Company Name: Texas Industries, Inc.
Public Availability Date: July 27, 2007
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
May 30, 2007
Office of the Chief Counsel
Division of Corporate Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Shareholder Proposals and Supporting Statements (the "Proposals") of Charles
T. Woodard (the "Woodard Proposal") and Robert M. Boothby (the "Boothby
Proposal")
Ladies and Gentlemen:
In accordance with Rule 14a-8(j) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), Texas Industries, Inc. (the "Company") hereby
gives notice of its intention to omit from its proxy statement and form of proxy
for its 2007 annual meeting of stockholders (the "2007 Proxy Materials") two
Proposals submitted to the Company by two stockholders who are employees of a
wholly owned subsidiary of the Company (the "Proponents"). The cover letter,
proposal, and supporting material in the Woodard Proposal and the Boothby
Proposal are identical in every respect, and both Proposals request the Company
to direct its correspondence to the same labor union representative. Therefore,
the two Proposals are addressed together in this letter. The Company
respectfully requests that the staff of the Division of Corporation Finance (the
"Staff") concur that it will not recommend enforcement action as a result of the
omission of the Proposals.
The Company expects to mail to stockholders, on or about August 24, 2007, our
2007 Proxy Materials in conjunction with our 2007 annual meeting of stockholders
(the "Annual Meeting"). That meeting currently is scheduled to be held on
October 16, 2007. The Company intends to file definitive copies of the 2007
Proxy Materials with the Commission on or about August 24, 2007. Accordingly,
this letter is being filed with the Commission more than 80 calendar days before
the date upon which the Company expects to file the definitive 2007 Proxy
Materials, as contemplated by Rule 14a-8(j).
The Company received the Proponents' Proposals, both dated April 25, 2007. The
Company is submitting the following:
1) Six copies of this letter;
2) Six copies of both Proposals (with supporting statements); and
3) One additional copy of this letter along with a self-addressed return
envelope for purposes of returning a file-stamped receipt copy of this letter to
the Company.
This letter sets forth the Company's reasons it deems the omission of the
Proposals to be proper. A copy of this submission is being forwarded
simultaneously to the representative designated by the Proponents, at the
offices of the United Steelworkers Union.
THE PROPOSALS
A complete copy of the Proposals, together with supporting statements, are
attached to this letter as Exhibit A, for the Staff to view in context. The
pertinent part of the Proposals is set forth as follows:
RESOLVED, that the stockholders of Texas Industries, Inc. ("TXI") request the
Board of Directors to prepare a public sustainability report, at reasonable
expense and omitting proprietary information, by February 1, 2008.
SUMMARY OF COMPANY'S ARGUMENT
The supporting statement attached to the Proposals includes a definition of
"sustainability reporting" supplied by the Proponents which quotes directly from
the Global Reporting Initiative (the "GRI") and attributes the definition to the
GRI. The definition is not merely advisory, and begins in the following language
that appears to mandate a GRI-supplied process:
"As described by the Global Reporting Initiative (http://www.globalreprting.org)
sustainability reporting is'...'".
The Statement leaves no doubt about the source for the definition of
"sustainability reporting" in the Proposal by continually referencing the GRI
throughout the supporting statement.
The Staff has indicated that a proposal which would compel a company to issue a
sustainability report which must adhere to the imprecise and sometimes
contradictory welter of GRI guidelines could be properly omitted. On the other
hand, the Staff has recently indicated that a proposal directing a company to
forge its own definition of "sustainability" while merely referencing the GRI
briefly and permissively in a supporting statement, could not be properly
omitted.
