Company Name: National Fuel Gas Co.
Public Availability Date: November 16, 2007
Document Sections:
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
[INQUIRY LETTER]
October 5, 2007
VIA OVERNIGHT 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 Submitted by Robert Belfield to National Fuel Gas
Company
Ladies and Gentlemen:
National Fuel Gas Company, a New Jersey corporation ("National Fuel" or the
"Company"), has received a shareholder proposal (the "Proposal") submitted by
Robert A. Belfield (the "Proponent") in connection with the annual meeting of
the Company's shareholders to be held in February 2008. We believe that this
Proposal may be properly excluded from the Company's 2008 Proxy Statement (the
"2008 Proxy Statement") pursuant to Rule 14a-8(h) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). We respectfully request that the
Staff (the "Staff") of the Division of Corporation Finance (the "Division") of
the Securities and Exchange Commission (the "Commission") confirm (i) that it
will not recommend any enforcement action against the Company based on the
omission of this Proposal, and (ii) that it will not recommend any enforcement
action against the Company if any proposal submitted by the Proponent is omitted
from the Company's proxy materials for any meetings of stockholders held in
calendar years 2008 or 2009.
Enclosed for filing pursuant to Rule 14a-8(j) of the Exchange Act are six copies
of this letter and the Proposal with its supporting statement. We are also
forwarding a copy of this letter to the Proponent, as required.
The Proposal
The Proposal, dated August 10, 2007, reads as follows:
The Stockholders recommend that the Board, each year, seek stockholders'
approval of the compensation of the 5 most highly compensated executive officers
of the Company and its subsidiaries, and thereby give stockholders the
opportunity to express their disapproval, if they should see fit.
The letter received by the Company setting out the Proposal and supporting
statement is attached hereto in its entirety as Exhibit 1.
Grounds for Exclusion
As addressed more completely below, we believe that the Proposal and the
supporting statement may be properly omitted from the 2008 Proxy Statement
pursuant to Rule 14a-8(h)(3) because the Proponent failed to appear, or to
appoint a qualified representative to appear, without good cause, at the
Company's 2007 Annual Meeting to present a prior shareholder proposal at that
meeting.
Background Information
The Proponent is and at all relevant times was the life companion of Mr. Curtis
W. Lee, who was an employee of the Company or its subsidiaries for approximately
19 years, from September 1980 to January 1999. Mr. Lee worked for the Company
and its subsidiaries as an attorney for virtually all that time, until very late
1998. The Company terminated Mr. Lee's employment in January 1999.
Mr. Lee and the Company have been for the last eight years and are still
currently involved in sealed litigation at the state and federal levels related
to Mr. Lee's misconduct as former counsel to the Company. Mr. Lee has been
convicted of 35 counts of criminal contempt of court and 83 counts of civil
contempt of court in the course of that litigation, and has been the subject of
multiple court orders and injunctions, including the ones referenced below.1 He
has also surrendered his law license and been censured as a result of
proceedings before the Attorney Grievance Committee of the Eighth Judicial
District and the New York State Appellate Division, Fourth Department. The
Appellate Division concluded that Mr. Lee violated six separate ethical rules,
including a conclusion that he engaged in "illegal conduct that adversely
reflects on his honesty, trustworthiness or fitness as a lawyer." 2
The Proponent and Mr. Lee have shown a pattern of submitting proposals to the
Company for annual meetings, as illustrated by the following table: |[NCCDEF]
|[UCA1] |[TDC4,M'from proxy',QC] |[TCC4,MP1,QL] |[TCC4,M'MR. LEE',QC]
|[TCC4,M'MR. BELFIELD',QC] |[XT] |[ST]|[TU201;4] |[ST]|[LC15]|[RS6]|[QC]MEETING
|[TA] |[TA]|[TN3,4]|[QC]PROPONENT |[ST]|[TU201;4] |[ST]|[CFZ]|[QC]YEAR |[TA]|[QC]SUBJECT
