proxy statement that the Nathan Cummings Foundation is the
primary proponent of this resolution. At least one representative of the filers
will attend the stockholders' meeting to move the resolution as required by the
rules of the Securities and Exchange Commission.
The Nathan Cummings Foundation is the beneficial owner of over $2,000 worth of
shares of Kohl's Corporation stock. Verification of this ownership, provided by
Northern Trust, our custodian bank, is included with this letter. We have held
over $2,000 worth of the stock for more than one year and will continue to hold
these shares through the shareholder meeting.
If you have any questions or concerns about this resolution, please contact
Laura Shaffer at (212) 787-7300. Thank you for your time.
Sincerely,
/s/
Lance E. Lindblom
President and CEO
/s/
Laura J. Shaffer
Manager of Shareholder Activities
cc: Interfaith Center on Corporate Responsibility Members and Associates
[APPENDIX]
The provision of health insurance is crucial to productivitythe HR Policy
Association estimates that the annual cost of reduced productivity stemming from
the lack of coverage is at least $87 billionand can be critical to attracting
and retaining talented workers. Employer-based coverage is an essential part of
America's health insurance system and will continue to be so for the near term.
However, the cost of employer-sponsored health plans has increased by nearly 75
percent since 2000, with premiums increasing more rapidly than either inflation
or wage growth. Health insurance costs are now among the fastest-growing
business expenses for American corporations. In fact, The McKinsey Quarterly
predicted that the average Fortune 500 company could see health benefit spending
equal profits as soon as 2008.
According to Business Week, "The biggest issue for Corporate America in 2005 and
beyond is getting out from under the crushing burden of costly medical-care
benefits." Soaring costs are putting upward pressure on cost structures and
cutting into profits. They also make it difficult for American companies to
compete in the global market place.
A study by the Manufacturers Alliance and the National Association of
Manufacturers found that structural costs, of which the largest component by far
is health care, add almost 23 percent to the price of doing business in the
United States. Wilbur Ross, the investor responsible for restructuring Bethlehem
Steel, estimated in a recent issue of The New Yorker that American companies are
confronted with a 15 percent cost disadvantage versus firms from countries with
universal health care.
Majot American corporations are feeling the effects, General Motors' CEO
recently iamented that, "[GM's] health care expense represents a significant
disadvantage versus our foreign-based competitors. Left unaddressed, this will
make a big difference in our ability to compete in investment. technology and
other key contributors to our future success." GM's CEO is not alone. The
Economist recently speculated that many American executives harbor similar
sentiments and the U.S. Chamber of Commerce has identified the cost of health
care as an issue affecting the ability of U.S. corporations to compete in global
markets.
According to the Deloitte Center for Health Solutions, current attempts to hold
down the cost of coverage are not demonstrating appreciable results. And
eliminating benefits altogether is not a viable option either. According to
Ford's 2004/5 Sustainability Report, "Long-term, national solutions are needed."
In the meantime, state legislatures are beginning to address health coverage.
Four states have passed universal health care bills, at least eight more are
under consideration and an additional seven states are studying the possibility
of a universal system.
Resolved: Shareholders request that the company report (at reasonable cost and
omitting proprietary information) on the implications of rising health care
expenses and how it is positioning itself to address this public policy issue
without compromising the health and productivity of its workforce. The report
should be completed by June 30, 2007 and need not address specific benefit
offerings.
The provision of health insurance is crucial to productivitythe HR Policy
Association estimates that the annual cost of reduced productivity stemming from
the lack of coverage is at least $87 billionand can be critical to attracting
and retaining talented workers. Employer-based coverage is an essential part of
America's health insurance system and will continue to be so for the near term.
However, the cost of employer-sponsored health plans has increased by nearly 75
percent since 2000, with premiums increasing more rapidly than either inflation
or wage growth. Health insurance costs are now among the fastest-growing
business expenses for American corporations. In fact, The McKinsey Quarterly
predicted that the average Fortune 500 company could see health benefit spending
equal profits as soon as 2008.
According to Business Week, "The biggest issue for Corporate America in 2005 and
beyond is getting out from under the crushing burden of costly medical-care
benefits." Soaring costs are putting upward pressure on cost structures and
cutting into profits. They also make it difficult for American companies to
compete in the global market place.