The Company believes that the attached Proposals' failure to direct the Company
to establish its own definition for "sustainability" and instead using the
supporting statement to lock in the GRI's definition and protocol is more than a
passing advisory reference to the GRI. By inserting the GRI definition of
"sustainability reporting" into the supporting statement in a way that leaves
the Company no alternative to using the GRI definition and process, the
Proposals fail the earlier tests set forth by the Staff for this type of
proposal. Therefore, the Proposals may properly be omitted from the Company's
2007 Proxy Statement and Proxy.
DISCUSSION
This type of shareholder proposal has been presented to the Staff on many
occasions over the past several years, citing Rule 14a-8(i)(3) as a reason for
omission. By 2005 the Staff had forged a simple test, which was aptly summarized
in a letter from a company that had received a similar proposal:
"... guidance may be gleaned by analogy from recent Staff decisions under Rule
14a-8(i)(3) with respect to proposals seeking social, economic or environmental
"sustainability" reports. The Staff generally will issue no-action letters under
(i)(3) when proposals would compel a company to apply the complex Global
Reporting Initiative ("GRI") Guidelines to the preparation of the report E.g.,
Ryland Group, Inc. (Jan. 19, 2005); ConAgra Foods, Inc. (July 1, 2004); and
Kroger Co. (March 19, 2004), upon reconsideration (April 21, 2004). The Staff
generally will not do so when the proposals just broadly request a
sustainability report and leave it to the companies to decide how best to
prepare the report. E.g., Wal-Mart Stores, Inc. (Feb. 17, 2004); Hormel Foods
Corp. (Oct. 22, 2004); Burlington Resources, Inc. (Feb. 4, 2005); Wendy's
International, Inc. (Feb. 10, 2005); and Seaboard Corp. (Feb. 14, 2005)."
Abercrombie & Fitch Co. (May 2, 2005).
Since this simple test was established, it appears from subsequent no action
requests that many other proponents have omitted references to the Global
Reporting Initiative ("GRI") guidelines from their proposals and supporting
statements. In the event the GRI guidelines were referenced in supporting
statements, the supporting statements generally stated that the Company should
first define "sustainability" in its own way, in its own words, at the Company's
own discretion.
For example, The Kroger Co. requested a no action recommendation if it chose to
omit a shareholder proposal (the "Kroger Proposal") from its 2006 proxy
materials, which is virtually identical to the Proposal submitted to the Company
(but with very significant differences in the Supporting Statement). (The Kroger
Co., March 29, 2006). The first words of the "Supporting Statement" supplied by
the proponent as printed in The Kroger Co. 2006 proxy materials filed with the
Commission, are as follows:
"SUPPORTING STATEMENT
We believe the report should include:
1. The company's operating definition of sustainability...."
After directing the company to develop its own definition for sustainability,
the proposal concluded, "[w]e recommend ..." that Kroger issue a report based on
the GRI guidelines. Despite the proponent's unambiguous statement that The
Kroger Co. should forge its own specific definition of "sustainability", The
Kroger Co. argued to the Staff that a single, expressly non-binding reference to
the GRI in the supporting statement was in fact a mandate by the proponent to
incorporate the complex and sometimes confusing GRI protocol, and therefore the
proposal could be omitted pursuant to Rule 14a-8(i)(3). The Staff declined to
recommend that no action be taken against The Kroger Company if it excluded the
proposal from its proxy statement.
By directing the company to develop its own specific definition, and then using
permissive language such as "recommend" when referencing GRI guidelines, the
Kroger Proposal differs substantially from the Proposals. The Supporting
Statement submitted to the Company differs in the following ways:
1. The Supporting Statement in the Kroger Proposal opens by directing the
company to define "sustainability" for itself. The Supporting Statement in the
proposal submitted to the Company opens by supplying a GRI definition, "As
described by the Global Reporting Initiative ... `Sustainability reporting is
...'"
2. The Supporting Statement in the Kroger Proposal mentions GRI only once, with
permissive language. The Supporting Statement in the proposal submitted to the
Company contains four main paragraphs, and three out of four paragraphs
reference the GRI protocol. None of the references to the GRI contain permissive
non-binding language such as "recommends".
Following are several examples of proposals which have been presented to the
Staff which could not be properly excluded under Rule 14a-8(i)(3), each of which
expressly provide that the Company establish its own definition of
sustainability. Wording of this nature has apparently become a common way to
disclaim any requirement that a company comply with the welter of GRI
methodologies regarding "sustainability reporting".
A proposal submitted to Johnson Controls, Inc. requested only the following
items:
"1. The company's definition of sustainability.
2. A review of current company policies and practices related to social,
environmental, and economic sustainability.
