Company Name: Procter & Gamble Co.
Public Availability Date: August 8, 2007

Document Sections:

INQUIRY LETTER

[INQUIRY LETTER]

June 7, 2007

VIA FEDERAL EXPRESS

Office of Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re: The Procter & Gamble Company / Proposal Submitted by John J. Crapo

Ladies and Gentlemen:

This letter and the enclosed materials are submitted on behalf of The Procter & Gamble Company (the "Company") in accordance with Rule 14a-8(j) under the Securities Exchange Act of 1934 (the "Exchange Act"). As discussed below, the Company received two shareholder proposals (the "Proposals") from John Jennings Crapo (the "Proponent") for inclusion in the proxy materials for its 2007 Annual Meeting of Shareholders. By this letter the Company requests that the staff of the Division of Corporation Finance (the "Staff"), confirm that the Staff will not recommend enforcement action to the Commission if the Company excludes the Proposals from its proxy materials for the reasons discussed below.

I. Factual Background

On October 30, 2006, the Company received a shareholder proposal for its 2007 Annual Meeting of Shareholders from the Proponent in a handwritten submission dated October 26, 2006 (the "October Proposal") (Attached as Exhibit A). The October Proposal exceeded the 500-word limitation set by Rule 14a-8(d), and accordingly, on November 13, 2006, the Company requested that the Proponent reduce the October Proposal to 500 words or less (the "November Notice") (Attached as Exhibit B).

Without addressing the defect identified in the November Notice and without indicating an intent to withdraw or replace the October Proposal, the Proponent submitted a new proposal in a handwritten submission dated November 21, 2006 (the "November Proposal") (Attached as Exhibit C). Like the October Proposal, the November Proposal exceeded the 500-word limitation set by Rule 14a-8(d). Accordingly, on December 8, 2006, the Company (i) notified the Proponent that he could only submit one proposal under Rule 14a-8(c) and (ii) requested that the Proponent reduce the November Proposal to 500 words or less if the November Proposal was meant to replace the October Proposal (the "December Notice") (Attached as Exhibit D).

The Proponent replied to the December Notice in a handwritten letter dated December 11, 2006 (the "December Letter") (Attached as Exhibit E). Although the December Letter refers to the Company's December Notice, it did not correct the defects identified in the December Notice. Further, although the December Letter does not contain any additional shareholder proposals, it did not withdraw the November Proposal or indicate that the November Proposal was meant to replace the October Proposal. Instead, the Proponent indicated that "the first one (01) is one (01) I prefer if the Commission said I may [unreadable] present but one (01)."

II. No-Action Request

The Company respectfully requests that the Staff confirm that it will not recommend enforcement action to the Commission if the Company omits the Proposals from its proxy materials. The Company believes that there are several procedural and substantive bases for exclusion of the Proposals. The Company intends to exclude the Proposals from its proxy materials under Rule 14a-8(f)(1) on the basis that they exceed the word 500-word limitation of Rule 14a-8(d). The Company also believes that it can exclude the Proposals from its proxy materials under Rule 14a-8(i)(3) on the basis that they are materially vague and indefinite. Finally, to the extent that the Staff does not agree that any of the foregoing bases for exclusion apply, the Company intends to exclude the November Proposal from its proxy materials under Rule 14a-8(f)(1) on the basis that it violates the one-proposal limitation imposed by Rule 14a-8(c).

Each of the Proposals contains other procedural and substantive deficiencies, but we have refrained from raising such objections at this time. We respectfully reserve the right to raise such objections should the relief requested herein not be granted by the Staff. Pursuant to Rule 14a-8(j) under the Exchange Act, please find enclosed six copies of the October Proposal, the November Proposal, the December Letter, this letter, and our correspondence with the Proponent concerning his proposals. The Company is simultaneously providing a copy of this submission to the Proponent.