A study by the Manufacturers Alliance and the National Association of
Manufacturers found that structural costs, of which the largest component by far
is health care, add almost 23 percent to the price of doing business in the
United States. Wilbur Ross, the investor responsible for restructuring Bethlehem
Steel, estimated in a recent issue of The New Yorker that American companies are
confronted with a 15 percent cost disadvantage versus firms from countries with
universal health care.
Major American corporations are feeling the effects. General Motors' CEO
recently lamented that, "[GM's] health care expense represents a significant
disadvantage versus our foreign-based competitors. Left unaddressed, this will
make a big difference in our ability to compete in investment, technology and
other key contributors to our future success." GM's CEO is not alone. The
Economist recently speculated that many American executives harbor similar
sentiments and the U.S. Chamber of Commerce has identified the cost of health
care as an issue affecting the ability of U.S. corporations to compete in global
markets.
According to the Deloitte Center for Health Solutions, current attempts to hold
down the cost of coverage are not demonstrating appreciable results. And
eliminating benefits altogether is not a viable option either. According to
Ford's 2004/5 Sustainability Report, "Long-term, national solutions are needed."
In the meantime, state legislatures are beginning to address health coverage.
Four states have passed universal health care bills, at least eight more are
under consideration and an additional seven states are studying the possibility
of a universal system.
Resolved: Shareholders request that the company report (at reasonable cost and
omitting proprietary information) on the implications of rising health care
expenses and how it is positioning itself to address this public policy issue
without compromising the health and productivity of its workforce. The report
should be completed by June 30, 2007 and need not address specific benefit
offerings.
[INQUIRY LETTER]
December 20, 2006
Richard D. Schepp
Secretary & General Counsel
Kohl's Department Stores
N56 W17000 Ridgewood Drive
Menomonee Falls, WI 53051
Dear Mr. Schepp:
I have just learned that Catholic Healthcare West did not hold Kohl's common
stock continuously for the past year. I withdraw my proposal and apologize for
any inconvenience.
Sincerely,
/s/
Susan Vickers
VP, Community Health
[APPENDIX]
The provision of health insurance is crucial to productivity-the HR Policy
Association estimates that the annual cost of reduced productivity stemming from
the lack of coverage is at least $87 billion-and can be critical to attracting
and retaining talented workers. Employer-based coverage is an essential part of
America's health insurance system and will continue to be so for the near term.
However, the cost of employer-sponsored health plans has increased by nearly 75
percent since 2000, with premiums increasing more rapidly than either inflation
or wage growth. Health insurance costs are now among the fastest-growing
business expenses for American corporations. In fact, The McKinsey Quarterly
predicted that the average Fortune 500 company could see health benefit spending
equal profits as soon as 2008.
According to Business Week, "The biggest issue for Corporate America in 2005 and
beyond is getting out from under the crushing burden of costly medical-care
benefits." Soaring costs are putting upward pressure on cost structures and
cutting into profits. They also make it difficult for American companies to
compete in the global market place.
A study by the Manufacturers Alliance and the National Association of
Manufacturers found that structural costs, of which the largest component by far
is health care, add almost 23 percent to the price of doing business in the
United States. Wilbur Ross, the investor responsible for restructuring Bethlehem
Steel, estimated in a recent issue of The New Yorker that American companies are
confronted with a 15 percent cost disadvantage versus firms from countries with
universal health care.
Major American corporations are feeling the effects. General Motors' CEO
recently lamented that, "[GM's] health care expense represents a significant
disadvantage versus our foreign-based competitors. Left unaddressed, this will
make a big difference in our ability to compete in investment, technology and
other key contributors to our future success." GM's CEO is not alone. The
Economist recently speculated that many American executives harbor similar
sentiments and the US. Chamber of Commerce has identified the cost of health
care as an issue affecting the ability of U.S. corporations to compete in global
markets.
According to the Deloitte Center for Health Solutions, current attempts to hold
down the cost of coverage are not demonstrating appreciable results. And
eliminating benefits altogether is not a viable option either. According to
Ford's 2004/5 Sustainability Report, "Long-term, national solutions are needed."
In the meantime, state legislatures are beginning to address health coverage.
Four states have passed universal health care bills, at least eight more are
under consideration and an additional seven states are studying the possibility
of a universal system.
Resolved: Shareholders request that the company report (at reasonable cost and
omitting proprietary information) on the implications of rising health care
expenses and how it is positioning itself to address this public policy issue
without compromising the health and productivity of its workforce. The report
should be completed by June 30, 2007 and need not address specific benefit
offerings.