3. A summary of long term plans to integrate sustainability objectives
throughout company operations."
Johnson Controls, Inc. (Nov. 14, 2002)
The statement accompanying a proposal submitted to Burlington Resources, Inc.
read as follows:
"Supporting Statement
We believe the report should include:
1. The company's operating definition of sustainability..."
Burlington Resources Inc. (February 4, 2005)
The statement accompanying a proposal submitted to Wendy's International, Inc.
was similar to the one submitted to The Kroger Co.:
"Supporting Statement
The report should include Wendy's definition of sustainability, as well as a
company-wide review of company policies and practices related to long-term
social and environmental sustainability.
We recommend that Wendy's use the Global Reporting Initiative's Sustainability
Reporting Guidelines ("The Guidelines") to prepare the report."
Wendy's International, Inc. (February 10, 2005)
The statement accompanying a proposal submitted to Raytheon Company was similar
to the supporting statement accompanying the Kroger Proposal:
"SUPPORTING STATEMENT
The report should include the company's definition of sustainability, as well as
a company-wide review of company policies and practices related to long-term
social and environmental sustainability.
We recommend that the company use the Global Reporting Initiative's
Sustainability Reporting Guidelines ("The Guidelines") to prepare the report."
Raytheon Company (January 25, 2006)
Another typical form of this proposal, which appeared in many proposals reviewed
by the Staff, does not specifically ask the company to prepare its own
definition of "sustainability" but makes no reference to the GRI guidelines and
avoids language that conveys a mandate that the GRI guidelines be utilized. The
proposal submitted to Dean Foods Company, as follows, is a typical example:
"RESOLVED:
That shareholders request the company disclose its social, environmental and
economic performance to the public by issuing annual sustainability reports."
[No reference or implied mandate regarding GRI guidelines was included in the
supporting materials.]
Dean Foods Company (March 25, 2005)
CONCLUSION
The Staff have issued many letters regarding stockholder proposals for
"sustainability reports". The Staff responses have allowed several
straightforward methods for stockholders to request that a company include a
"sustainability report" proposal in its proxy materials. Many of the permissible
methods are quoted directly above.
The Proposals presented to the Company, however, can be properly omitted from
the Company's 2007 Proxy Materials pursuant to Rule 14a-8(i)(3) because they
effectively mandate that the Company follow a definition and protocol
established by the Global Reporting Institute. The Staff has in the past allowed
companies to omit proposals that include such a requirement, due to the muddy
welter of alternative, imprecise and sometimes contradictory requirements
described by the GRI.
Based on the foregoing, the Company respectfully requests the Staff's
concurrence that the Proposal may be omitted and that it will not recommend
enforcement action if both Proposals are omitted from the 2007 Proxy Statement
and Proxy.
Alternatively, if the Staff does not concur that both Proposals may be omitted
from the 2007 Proxy Statement and Proxy, the Company respectfully requests the
Staff's concurrence that it will not recommend enforcement action if the Boothby
Proposal is omitted pursuant to Rule 14a-8(i)(ii) if the Company includes the
Woodard proposal in the 2007 Proxy Statement and Proxy as the Boothby Proposal
is substantially duplicative of the Woodard Proposal. Please call the
undersigned at (972) 647-3330 if you have any questions or need additional
information.
Sincerely,
/s/
Wesley E. Schlenker
Assistant General Counsel and Assistant Secretary
Texas Industries, Inc.
[INQUIRY LETTER]
April 25, 2007
Robert M. Boothby
28710 Lakeview Ave.
Nuevo, CA 92567
Via Overnight Mail, E-mail: fanderson@txi.com, and FAX: 972-647-3320
Texas Industries, Inc.
1341 W. Mockingbird Lane
Suite 700W
Dallas, Texas 75247
Attention: Frederick G. Anderson,
Vice President, General Counsel & Secretary
Dear Mr. Anderson:
I write to give notice that pursuant to the 2006 proxy statement of Texas
Industries, Inc. (the "Company") and Rule 14a-8 under the Securities Exchange
Act of 1934, I intend to present the attached proposal (the "Proposal") at the
2007 annual meeting of shareholders (the "Annual Meeting"). I am the owner of
shares of voting common stock (the "Shares") of the Company in excess of $2,000
and have held the Shares for over one year. In addition, I intend to hold the
Shares through the date on which the annual meeting is held.
