Company Name: Plexus Corp.
Public Availability Date: September 4, 2007
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
August 13, 2007
VIA OVERNIGHT DELIVERY
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, DC 20549
RE: Plexus Corp. Commission File No. 000-14824 Omission of Shareholder Proposal
Pursuant to Rule 14a-8
Ladies and Gentlemen:
We are writing on behalf of our client, Plexus Corp., a Wisconsin corporation
(the "Company"), pursuant to Rule 14a-8(j) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to respectfully request that the staff of
the Division of Corporation Finance (the "Staff") of the Securities and Exchange
Commission (the "SEC") advise the Company that it will not recommend any
enforcement action to the SEC if the Company omits from its proxy statement and
proxy to be filed and distributed in connection with its 2008 Annual Meeting of
Shareholders (the "Proxy Materials") the proposal (the "Proposal") it received
from Robert and Lynne Malinoski (the "Proponent"). The text of the resolution
set forth in the Proposal is as follows:
"Resolve, the shareholders of Plexus Company [sic] hereby request that the Board
of Directors in developing commensurations [sic] discontinue use of stock
options for all employees and associates of Plexus."
The Company does not intend to include the Proposal in its Proxy Materials
because, pursuant to clauses (i)(7) and (i)(9) of Rule 14a-8 under the Exchange
Act, the Proposal deals with matters relating to the Company's ordinary business
operations and conflicts with one of the Company's proposals that it intends to
submit to shareholders.
Proponent's Proposal is nearly identical to a proposal that Proponent submitted
in 2004 (the "2004 Proposal") and that the Division permitted the Company to
exclude from its 2005 proxy materials. See Plexus Corp. (November 4, 2004).
Enclosed for your convenience are copies of our communications with the Division
relating to the 2004 Proposal.
Pursuant to Rule 14a-8(j) under the Exchange Act, we are enclosing six copies of
each of the following: (i) this letter and (ii) the Proposal (Exhibit A). By
copy of this letter, the Company hereby notifies the Proponent as required by
Rule 14a-8(j) of its intention to exclude the Proposal from its Proxy Materials.
I. The Proposal relates to the Company's ordinary business operations and,
therefore, may be omitted from the Company's Proxy Materials pursuant to Rule
14a-8(i)(7).
Rule 14a-8(i)(7) permits exclusion of shareholder proposals dealing with matters
relating to the conduct of a company's "ordinary business operations." The Staff
has defined this exclusion to include proposals relating to "general
compensation issues." In addition to the Plexus Corp. letter cited above, see
Pfizer Inc. (January 29, 2007) (permitting the exclusion under Rule 148(i)(7) of
a proposal forbidding the issuance of new stock options to all employees);
Amazon.com, Inc. (March 7, 2005) (permitting the exclusion under Rule 14-8(i)(7)
of proposals requesting that the board adopt and disclose a new policy on equity
compensation and cancel a certain equity compensation plan potentially affecting
all employees); Woodward Governor Co. (September 29, 2004) (permitting the
exclusion under Rule 14-8(i)(7) of a proposal requesting the discontinuation of
all stock option grants); Lucent Technologies Inc. (November 6, 2001)
(permitting the exclusion under Rule 14-8(i)(7) of a proposal seeking to
decrease the remuneration of all officers and directors). The Staff has
distinguished between shareholder proposals relating to senior executive officer
compensation issues, which are not excludable from proxy material under Rule
14a-8(i)(7), and proposals relating to a broader group of officers and
employees, which are excludable. See Ascential Software Corporation (April 4,
2003) (allowing the omission of a proposal under Rule 14a-8(i)(7) that addressed
compensation policies and practices that extended beyond senior executive
compensation); Minnesota Mining and Manufacturing Company (March 4, 1999)
(proposal to limit the yearly percentage compensation increase of the "top 40
executives" excludable under Rule 14a-8(i)(7) as relating to ordinary business
matters); Xerox Corporation (March 25, 1993) (referring to senior executive
officer compensation as an includable matter).