III. The Proposals Violate the 500-Word Limitation of Rule 14a-8(d)

Rule 14a-8(d) states that "the proposal, including any accompanying statement, may not exceed 500 words." The Staff has explained that "any statements that arc, in effect, arguments in support of the proposal constitute part of the supporting statement" for purposes of this word limit. See Staff Legal Bulletin No. 14 C(2)(a) ("SLB 14") (July 13, 2001) (stating that any "title" or "heading" that meets this test may be counted toward the 500-word limit).

A. The October Proposal Exceeds 500 Words

The October Proposal, including its supporting statement, exceeds 500 words. The November Notice, which was sent within 14 days of receipt of the October Proposal, notified the Proponent of this deficiency. The November Notice informed the Proponent that he was required to submit a revised proposal that complied with the 500-word limitation. The November Notice explained:

the requirement of Rule 14a-8(d) that a proposal, together with any supporting statement, not exceed 500 words; and

the requirement that a conforming response from the Proponent had to be postmarked or submitted electronically within 14 days of receipt of the Company's notice.

Consistent with SLB 14, the Company also enclosed a copy of Rule 14a-8 with the November Notice.

As noted above, the Proponent failed to reduce the October Proposal to 500 words or less. Instead, the Proponent submitted the November Proposal. Because the Proponent failed to reduce the October Proposal to 500 words or less within 14 days of being notified of the 500-word limitation, the Company may exclude the October Proposal from its proxy materials in reliance on Rule 14a-8(f).

B. The November Proposal Exceeds 500 Words

The November Proposal, including its supporting statement, also exceeds 500 words. The December Notice, which was sent within 14 days of receipt of the November Proposal, notified the Proponent of this deficiency. The December Notice informed the Proponent that he was required to submit a revised proposal that complied with the 500-word limitation. The December Notice explained:

the requirement of Rule 14a-8(d) that a proposal, together with any supporting statement, not exceed 500 words; and

the requirement that a conforming response from the Proponent had to be postmarked or submitted electronically within 14 days of receipt of the Company's notice.

Consistent with SLB 14, the Company also enclosed a copy of Rule 14a-8 with the December Notice.

As was the case with the October Proposal, the Proponent failed to reduce the November Proposal to 500 words or less. Because the Proponent failed to reduce the November Proposal to 500 words or less within 14 days of being notified of the 500-word limitation, the Company may exclude the November Proposal from its proxy materials in reliance on Rule 14a-8(f).

C. The Failure to Reduce the Proposals to 500 Words or Less Provides a Basis For Exclusion under Rule 14a-8(d)

Following the Company's notices of deficiency in November and December, the Proponent failed to revise his submissions to conform to the requirements of Rule 14a-8(d). This failure provides a basis for exclusion under Rule 14a-8(d). See, e.g., Bank of America Corp. (January 27, 2005) (concurring that a proposal from Mr. Crapo could be excluded because it exceeded 500 words); The Procter & Gamble Co. (August 10, 2004) (concurring that a proposal from Mr. Crapo could be excluded because it exceeded 500 words); Amgen, Inc. (January 12, 2004) (proponent was given the opportunity to reduce the length of a submission to 500 words but failed to do so, resulting in the exclusion of the proposal) (reconsideration request denied, February 10, 2005).

In light of these no-action letters, we respectfully request that the Staff concur in the Company's view that it may exclude the October Proponal and the November Proposal from its proxy materials in reliance on Rule 14a-8(d).

IV. The October Proposal and the November Proposal Violate Rule 14a-8(i)(3)

Under Rule 14a-8(i)(3), a proposal or supporting statement is excludable if it "is contrary to any of the Commission's proxy rules, including Rule 14a-9, which prohibits materially false or misleading statements in proxy soliciting materials." In addition, the Staff has stated that "[i]t is important to note that Rule 14a-8(i)(3), unlike the other bases for exclusion under Rule 14a-8, refers explicitly to the supporting statement as well as the proposal as a whole," See Staff Legal Bulletin No. 14B B(1). (September 15, 2004) ("SLB 14B").