The proposal is enclosed. I represent that I or my agent intends to appear in
person or by proxy at the Annual Meeting to present the Proposal. I declare that
I have no "material interest" other than that believed to be shared by
stockholders of the Company generally.
Please direct all questions or correspondence regarding the Proposal to Jon
Vandenburgh, United Steelworkers, 5 Gateway Center, 10\th/ Floor, Pittsburgh, PA
15222, at 412-576-2561 or jvandenburgh@usw.org.
Sincerely,
/s/
Robert M. Boothby
Enclosure
RESOLVED, that the stockholders of Texas Industries, Inc. ("TXI") request the
Board of Directors to prepare a public sustainability report, at reasonable
expense and omitting proprietary information, by February 1, 2008.
SUPPORTING STATEMENT
There is a strong trend in the global marketplace toward corporate
sustainability reporting.
As described by the Global Reporting Initiative
(http://www.globalreporting.org), "Sustainability reporting is a process for
publicly disclosing an organization's economic, environmental, and social
performance. Many organizations find that financial reporting alone no longer
satisfies the needs of shareholders, customers, communities, and other
stakeholders for information about overall organizational performance."
Nearly 1,000 organizations have published sustainability reports incorporating
all or part of the guidelines established by the GRI. Nearly 100 such reports
have been produced by companies in the worldwide "Construction & Building
Materials" sector. More than 200 such reports have been produced by
organizations based in the United States.
The global cement industry is recognizing the trend toward sustainability
reporting. Several cement companies, including Cemex, Holcim and Lafarge, have
issued reports under the GRI framework, and, in 2002, a group often cement
companies formed the Cement Sustainability Initiative
(http://www.wbcsdcement.org/). The CSI established an "Agenda for Action," a
five-year program dedicated to addressing six priority issues: 1) Climate
Protection, 2) Responsible Use of Fuels and Materials, 3) Employee Health and
Safety, 4) Emissions Reduction, 5) Local Impacts on Land and Communities, and 6)
Reporting and Communication.
In founding the CSI, the member companies recognized that the sustainability
trend presents both challenges and opportunities to the cement industry. Cement
production is energy-intensive, accounting for 5% of global man-made carbon
dioxide emissions, and affects other sustainability issues in addition to
climate change, such as emissions to air and water, natural resource depletion
and worker safety and health. But cement can also play an important role in
meeting the world's needs for sustainable housing and infrastructure.
Joining the ranks of cement producers that issue a sustainability report will
provide TXI stakeholders with a useful tool for comparing the Company's progress
on sustainability initiatives with industry competitors.
We urge stockholders to vote for this proposal.
[INQUIRY LETTER]
April 25, 2007
Charles T. Woodard
6594 Avenida Mariposa
Riverside Ca. 92509
Via Overnight Mail, E-mail: fanderson@txi.com, and FAX: 972-647-3320
Texas Industries, Inc.
1341 W. Mockingbird Lane
Suite 700W
Dallas, Texas 75247
Attention: Frederick G. Anderson,
Vice President, General Counsel & Secretary
Dear Mr. Anderson:
I write to give notice that pursuant to the 2006 proxy statement of Texas
Industries, Inc. (the "Company") and Rule 14a-8 under the Securities Exchange
Act of 1934, I intend to present the attached proposal (the "Proposal") at the
2007 annual meeting of shareholders (the "Annual Meeting"). I am the owner of
shares of voting common stock (the "Shares") of the Company in excess of $2,000
and have held the Shares for over one year. In addition, I intend to hold the
Shares through the date on which the annual meeting is held.
The proposal is enclosed. I represent that I or my agent intends to appear in
person or by proxy at the Annual Meeting to present the Proposal. I declare that
I have no "material interest" other than that believed to be shared by
stockholders of the Company generally.