MATTER OF PROPOSAL |[TA]|[QC]Mr. Lee |[TA]|[QC]Mr. Belfield |[ST]|[TU201;4]
|[ST]|[TVU1]|[RS4]1999 |[TA]|[TVU1]Limit executive compensation awards
|[TA]|[TVU1]X |[TA]|[TVU1] |[ST]|[TU201;4] |[ST]|[TVU1]2000
|[TA]|[TVU1]Committee, plan and report on minority employment |[TA]|[TVU1]X
|[TA]|[TVU1] |[ST]|[TU201;4] |[ST]|[TVU1]2001 (excluded from proxy statement)
|[TA]|[TVU1]Limit executive compensation awards |[TA]|[TVU1]X |[TA]|[TVU1]
|[ST]|[TU201;4] |[ST]|[TVU1] |[TA]|[TVU1]Limit executive compensation awards
|[TA]|[TVU1]X |[TA]|[TVU1] |[ST]|[TVU1]2002 |[ST] |[TA]|[TVU1]Committee, plan
and report on minority employment |[TA]|[TVU1] |[TA]|[TVU1]X |[ST]|[TU201;4]
|[ST]|[TVU1] |[TA]|[TVU1]Limit executive compensation awards |[TA]|[TVU1]X
|[TA]|[TVU1] |[ST]|[TVU1]2003 |[ST]|[TVU1] |[TA]|[TVU1]Committee, plan and
report on minority employment |[TA]|[TVU1] |[TA]|[TVU1]X |[ST]|[TU201;4]
|[ST]|[TVU1]2004 |[TA]|[TVU1]Limit executive compensation awards |[TA]|[TVU1]
|[TA]|[TVU1]X |[ST]|[TU201;4] |[ST]|[TVU1]2005 |[TA]|[TVU1]Limit executive
compensation awards |[TA]|[TVU1] |[TA]|[TVU1]X |[ST]|[TU201;4] |[ST]|[TVU1]2006
|[TA]|[TVU1]Repeal the 2005 compensation increases to directors |[TA]|[TVU1]
|[TA]|[TVU1]X |[ST]|[TU201;4] |[ST]|[TVU1]2007 |[TA]|[TVU1]Repeal the 2005
compensation increases to directors |[TA]|[TVU1] |[TA]|[TVU1]X |[ST]|[TU201;4]
|[ET]
Mr. Lee' submitted his first shareholder proposal (for the 1999 Annual Meeting)
while he was still employed by the Company as its in-house executive
compensation and benefits attorney, and all of the shareholder proposals on the
above table are written in a highly similar style. A few months before the
Company terminated Mr. Lee's employment, Mr. Lee gave the Proponent enough
Company stock so that, beginning with the 2002 annual meeting, one shareholder
proposal per year could be submitted under the Proponent's name, in addition to
the proposal that Mr. Lee would annually submit under his own name, until a
permanent injunction forced him to divest all his Company stock.
Discussion
The Proponent failed to appear, or to designate a qualified representative to
appear, without good cause, at the Company's 2007 Annual Meeting to present the
Proponent's shareholder proposal for that meeting.
Rule 14a-8(h)(3) provides that:
If [the Proponent or his] qualified representative fail to appear and present
the proposal without good cause, the company will be permitted to exclude all of
[the Proponent's] proposals from its proxy materials for any meetings held in
the following two calendar years.
The Proponent failed to appear at the Company's Annual Meeting of Stockholders
held on February 15, 2007, to present the shareholder proposal he had submitted
for that meeting.3 Instead, the Proponent's life componion Mr. Lee appeared at
that meeting and presented a document dated January 16, 2007 which appeared to
be signed by the Proponent, stating that for health reasons the Proponent would
not attend the Annual Meeting, and that the Proponent was appointing Mr. Lee as
his representative to present the Proponent's proposal (the "Attempted
Designation")4. Mr. Lee was not admitted to the meeting, and nobody presented
the proposal on the Proponent's behalf. The Chairman allowed the stockholders to
vote on the Proponent's proposal. See the minutes of the meeting attached as
Exhibit 5, and the affidavits of Company officers attached as Exhibits 6, 7, 8
and 9 regarding events at and near the February 15, 2007 Annual Meeting.
Rule 14a-8(h)(l) provides that a proponent may designate a "representative who
is qualified under state law to present the proposal on your behalf." However,
under state law, Mr. Lee is expressly disqualified from presenting any National
Fuel shareholder proposal. The New York State Supreme Court issued a permanent
injunction that was mostly upheld on appeal5 that provides in relevant part as
follows:
[Mr. Lee] is permanently enjoined and restrained from buying, holding, owning,
possessing, receiving, obtaining, obtaining benefits from, or exercising any
rights or privileges with respect to, any National Fuel shares (emphasis
supplied).