Additionally, in Division of Corporation Finance: Staff Legal Bulletin No.
14AShareholder Proposals (July 12, 2002) ("SLB 14A") regarding shareholder
proposals relating to shareholder approval of equity compensation plans, the
Staff has stated that it will allow companies to rely on Rule 14a-8(i)(7) to
exclude a proposal if the proposal, without focusing on any potential dilution,
relates to equity compensation plans that may be used to compensate all
employees, including senior executive officers and directors. The current
Proposal does not focus on dilution, but instead focuses on general compensation
and, therefore, falls within the pronouncement of SLB 14A as an excludable
proposal pursuant to Rule 14a-8(i)(7).
Consistent with the Staff's precedent, the Proposal may be excluded from the
Proxy Materials because it targets broader compensation policies and practices
than those relating only to senior executive officers. The Proposal seeks to
prohibit future stock option grants to all employees and associates. Because the
Proposal clearly seeks to affect the granting of stock options to employees
beyond those classified as senior executive officers, it may be excluded
pursuant to Rule 14a-8(i)(7), and recent precedent, as related to the Company's
ordinary business operations.
Additionally, the Staff has a long-standing policy of not permitting proponents
to revise overly-broad shareholder proposals once it becomes apparent that they
would be excludable under Rule 14a-8(i)(7) because they address "ordinary
business operations." This policy was reaffirmed in Section E.5 of Staff Legal
Bulletin No. 14 where the Staff stated that proposals excludable under Rule
14a-8(i)(7) may only be revised "[i]f it is unclear whether the proposal focuses
on senior executive compensation or director compensation, as opposed to general
employee compensation..." Division of Corporation Finance: Staff Legal Bulletin
No. 14Shareholder Proposals (July 13, 2001). Here, it is clear that the
specific mandates of the Proposal focus on general employee compensation.
II. The Proposal may be omitted from the Proxy Materials under Rule 14a-8(i)(9)
because it directly conflicts with a proposal that the Company intends to submit
to shareholders at the same meeting.
The Proposal provides "that the Board of Directors in developing commensurations
[sic] discontinue use of stock options for all employees and associates of
Plexus." At the 2008 Annual Meeting of Shareholders, the Company intends to
submit a proposal to the shareholders to approve a new stock incentive plan (the
"New Plan"). The New Plan, which is expected to be a relatively standard stock
incentive plan, will provide for the granting of incentive stock options,
non-incentive stock options, stock appreciation rights, and restricted stock
awards, among other awards. The New Plan will specifically permit the granting
of stock options to officers and directors, as well as to employees in general.
Rule 14a-8(i)(9) provides that a company may exclude a shareholder proposal if
"the proposal directly conflicts with one of the company's own proposals to be
submitted to shareholders at the same meeting."
The rationale for exclusion under Rule 14a-8(i)(9) is that if a shareholder
proposal is counter to a proposal to be submitted to shareholders by management,
a favorable vote on both the proponent's and management's proposals would result
in inconsistent and inconclusive mandates from the security holders. In the
event of such a vote, it would not be possible to determine which, if either,
proposal could be implemented.