Please direct all questions or correspondence regarding the Proposal to Jon
Vandenburgh, United Steelworkers, 5 Gateway Center, 10\th/ Floor, Pittsburgh, PA
15222, at 412-576-2561 or jvandenburgh@usw.org.
Sincerely,
Charles T. Woodard
Enclosure
RESOLVED, that the stockholders of Texas Industries, Inc. ("TXI") request the
Board of Directors to prepare a public sustainability report, at reasonable
expense and omitting proprietary information, by February 1, 2008.
SUPPORTING STATEMENT
There is a strong trend in the global marketplace toward corporate
sustainability reporting.
As described by the Global Reporting Initiative
(http://www.globalreporting.org/), "Sustainability reporting is a process for
publicly disclosing an organization's economic, environmental, and social
performance. Many organizations find that financial reporting alone no longer
satisfies the needs of shareholders, customers, communities, and other
stakeholders for information about overall organizational performance."
Nearly 1,000 organizations have published sustainability reports incorporating
all or part of the guidelines established by the GRI. Nearly 100 such reports
have been produced by companies in the worldwide "Construction & Building
Materials" sector. More than 200 such reports have been produced by
organizations based in the United States.
The global cement industry is recognizing the trend toward sustainability
reporting. Several cement companies, including Cemex, Holcim and Lafarge, have
issued reports under the GRI framework, and, in 2002, a group of ten cement
companies formed the Cement Sustainability Initiative
(http://www.wbcsdcement.org/). The CSI established an "Agenda for Action," a
five-year program dedicated to addressing six priority issues: 1) Climate
Protection, 2) Responsible Use of Fuels and Materials, 3) Employee Health and
Safety, 4) Emissions Reduction, 5) Local Impacts on Land and Communities, and 6)
Reporting and Communication.
In founding the CSI, the member companies recognized that the sustainability
trend presents both challenges and opportunities to the cement industry. Cement
production is energy-intensive, accounting for 5% of global man-made carbon
dioxide emissions, and affects other sustainability issues in addition to
climate change, such as emissions to air and water, natural resource depletion
and worker safety and health. But cement can also play an important role in
meeting the world's needs for sustainable housing and infrastructure.
Joining the ranks of cement producers that issue a sustainability report will
provide TXI stakeholders with a useful tool for comparing the Company's progress
on sustainability initiatives with industry competitors.
We urge stockholders to vote for this proposal.
Charles T. Woodard
[INQUIRY LETTER]
22 June 2007
Office of the Chief Counsel
Division of Corporation Finance
Securities & Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
By Hand
Re: Shareholder proposal to Texas Industries, Inc.
Dear Counsel:
I have been asked to respond on behalf of Charles T. Woodard and Robert M.
Boothby (the "Proponents") to the letter from counsel for Texas Industries, Inc.
("TXI" or the "Company") dated 30 May 2007 ("TXI Letter"), in which TXI advises
that it plans to omit the Proponents' resolution (the "Proposal") from the
Company's 2007 proxy materials.1 For the reasons set forth below, the Proponents
respectfully ask the Division to deny the no-action relief that TXI seeks.
The text of the resolution and supporting statement are as follows:
RESOLVED, that the stockholders of Texas Industries, Inc. ("TXI") request the
Board of Directors to prepare a public sustainability report, at reasonable
expense and omitting proprietary information, by February 1, 2008.
Supporting Statement
There is a strong trend in the global marketplace toward corporate
sustainability reporting.
As described by the Global Reporting Initiative
(http://www.globalreporting.org/), "Sustainability reporting is a process for
publicly disclosing an organization's economic, environmental, and social
performance. Many organizations find that financial reporting alone no longer
satisfies the needs of shareholders, customers, communities, and other
stakeholders for information about overall organizational performance."
Nearly 1,000 organizations have published sustainability reports incorporating
all or part of the guidelines established by the GRI. Nearly 100 such reports
have been produced by companies in the worldwide "Construction & Building
Materials" sector. More than 200 such reports have been produced by
organizations based in the United States.