The right to submit and present a shareholder proposal to be voted upon at the
Annual Meeting is a right or privilege held only by certain National Fuel
shareholders [Rule 14a-8(h)]. If Mr. Lee were to present at a meeting of
National Fuel's stockholders a shareholder proposal submitted by the Proponent,
he would be exercising a right or privilege with respect to the Proponent's
National Fuel shares. Mr. Lee is specifically barred under state law from doing
that, so he cannot possibly be considered eligible to be the Proponent's
"representative who is qualified under state law to present the proposal on your
behalf." Rule 14a-8(h)(1). A written opinion of counsel on the applicable state
law is attached hereto as Exhibit 10.
The Proponent and Mr. Lee knew or should have known that Mr. Lee was not
qualified under state law to present the proposal that the Proponent had
submitted for the 2007 Annual Meeting. Exhibit A to the opinion letter includes
a copy of the proofs of service of the permanent injunction at the residence
shared by the Proponent and Mr. Lee. The Proponent had appeared as a witness in
the state court proceedings, attended most of the state court hearings
(including the hearing at which Mr. Lee was sentenced for multiple counts of
civil and criminal contempt), and was well aware of the permanent injunction
entered against Mr. Lee at the conclusion of contempt hearings that extended
over 12 months. The Proponent's close attention to Mr. Lee's litigation is
further evidenced by the letters attached as Exhibit 11, in which the Proponent
updates members of the Company's board in considerable detail about his view of
that litigation. Furthermore, the Proponent presented shareholder proposals at
Company Annual Meetings at which he was accompanied by Mr. Lee, who was excluded
from the rooms where those Annual Meetings took place, in accordance with the
permanent injunction.
The Attempted Designation was dated January 16, 2007, 30 days before the Annual
Meeting. So the Proponent had already decided by January 16\th/ that he would
not attend the February 15\th/ Annual Meeting. It would have been easy and
inexpensive for the Proponent, even if he had started no earlier than January
16\th/, to arrange for someone living in the vicinity of the Annual Meeting
location to take no more than ninety minutes to travel to the Annual Meeting,
attend the entire meeting, present Mr. Belfield's shareholder proposal to the
Annual Meeting, and travel back to his or her home or place of business.
The sequence of events described above indicates that the Proponent's failure to
designate a representative qualified under state law was "without good cause."
Under Rule 14a-8(h)(3), it was the Proponent's responsibility to attend the 2007
Annual Meeting to present his 2007 proposal or, in the alternative, to ensure
that a qualified representative appeared on his behalf and that the
representative was adequately prepared to attend the meeting and to participate
in the meeting on a timely basis. See Transamerica Inc. SEC No-Action Letter
(December 27, 1989) ("[w]hile the proponent provides information to suggest that
he had "good cause" for such failure, there is no information to indicate that
the proponent took steps to avoid such cause"); ConocoPhillips SEC No Action
Letter (March 5, 2007) (proponent had no "good cause" for purposes of Rule
14a-8(h)(3) despite his claim that he was unable to find anybody in the Houston
area to present his proposal); Sonat Inc. SEC No-Action Letter (January 6, 1994)
(schedule conflicts and personal inconvenience are not "good cause" for purposes
of Rule 14a-8(h)(3)); Eastman Chemical SEC No-Action Letter (February 10, 1997)
(proponent's "advanced age, schedule conflicts and personal inconvenience" were
not "good cause"); Harnischfeger Indus., Inc. SEC No-Action Letter (December 15,
1992) (proponent "offered no explanation accounting for his failure to present
his proposal"); and United States Steel Corp. SEC No-Action Letter (January 23,
1984) (scheduling conflict arising from two simultaneous stockholder meetings
was foreseeable and avoidable, and therefore not "good cause").