The Staff consistently has taken the position that a proposal may be excluded under Rule 14a-8(i)(3) as vague and indefinite if "neither the stockholders voting on the proposal, nor the company in implementing the proposal (if adopted), would be able to determine with any reasonable certainty exactly what actions or measures the proposal requires." SLB 14B B(4); Philadelphia Electric Company (July 30, 1992). Furthermore, the Staff has noted that exclusion may be appropriate where "substantial portions of the supporting statement are irrelevant to a consideration of the subject matter of the proposal, such that there is a strong likelihood that a reasonable shareholder would be uncertain as to the matter on which she is being asked to vote." SLB 14B B(4).

A. The October Proposal is Excludable under Rule 14a-8(i)(3)

The October Proposal is excludable under Rule 14a-8(i)(3) on the basis that it is materially vague and indefinite. The October Proposal provides in pertinent part:

We shareholders request our Procter and Gamble Company ("Corporation") Board of Directors ("Board) to completely report to us in the next succeeding proxy statement the complete report regarding the shareholder proponent reporting to state officials of Massachusetts the Supreme Judicial Court and divers other ones AND ALSO to the U.S. Department of Justice Civil Rights Division Employment Litigation Section the no action of the United States Securities and Exchange Commission ("the COMMISSION") re: shareholder proponent shareholder proposal submission to the 2006 Annual Meeting of Procter & Gamble for the Corporation to be mandated to provide stockholders of Procter & Gamble Company a complete report as to what has happened to Procter & Gamble co employees who were terminated as a result of the merger with the Gillette Company by the Procter and Gamble Company

As drafted, no shareholder could reasonably surmise the purpose or effect of the October Proposal. Arguably, the October Proposal seeks information about a shareholder proposal that the Proponent submitted for inclusion in the proxy materials for the Company's 2006 annual meeting of shareholders. This, however is not made clear by the resolution or its supporting statement, and reasonable shareholders may not all reach this conclusion. Further, it is not clear whether the Proponent requests that this report be provided to the Massachusetts government, the Supreme Court and the U.S. Department of Justice or about such entities (the proposal mandates that the Board "report to us in the next succeeding proxy statement the complete report regarding the shareholder proponent reporting to ..." emphasis added).

The portion of the October Proposal that requests that the Company "provide stockholders of Procter & Gamble Company a complete report as to what has happened to Procter & Gamble Co employees who were terminated as a result of the merger with the Gillette Company" only makes the October Proposal more confusing. Some might interpret this language as another request being made by the October Proposal, adding to the overall lack of clarity. For example, the phrase "what happened to" is very broad. Does the proposal seek information about the actions that the Company took with regard to such employees, information about what the employees did after leaving the Company as a result of the merger, or details about their termination process? This vagueness could lead to implementation measures by the company that are significantly different than those envisioned by the shareholders who voted for the proposal.

Whether read alone or in conjunction with the Proposal, the Proponent's supporting statement only serves to exacerbate the problem and provides an independent basis for exclusion. It never clarifies what the Company is supposed to report about past employees. Further, it largely is confusing and/or irrelevant. For instance, in discussing previous public opposition to the merger, the Proponent says it "would be no surprise to anyone and the Secretary of State (Commonwealth) of Massachusetts took legal action as well giving his objections to the merger as the state constitutional officer charged with enforcement of state laws concerning securities laws. There's question whether Mstr Secretary of Commonwealth had right to do that."

B. The November Proposal May be Excluded under Rule 14a-8(i)(3)

The November Proposal also is excludable under Rule 14a-8(i)(3) on the basis that it is materially vague and indefinite. The November Proposal states, "No action varying the compensation of Members of Board of Directors ("Board") of Procter & Gamble Company for the services of said Board shall take effect until an election of Directors shall have intervened." The only portion of the otherwise irrelevant and incomprehensible supporting statement that relates to this states "[t]he issue here is limitations on salary increases and other financial acts of our Directors. The moneys they receive are moneys which could be shareholder dividends or otherwise lawfully dispensed by them." Id. There are several reasons that this is impermissibly vague and thus excludable under Rule 14a-8(i)(3).