There are numerous precedents under Rule 14a-8(i)(9) and its predecessor for the
exclusion of a shareholder proposal seeking to prohibit or restrict the granting
of stock options when management proposes to present a stock option plan to
shareholders for their approval. See, e.g., Abercrombie & Fitch Co. (May 2,
2005) (shareholder proposal requiring that stock option grants be
performance-based was excludable because it conflicted with a company proposal
to adopt a new equity based compensation plan that provided for time-based stock
options); Goodrich Corporation (January 27, 2004) (shareholder proposal
requesting that the compensation committee, in developing future senior
executive equity compensation plans, utilize performance and time-based
restricted share programs in lieu of stock options was excludable because it
conflicted with company proposal to increase the securities available for
issuance under its stock option plan), AOL Time Warner, Inc. (March 3, 2003)
(shareholder proposal that the Board of Directors adopt a policy prohibiting
future stock option grants to senior executives was excludable because it
conflicted with a stock option plan that AOL expected to include in its proxy
materials that permitted the granting of stock options to all employees,
including senior executives); Baxter International Inc. (January 6, 2003)
(shareholder proposal to prohibit future stock option grants to senior
executives conflicted with company proposal to implement incentive compensation
plan providing for stock option grants to, among others, senior executives);
(Croghan Bankshares, Inc. (March 13, 2002) (shareholder proposal requiring that
directors be excluded from participation in the company's stock options and
incentive plans excludable because it conflicted with a company proposal to
adopt a new stock option plan that allowed grants to directors and gave
committee broad discretion in selecting participants); First Niagara Financial
Group, Inc. (March 7, 2002) (shareholder proposal requesting that officers and
directors consider replacing stock option grants with cash bonuses excludable
because it conflicted with a company proposal to adopt a new stock option plan
that allowed grants to officers and directors); Osteotech, Inc. (April 24, 2001)
(shareholder proposal requesting discontinuance of stock option grants to
executive officers and directors excludable because it conflicted with company
proposal to adopt a new option plan that granted broad discretion to committee
to determine the identity of recipients of stock option awards); Phillips-Van
Heusen Corporation (April 21, 2000) (shareholder proposal that officers and
directors consider the discontinuance of all stock options and other awards for
top management excludable because it conflicted with company proposal to adopt
certain bonus, incentive and stock option plans); Mattel, Inc. (March 4, 1999)
(shareholder proposal that the directors consider the discontinuance of all
bonus, stock options and other awards for top management excludable because the
proposal conflicted with company proposal to adopt a long-term incentive plan
for payment of bonuses to members of management); Eastman Kodak Company
(February 1, 1999) (shareholder proposal that officers and directors consider
the discontinuance of all stock options and other awards for top management
excludable because the proposal conflicted with a company proposal to adopt
certain bonus, incentive and stock option plans); Rubbermaid Incorporated
(January 16, 1997) (shareholder proposal requiring that all future stock options
be granted at market price indexed for inflation excludable because it
conflicted with company proposal to adopt amend stock option plan that did not
provide, for inflation adjustments).
The Proposal, which requests that the Board of Directors discontinue the use of
stock options, directly conflicts with the New Plan that management intends to
submit for a vote of the shareholders at the 2008 Annual Meeting of
Shareholders. An affirmative vote on both the Proposal and the New Plan would
lead to an inconsistent and ambiguous mandate from the Company's shareholders.
Accordingly, we believe that the Proposal may be omitted from the Company's
Proxy Statement pursuant to Rule 14a-8(i)(9).
* * * * *
For all the reasons set forth above, we respectfully submit that the exclusion
of the entire Proposal from the Proxy Materials is proper under clauses (i)(7)
and (i)(9) of Rule 14a-8.
For the foregoing reasons, the Company also respectfully requests that the Staff
confirm that it would not recommend enforcement action if the Company omits the
Proposal from its Proxy Materials. We would respectfully request the opportunity
to discuss the requests contained in this letter with you further prior to the
issuance of a response if the Staff believes that it will not be able to grant
the relief requested herein. If you have any questions, require further
information or wish to discuss this matter, please call the undersigned at (414)
277-5345 or Ryan P. Morrison at (414) 277-5401 or Ryan S. Lovitz (414) 277-5235,
both of this office.
Please acknowledge receipt of this letter by stamping the enclosed additional
copy of this letter and returning it to the undersigned in the enclosed
self-addressed stamped envelope.
Very truly yours,
QUARLES & BRADY LLP
/s/
Kenneth V. Hallett
Enclosure
cc: Mr. Angelo M. Ninivaggi
Vice President, General Counsel,
and Secretary
Plexus Corp.
55 Jewelers Park Drive
Neenah, WI 54957
(w/encs. - Via Overnight Delivery)
Robert and Lynne Malinoski
741 Fieldcrest Drive
Neenah, WI 54956
Ryan P Morrison, Esq.