The global cement industry is recognizing the trend toward sustainability
reporting. Several cement companies, including Cemex, Holcim and Lafarge, have
issued reports under the GRI framework, and, in 2002, a group of ten cement
companies formed the Cement Sustainability Initiative
(http://www.wbcsdcement.org/). The CSI established an "Agenda for Action," a
five-year program dedicated to addressing six priority issues; 1) Climate
Protection, 2) Responsible Use of Fuels and Materials, 3) Employee Health and
Safety, 4) Emissions Reduction, 5) Local Impacts on Land and Communities, and 6)
Reporting and Communication.
In founding the CSI, the member companies recognized that the sustainability
trend presents both challenges and opportunities to the cement industry. Cement
production is energy-intensive, accounting for 5% of global man-made carbon
dioxide emissions, and affects other sustainability issues in addition to
climate change, such as emissions to air and water, natural resource depletion
and worker safety and health. But cement can also play an important role in
meeting the world's needs for sustainable housing and infrastructure.
Joining the ranks of cement producers that issue a sustainability report will
provide TXI stakeholders with a useful tool for comparing the Company's progress
on sustainability initiatives with industry competitors.
We urge stockholders to vote for this proposal.
TXI opposes inclusion of this proposal in its proxy materials primarily on the
basis of Rule 14a-8(i)(3), which permits the exclusion of proposals that are
impermissibly vague and indefinite. Alternatively, should the Division disagree
with that analysis, TXI seeks guidance that it may print only the "Woodard
Proposal," consistent with Rule 14a-8(i)(11). Under Rule 14a-8(g), TXI bears the
burden of demonstrating why the Proponents' proposal may be excluded. As we now
explain, TXI has not sustained its burden, and the request for no-action relief
should therefore be denied.
The "Vague and Indefinite" Objection
1. The objection lacks merit. TXI argues that the Proposal would "effectively
mandate that the Company follow a definition and protocol established by the
Global Reporting Institute ['GRI']," a mandate that is said to be vague and
indefinite because of the "muddy welter of alternative, imprecise and sometimes
contradictory requirements described by the GRI." TXI Letter at 6.
The problem with this argument is that it pays no attention to the text of the
proposal, which is fully consistent with the guidance provided by the Division
in prior no-action letters.
The text of the proposal is clear and unambiguous, asking the TXI board "to
prepare a public sustainability report, at reasonable expense and omitting
proprietary information, by February 1, 2008." This language is very similar to
language approved by the Division in The Kroger Co. (29 March 2006), which
similarly asked the Company to "prepare, at reasonable expense and omitting
proprietary information, a Sustainability Report."
The formulation here is similar to language approved in other sustainability
resolutions, which similarly made no reference to the GRI. These letters
include:
Terex Corp. (18 March 2005) ("disclose its social, environmental and economic
performance to the public by issuing annual sustainability reports");
Seaboard Corp. (14 February 2005) ("prepare a sustainability report ...
examining the environmental impacts of both company-owned and contract farms");
Wendy's International, Inc. (10 February 2005) (issue "a sustainability report
to shareholders, at reasonable cost, and omitting proprietary information, by
September 1, 2005."
Burlington Resources Inc. (4 February 2005) ("prepare at reasonable expense a
Sustainability Report");
Hormel Foods Corp. (22 October 2004) ("issue a sustainability report by August
2005, at reasonable cost and omitting proprietary information, examining the
environmental impacts of both co-owned and contract livestock operations");
Dean Foods Co. (25 March 2005) ("disclose its social, environmental and
economic performance to the public by issuing annual sustainability reports");
Wal-Mart Stores, Inc. (17 February 2004) (asking the company to "prepare t
reasonable expense a sustainability report");
Johnson Controls, Inc. (14 November 2002) ("prepare at reasonable expense a
report dealing with the social and environmental issues related to
sustainability").
Notwithstanding the Proponents' reliance on previously-approved resolution
language, TXI argues that the proposal is fatally infected by several references
to GRI Sustainability Reporting Guidelines ("GRI Guidelines") in the supporting
statement, which statement purportedly mandates use of the GRI. This argument
mischaracterizes the supporting statement, which cites the GRI and GRI
Guidelines in the following contexts:
The second paragraph quotes the GRI website as to the importance of
sustainability reporting.