First, the triggering event specified by the November Proposal "an election of Directors shall have intervened" can be interpreted in a variety of ways. For instance, one could read this language as barring a change in compensation in a given year until the directors have been elected for service in that year. This language also could be read to mean that the Company may make any changes it desires to the compensation paid to a particular director once he or she has been elected to the board once. This appears possible due to the fact that the November Proposal does not specify the time frame in which it applies or how long the bar it proposes applies. This would mean, for example, that the November Proposal would have no practical impact on the compensation paid to the Company's current directors, all of whom already have been elected to the Board once by the Company's shareholders. In this regard, it also is unclear whether the November Proposal applies to the compensation of a particular director or of the board as a whole. For example, does the proposal bar changes to the Company's Deferred Compensation Plan for Directors? Alternatively, does it bar changes to individual awards under the Company's Deferred Compensation Plan for Directors? These questions are not answered by the text of the November Proposal or its supporting statement.

Second, the phrase "action varying" is unclear. One could guess that the Proponent intends to refer to affirmative changes to the compensation agreements and arrangements for the Board by the Company. It is equally likely, however, that the phrase encompasses all changes to Board compensation, including the period to period changes that occur when Board members receive payments relating to their annual cash retainer, receive allocations or change elections under the Company's Deferred Compensation Plan for Directors, vest in their restricted stock grants, and/or experience other changes to their compensation that are not the result of subsequent affirmative compensation decisions by the Company. For instance, it is impossible to determine if allowing a Board member to exercise his or her stock options would be considered an "action varying" his or her compensation. Similarly, it is unclear if automatic changes to the formulas for the vesting of restricted stock or for the accrual of benefits under the Deferred Compensation Plan for Directors are prohibited by the November Proposal. Rather than clarifying these ambiguities, the supporting statement for the November Proposal increases the uncertainty by using the phrase "salary increases and other financial acts" rather than the "compensation" formulation used in the Proposal.

Even if it is determined that the November Proposal is clear enough to satisfy Rule 14a-9, the supporting statement should be excluded. The supporting statement is comprised almost entirely of information that is unrelated to the proposal. For example, it includes a discussion of the Magna Carta, the ransom of King Richard by the Holy Roman Empire, slavery, the Proponent's winning lottery ticket, and the Proponent's dermatitis. It violates Rule 14a-9 because it is so confusing that, taken in conjunction with the shareholder proposal, it is impossible to adequately determine what shareholders are being asked to vote upon and what the Board would be expected to do if the shareholders approved. Moreover, it would "require detailed and extensive editing in order to bring it into compliance with the proxy rules," thus providing a basis for exclusion under Rule 14a-8(i)(3). See SLB 14B B(4); see Sara Lee Corporation (March 31, 2004) (granting no-action relief with regard to supporting statement for proposal seeking information regarding Sara Lee's charitable donations program, noting "There appears to be some basic for your view that Sara Lee may exclude the entire supporting statement under rule 14a-8(i)(3)").

C. The Proposals are Vague and Indefinite, Providing a Basis For Exclusion under Rule 14a-8(i)(3)

Taking all this into account, the Company respectfully submits that both Proposals meet the standard for exclusion under Rule 14a-8(i)(3). On numerous occasions, the Staff has permitted the exclusion of shareholder proposals that included inconsistencies and ambiguities that were analogous to those presented by the Proposals. For example, in Sensar Corporation (July 17, 2001), the Staff agreed with Sensar that it could rely on Rule 14a-8(i)(3) to exclude a shareholder proposal that proposed to allow stockholders to provide an advisory vote on compensation matters. The proposal in that letter provided that "The stockholders wish to express displeasure over the terms of the options on 2.2 million shares of Sensar that were recently granted to management, the board of directors, and certain consultants, and the stockholders wish to express displeasure over the seemingly unclear or misleading disclosures relating to those options." Sensar argued that the proposal was materially misleading on the basis that a shareholder voting on the proposal would not be able to determine what measures Sensar would be required to take under the proposal if it were adopted. The Staff agreed and granted relief under Rule 14a-8(i)(3).