Ryan S. Lovitz, Esq.
[INQUIRY LETTER]
May 5, 2007
Mr. Joseph P. Kaufman,
The winds of change are being felt throughout the country and the SEC. In closed
is our proposal for the next Annual Meeting (2008). The proposal is quite simple
and close to the 2004 proposal we submitted. I say this to inform you that
copies of all the materials you have may be sent to our legislators and
stockholders of Plexus. It's the age of rapid communication.
Thank you in advance,
/s/
Robert S. Malinoski
741 Fieldcrest Dr.
Neenah, WI 54956
920-725-0103
[INQUIRY LETTER]
May 5, 2007
Robert S. Malinoski and Lynne Malinoski 741 Fieldcrest Dr. Neenah, WI 54956 who
own 500 shares of Plexus stock proposes the following and has furnished the
following statement in support of their proposal:
Proposal
Resolve, the shareholders of Plexus Company hereby request that the Board of
Directors in developing commensurations discontinue use of stock options for all
employees and associates of Plexus.
As a long-term shareholders we support executive compensation and executive
compensation based on value creation goals both short and long term. The
compensation should be competive with other industries and have clearly defined
performance criteria and challenging performance benchmarks. The Board of
Directors has the responsibility to reward excellence in executive compensation
to hire and retain quality people.
Statement of support
1. We do NOT fully understand the benefits and accounting of the use of stock
options.
2. "New accounting rules aren't usually something people get too excited about.
That is about to change..." From the Appleton Post Crescent April 26, 2004
3. "The committee believes that it is unlikely that compensation of any
executive officer, including the CEO, will exceed $1 million in any fiscal year
unless it is the consequence of the exercise of stock options". Page 12 of
Plexus's 2003 Annual Report.
4. Warren Buffett wrote in a New York Times Op-Ed piece on July 24,2002:
a. There is a crisis of confidence today about corporate carnings reports and
credibility of chief executives. And it is justified.
b. For many years, I've had little confidence in the earnings numbers reported
by most corporations. I'm not talking about Enron and WorldCom-Examples of
outright crookedness. Rather, I am referring to the legal, but improper,
accounting methods used by chief executives to inflate reporting earnings.
c. Options are a huge cost for many corporations and a huge benefit to
executives. No wonder, then, that they have fought ferociously to avoid making a
change against their earnings.
d. When a company gives something of value to its employees in return for their
services, it is clearly a compensation expense. And if expenses don't belong in
the earnings statement, where in the world do they belong?
e. Without blushing, almost all CEOs have told their shareholders that options
are cost-free.
5. There currently is legislation under consideration in the U.S. Congress that
requires shareholders' approval of executive packages.
6. A Mr. Robert Morsse, 212 Highland Avenue, Moorestown, NJ 08057 has an
approved proposal in this year's (2007) Exxon Mobil Proxy Statement (page 53)
that starts off "I propose that the remuneration to any of the top five persons
named in management be limited to $500,000.00 per year, plus any nominal
perks...."
7. Lastly there has been enough press lately on the "back dating of options" and
the problems of abuse that can occur.
We urge your support for this proposal.
Sincerely,
/s/
Robert S. Malinoski & Lynne M. Malinoski
741 Fieldcrest Dr.
Neenah, WI. 54956
[STAFF REPLY LETTER]
September 4, 2007
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Plexus Corp.
Incoming letter dated August 13, 2007
The proposal requests that the board discontinue the use of stock options for
all employees and associates of Plexus.
There appears to be some basis for your view that Plexus may exclude the
proposal under rule 14a-8(i)(7), as relating to Plexus' ordinary business
operations (i.e., general compensation matters). Accordingly, we will not
recommend enforcement action to the Commission if Plexus omits the proposal from
its proxy materials in reliance on rule 14a-8(i)(7). In reaching this position,
we have not found it necessary to address the alternative basis for omission
upon which Plexus relies.
Sincerely,
/s/
Ted Yu
Special Counsel
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