[INQUIRY LETTER]
November 27, 2006
Richard D. Schepp
Secretary & General Counsel
Kohl's Department Stores
N56 W17000 Ridgewood Drive
Menomonee Falls, WI 53051
Dear Mr. Schepp:
Catholic Healthcare West, in collaboration with The Nathan Cummings Foundation,
hereby submits the enclosed proposal for inclusion in the proxy statement for
consideration and action by the 2007 shareholders meeting in accordance with
Rule 14(a)(8) of the General Rules and Regulations of the Securities and
Exchange Act of 1934. We would appreciate indication in the proxy statement that
Catholic Healthcare West is a sponsor of this resolution. Other shareholders
will be co-sponsoring this proposal.
Catholic Healthcare West has held over $2000.00 worth of Kohl's Department
Stores stock for more than one year. Proof of ownership will be provided upon
request. A representative of the filers will attend the stockholders meeting to
move the resolution as required by the rules of the Securities and Exchange
Commission (SEC), and we will continue to hold shares in the company through the
stockholder meeting.
Sincerely yours,
/s/
Susan Vickers, RSM
Vice President Community Health
cc: Dan Rosan, Interfaith Center on Corporate Responsibility
Julie Wokaty, ICCR Director of Publications
Laura J. Shaffer, The Nathan Cummings Foundation
[APPENDIX]
The provision of health insurance is crucial to productivitythe HR Policy
Association estimates that the annual cost of reduced productivity stemming from
the lack of coverage is at least $87 billionand can be critical to attracting
and retaining talented workers. Employer-based coverage is an essential part of
America's health insurance system and will continue to be so for the near term.
However, the cost of employer-sponsored health plans has increased by nearly 75
percent since 2000, with premiums increasing more rapidly than either inflation
or wage growth. Health insurance costs are now among the fastest-growing
business expenses for American corporations. In fact, The McKinsey Quarterly
predicted that the average Fortune 500 company could see health benefit spending
equal profits as soon as 2008.
According to Business Week, "The biggest issue for Corporate America in 2005 and
beyond is getting out from under the crushing burden of costly medical-care
benefits." Soaring costs are putting upward pressure on cost structures and
cutting into profits. They also make it difficult for American companies to
compete in the global market place.
A study by the Manufacturers Alliance and the National Association of
Manufacturers found that structural costs, of which the largest component by far
is health care, add almost 23 percent to the price of doing business in the
United States. Wilbur Ross, the investor responsible for restructuring Bethlehem
Steel, estimated in a recent issue of The New Yorker that American companies are
confronted with a 15 percent cost disadvantage versus firms from countries with
universal health care.
Major American corporations are feeling the effects. General Motors' CEO
recently lamented that, "[GM's] health care expense represents a significant
disadvantage versus our foreign-based competitors. Left unaddressed, this will
make a big difference in our ability to compete in investment, technology and
other key contributors to our future success." GM's CEO is not alone. The
Economist recently speculated that many American executives harbor similar
sentiments and the U.S. Chamber of Commerce has identified the cost of health
care as an issue affecting the ability of U.S. corporations to compete in global
markets.
According to the Deloitte Center for Health Solutions, current attempts to hold
down the cost of coverage are not demonstrating appreciable results. And
eliminating benefits altogether is not a viable option either. According to
Ford's 2004/5 Sustainability Report, "Long-term, national solutions are needed."
In the meantime, state legislatures are beginning to address health coverage.
Four states have passed universal health care bills, at least eight more are
under consideration and an additional seven states are studying the possibility
of a universal system.
Resolved: Shareholders request that the company report (at reasonable cost and
omitting proprietary information) on the implications of rising health care
expenses and how it is positioning itself to address this public policy issue
without compromising the health and productivity of its workforce. The report
should be completed by June 30, 2007 and need not address specific benefit
offerings.
STAFF REPLY LETTER]
January 8, 2007
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Kohl's Corporation Incoming letter dated December 6, 2006
The proposal requests that the board prepare a report examining the implications
of rising health care expenses and how Kohl's is addressing this issue without
compromising the health and productivity of its workforce.
There appears to be some basis for your view that Kohl's may exclude the
proposal under rule 14a-8(i)(7), as relating to Kohl's ordinary business
operations (i.e., employee benefits). Accordingly, we will not recommend
enforcement action to the Commission if Kohl's omits the proposal from its proxy
materials in reliance on rule 14a-8(i)(7).
Sincerely,
/s/
Gregory Belliston
Attorney-Adviser
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