The Staff's position in Sensar is consistent with countless other no-action letters, many of which involved proposals from the Proponent, that related to proposals that were materially vague and indefinite. See, e.g., Bank of America Corporation (February 12, 2007) (granting relief under Rule 14a-8(i)(3) with regard to a proposal that the company "institute a policy of reducing investments of the Corporation by five (05) percent annually until such time as the State of Israel ceases its military, economic, and other political attacks on the Palestinian Authority and League of Arab States."); NSTAR (January 5, 2007) (granting relief under Rule 14a-8(i)(3) with regard to a proposal that requested that the company provide shareholders with "standards of record keeping of our financial records as stockholders and proxies and fiduciaries"); American International Group, Inc. (March 21, 2002) (granting relief under Rule 14a-8(i)(3) with regard to a proposal that the company assemble a meeting of shareholders regarding matters described in the proposal); Puget Energy, Inc. (March 7, 2002) (excluding a proposal as vague and indefinite where the phrase "improved corporate governance" was undefined and the supporting statement discussed a range of corporate governance issues without elaborating on which of those were considered "improved corporate governance"); CBRL Group (September 6, 2001) (excluding a proposal requesting "full and complete disclosure in its annual report of all expenses relating to corporate monies being used for personal benefit of the officers and directors and their friends" where none of the material terms were adequately defined); IDACORP, Inc. (January 9, 2001) (excluding a proposal that required the company to determine the meaning of the phrase "service area ... outside the United States" as vague and indefinite); Bristol-Myers Squibb Co. (February 1, 1999) (excluding a proposal requesting "the Company adopt a policy not to test its products on unborn children or cannibalize their bodies, but pursue preservation, not destruction, of their lives").

As was the case in each of those letters, neither the stockholders voting on the Proposals nor the Company in implementing the Proposals will be able to determine with any reasonable certainty exactly what actions or measures the Proposals require. Based on this possibility, the Proposals fall squarely within the parameters of Rule 14a-9 and may be omitted in reliance on Rule 14a-8(i)(3).

V. The Proponent Has Violated the One Proposal Limitation of Rule 14a-8(c)

To the extent that the Staff does not agree with any of the foregoing bases for exclusion, the Company intends to exclude the November Proposal from its proxy materials in reliance on Rule 14a-8(c). Rule 14a-8(c) provides that a shareholder may submit only one proposal for a particular shareholder meeting. Though it is difficult to decipher the intended subject matter of the proposals, it is clear that the October Proposal and the November Proposal constitute two unrelated and distinct proposals. Although the November Proposal mentions the November Notice, it does not correct the defects of the October Proposal or clearly indicate that the November Proposal was intended to serve as a revision or replacement of the October Proposal.

As required by Rule 14a-8(f), the Company sent the December Notice within 14 days of receiving the November Proposal. The December Notice reminded the Proponent that he could only submit one proposal per shareholder meeting. Moreover, as suggested by SLB 14, the December Notice included a copy of Rule 14a-8 for his reference and reminded the Proponent that he had to cure any deficiencies in the November Proposal within 14 days of receiving the Company's notice. Although it is difficult to determine the Proponent's intent, the December Letter seems to Indicate that the Proponent would prefer that the Company include the October Proposal in its proxy materials. The Proponent, did not, however, unequivocally withdraw the November Proposal.