The Division has placed the burden on the proponent of a shareholder proposal to
demonstrate that he or she had "good cause" for failing to present the proposal
at a meeting of security holders. See, e.g., Union Oil Co. of California SEC
No-Action Letter (February 23, 1984). The Commission has previously emphasized
that it is "the proponent's responsibility, not his representative's, to insure
that the proposal is presented [at the meeting]." Proposed Amendments to Rule
14a-8 Under the Securities Exchange Act of 1934 Relating to Proposals by
Security Holders, Exchange Act Release No. 19,135, [1982 Transfer Binder] Fed.
Sec. L. Rep. (CCH)83,262 (Oct. 14, 1982).
The Division has occasionally held that a proponent had "good cause" for not
presenting its proposal at an annual meeting of stockholders, see, e.g., Chevron
Corp. SEC No-Action Letter (February 25, 1993) (Los Angeles riots constituted
"good cause"); I.C. Indus., Inc. SEC No-Action Letter (August 10, 1982)
(proponent's illness and subsequent unsuccessful attempts to contact registrant
constituted "good cause"). Here, there was no riot, the Proponent's health
condition was not sudden, and there were no unsuceessful attempts to communicate
with the Company.
The Division has also previously determined that traffic and travel delays or
difficulties do not constitute "good cause" under Rule 14a-8(h)(3). See, e.g.,
ConocoPhillips SEC No-Action Letter (March 5, 2007) (proponent's failure to find
anybody in the Houston area to present his proposal was not "good cause");
Community Health Systems, Inc. SEC No-Action Letter (January 25, 2006) ("traffic
delays" were not "good cause"); IDACORP, Inc. SEC No-Action Letter (October 21,
2004) (proponent's failure to attend the annual meeting due to the fact that the
proponent attended another meeting two days earlier in another city, that the
travel expenses would be exorbitant and that Amtrak did not serve the city where
the annual meeting was being held was not a failure for "good cause");
Transamerica SEC No-Action Letter (December 27, 1989) ("an extremely slow
commute" was not "good cause"); Great Western Financial Corp. SEC No-Action
Letter (February 5, 1991) ("freeway traffic" was not "good cause").
Note also that the Division has routinely found proponents to be baned by Rule
14a-8(b)(3) even though the chairmen of the annual meetings allowed the
shareholders to vote on the shareholder proposals in the proponents' absence (as
the Company's chairman allowed the Company's shareholders to vote on the
Proponent's 2007 proposal). IDACORP, Inc. SEC No-Action Letter (October 21,
2004); Flowers Foods, Inc. SEC No-Action Letter (February 18, 2004); Raytheon
Co. SEC No-Action Letter (January 22, 2003); Eastman Chemical Co. SEC No-Action
Letter (February 27, 2001).
Conclusion
Under Rule 14a-8(h)(3), the Company should be permitted to exclude any proposals
submitted by the Proponent from its proxy materials for any meetings held during
the 2008 and 2009 calendar years. Because the Proponent submitted the 2007
proposal, which was included in the Company's 2007 Proxy Materials, and neither
the Proponent nor a qualified representative (i) appeared to present the 2007
proposal at the 2007 Annual Meeting, or (ii) demonstrated "good cause" for the
failure to appear to present the 2007 proposal at the 2007 Annual Meeting, the
Company respectfully requests your advice that the Division will not recommend
any enforcement action if the Proposal is omitted from the Company's 2008 Proxy
Materials, and further requests your advice that the Division will not recommend
any enforcement action if any proposal submitted by the Proponent is omitted
from the proxy materials for any meetings of Company stockholders held in
calendar years 2008 and 2009.
If you have any questions regarding this matter or require additional
information, please contact James R. Peterson at (716) 857-7702. If for any
reason you do not concur with any of the views expressed in this letter, we
respectfully request an opportunity to confer with you prior to any written
response.
Sincerely yours,
NATIONAL FUEL GAS COMPANY
By: /s/
James R. Peterson
Assistant Secretary
cc: Robert A. Belfield
Enclosures
-----FOOTNOTES-----
1 See Order of Contempt, Summary Judgment and Sanctions, and Permanent
Injunction, New York State Supreme Court, Eric County (Nov. 2, 2000) (excluding
exhibits), attached as Exhibit 2; Order of Criminal and Civil Contempt and
Permanent Injunction, New York State Supreme Court. Erie County (April 16,
2003), attached as Exhibit A to the accompanying opinion letter of counsel,
infra.