Because the Proponent did not unequivocally withdraw the November Proposal, the Company believes that it may exclude the November Proposal from its proxy materials because it violates the one-proposal limitation imposed by Rule 14a-8(c). In this regard, we note that the Staff consistently has concurred with the exclusion of a second proposal pursuant to Rule 14a-8(c) in similar circumstances. In fact, the Staff granted no-action relief to the Company in similar circumstances last year with regard to another proposal submitted by the Proponent. See The Procter & Gamble Company, August 18, 2006 (granting no-action relief under Rule 14a-8(c) where the Proponent failed to withdraw the second of two proposals or clearly indicate that the second proposal was being substituted for the first) (Attached as Exhibit F). The Staff consistently has concurred with the exclusion of proposals in several other cases in which the Proponent submitted two proposals. See, e.g., The Procter & Gamble Company (August 10, 2004) (granting no-action relief under Rule 14a-8(c) with regard to a proposal from Mr. Crapo because he previously had submitted a proposal for inclusion in the Company's proxy material with respect to the same meeting); The Adams Express Company (September 25, 1992) (granting no-action relief under Rule 14a-8(c) with regard to a second proposal submitted by Mr. Crapo after he submitted a prior proposal); see also Dow Chemical Company March 2, 2006 (granting no-action relief under Rule 14a-8(c) where the proponent submitted a second, substantially revised, shareholder proposal after receiving a deficiency notice regarding the first proposal). In light of these no-action letters, we respectfully request that the Staff concur in the Company's view that it may exclude the November Proposal from its proxy materials in reliance on Rule 14a-8(c).

VI. Conclusion

The Company has satisfied the requirements of Rule 14a-8(f)(1) and SLB 14 by timely notifying the Proponent of the defects in the Proposals and requesting that he submit a proposal that complies with the requirements of Rule 14a-8. Despite these notices, the Proponent failed to reduce the length of either-proposal or to reduce his proposals to one proposal within 14 days as provided in Rule 14a-8(f)(1). Furthermore, the Proposals violate Rule 14a-8(i)(3) on the basis that they are materially vague or indefinite. Accordingly, the Company respectfully requests that the Staff concur in its view that it may exclude the Proposals from its proxy materials for the 2007 Annual Meeting.

Should you have any questions regarding this matter or require additional information, please contact me at (513) 983-7695. Please be aware that the Company intends to mail the proxy materials for the 2007 Annual Meeting of Shareholders on or about August 28, 2007.

Please acknowledge receipt of this letter by date-stamping the enclosed additional copy of this letter and returning it to me in the enclosed envelope.

Sincerely,

/s/

Susan S. Whaley
Senior Counsel

Enclosures

cc: John Jennings Crapow/enclosures

[STAFF REPLY LETTER]

August 8, 2007

Response of the Office of Chief Counsel Division of Corporation Finance

Re: The Procter & Gamble Company Incoming letter dated June 7, 2007

The first proposal requests a complete report in the next proxy statement regarding actions taken by the proponent and the company with respect to a proposal submitted to the company by the proponent for the 2006 annual meeting. The second proposal relates to compensation for members of the board of directors.

There appears to be some basis for your view that Procter & Gamble may exclude the first proposal under rule 14a-8(i)(3) as vague and indefinite. Accordingly, we will not recommend enforcement action to the Commission if Procter & Gamble omits the first proposal from its proxy materials in reliance on rule 14a-8(i)(3). In reaching this position, we have not found it necessary to address the alternative basis for omission of the first proposal upon which Procter & Gamble relies.

There appears to be some basis for your view that Procter & Gamble may exclude the second proposal under rule 14a-8(c). Accordingly, we will not recommend enforcement action to the Commission if Procter&Gamble omits the second proposal from its proxy materials in reliance on rule 14a-8(c). In reaching this position, we have not found it necessary to address the alternative bases for omission of the second proposal upon which Procter & Gamble relies.

Sincerely,

/s/

Ted Yu
Special Counsel