2 A copy of the Appellate Division decision is attached as Exhibit 3.
3 A copy of the Company's proxy statement for the 2007 Annual Meeting is
attached as Exhibit 4.
4 A copy of the Attempted Designation is attached as part of Exhibit 6.
5 Certified copies of the permanent injunction and the appellate decision
affirming the relevant portions of the injunction are attached as Exhibits A and
B to the accompanying opinion letter of counsel, infra.
[APPENDIX]
Enclosed Exhibits
1 - Copy of Belfield letter with proposal and supporting statement
2 - Order of Contempt, Summary Judgment and Sanctions, and Permanent Injunction,
New York State Supreme Court, Erie County (Nov. 2, 2000)
3 - Decision of New York State Supreme Court, Appellate Division, Fourth
Department (July 7, 2006)
4 - Company's proxy statement for 2007 Annual Meeting
5 - Minutes of 2007 Annual Meeting
6 - Cellino Affidavit
7 - Ackerman Affidavit
8 - Tanski Affidavit
9 - Ciprich Affidavit
10 - Opinion of Counsel on State Law including copies of permanent injunction
and appellate decision modifying it
11 - Belfield letters to Board 4/30/03 and 2/7/05
[INQUIRY LETTER]
November 14, 2007
VIA UPS OVERNIGHT
Securities and Exchange Commission
Division of Corporate Finance
Office of the Chief Counsel
100 F. Street, N.E.
Washington, D.C. 20549
RE: Withdrawal of Shareholder Proposal Submitted by Robert L. Belfield
Ladies and Gentlemen:
In a letter dated October 5, 2007, National Fuel Gas Company (the "Company")
requested the staff of the Division of Corporate Finance (the "Staff) of the
Securities and Exchange Commission to concur that it would not recommend any
enforcement action to the Commission if the Company excluded a shareholder
proposal submitted by Robert A. Belfield (the "Proponent") related to executive
compensation (the "Proposal").
In a letter dated October 31, 2007 (copy attached), the Proponent informed the
Company of the Proponent's withdrawal of the Proposal, and authorized the
Company to inform the Commission of both that withdrawal and also of the
Proponent's desire to withdraw his letter to the Commission dated October 10,
2007, regarding the Proposal. Consequently, based on the Proponent's withdrawal
of the Proposal, the Company hereby informs the Staff of the withdrawal of the
Company's no-action request of October 5, 2007, related to the Proposal.
If you have any questions, require other information, or wish to discuss this
matter, please call me.
Very truly yours,
NATIONAL FUEL GAS COMPANY
By: /s/
James R. Peterson
Assistant Secretary
Enc.
cc: Robert A. Belfield
[INQUIRY LETTER]
Robert A. Belfield
7537 Teaticket Ct.
Jacksonville FL 32244
904 - 594 - 6192
October 31, 2007
By hand delivery
Anna Marie Cellino
Secretary
National Fuel Gas Company
6363 Main Street
Williamsville, NY 14221
Re: Withdrawal of Shareholder Proposal and Letter to SEC
Dear Ms. Cellino:
I hereby withdraw my shareholder proposal for the National Fuel Gas Company 2008
Annual Meeting of Stockholders. I also hereby authorize National Fuel Gas
Company to inform the Securities and Exchange Commission, by copy of this letter
or other means, of my desire to withdraw my letter to the SEC, dated October 10,
2007, regarding such shareholder proposal.
Sincerely yours,
/s/
Robert A. Belfield
Stockholder
[INQUIRY LETTER]
November 16, 2007
James R. Peterson
Assistant Secretary
National Fuel Gas Company
6363 Main Street
Williamsville, NY 14221-5887
Re: National Fuel Gas Company
Dear Mr. Peterson:
This is in regard to your letter dated November 14, 2007 concerning the
shareholder proposal submitted by Robert A. Belfield for inclusion in National
Fuel's proxy materials for its upcoming annual meeting of security holders. Your
letter indicates that the proponent has withdrawn the proposal, and that
National Fuel therefore withdraws its October 5, 2007 request for a no-action
letter from the Division. Because the matter is now moot, we will have no
further comment.
Sincerely,
/s/
Ted Yu
Special Counsel
cc: Robert A. Belfield
7537 Teaticket Ct.
Jacksonville, FL 32244
|