The third paragraph notes that nearly 1000 organizations have published
sustainability reports "incorporating all or part of the guidelines established
by the GRI," with nearly 100 reports produced by companies in the worldwide
"Construction & Building Materials" sector (which sector includes TXI).
The fourth paragraph notes more specifically that three companies in TXI's
industry have "issued reports under the GRI framework" and that ten cement
companies formed a Cement Sustainability Initiative to address issues in this
area.
At no point does the Proposal say that TXI must use the GRI Guidelines in
preparing the requested sustainability report. The point is crucial. The
citation to GRI Guidelines is meant to provide context for the "resolved"
clauseand appropriately so, given the fact that many consider GRI Guidelines to
be the world's leading format for sustainability reporting.2 Also, as the
supporting statement indicates, GRI Guidelines are being used by TXI's peers in
the cement industry to assess sustainability issues.
Properly read, the citations to GRI in the Proposal are intended to build
support for the proposal among shareholders by showing that the requested report
is feasible, that there are off-the-shelf guidelines available if TXI should
choose to use them, and that several of TXI's competitors have already moved
ahead in this area using currently available guidelines. The Proponents'
citation to the available literature and industry experience is thus designed to
anticipate the sort of arguments that TXI may raise in a statement in
opposition, e.g., preparing a report would be unduly expensive, the proposal is
unworkable, a report would offer little value, the company is already active on
this issue, etc.
There is no per se rule that bars or limits citations to GRI Guidelines in a
supporting statement. Indeed, recent no-action decisions make it clear that
proponents may cite GRI Guidelines favorably and urge the Company to use those
Guidelines in preparing a report. Indeed, in Wendy's International, Inc. (20
February 2005), the supporting statement said: "We recommend that Wendy's use
the Global Reporting Initiative's Sustainability Reporting Guidelines ('The
Guidelines') to prepare the report." In The Kroger Co. (29 March 2006), the
supporting statement suggested that Kroger should "join the over 700 companies
who have issued sustainability reports based on the Global Reporting
Initiative's (GRI) Sustainability Reporting Guidelines"). The instant Proposal
is similar in nature.
In making these points, we acknowledge a line of no-action letters that preceded
decisions such as Wendy's and Kroger and that granted no-action relief when the
resolution sought the preparation of a report expressly "based on" GRI
Guidelines. Smithfield Foods, Inc. (18 July 2003); Lowe's Companies, Inc. (3
March 2004); Ryland Group, Inc. (19 January 2005); Dean Foods Co. (25 February
2004); ConAgra Foods Inc. (1 July 2004); Albertson's Inc. (5 March 2004); Terex
Corp. (1 March 2004). Those decisions rested on arguments that the earlier
versions of the GRI Guidelines covered too much ground, were too vague and
provided insufficient guidance for application in specific industries, such that
it would be difficult to prepare a report that was required to be "based on"
those Guidelines.
The current Proposal is plainly distinguishable from those letters because it
does not mandate the preparation of a report "based on" and solely onthe GRI
Guidelines. The "resolved" clause seeks the preparation of a sustainability
study without elaboration as to how that should be done. Although the supporting
statement speaks favorably of those Guidelines as a reporting tool, the Proposal
leaves to TXI the task of deciding which benchmarks or guidelines to use in
preparing the requested report. None of the Division's no-action letters on this
topic require anything further to avoid exclusion on the ground that the
proposal is too vague or indefinite.
2. An alternative formulation. For these reasons, TXI has not carried its burden
on this point. Should the Division disagree, the Proponents would be willing to
clarify their intent by adding a sentence in the supporting statement to clarify
that the reference to GRI Guidelines is meant as a recommendation, rather than
an absolute requirement. Specifically, and without conceding the point, the
Proponents would be willing to add a sentence prior to the penultimate paragraph
that would state: "The requested report should contain TXI's definition of
sustainability, and we recommend that TXI use the GRI Guidelines in preparing
this report." This language is similar to the formulations used in Kroger,
Johnson Controls and other letters that TXI cites with approval in its Letter
(at pp. 3-4). It is also consistent with the Division's "long-standing practice
of issuing no-action responses that permit shareholders to make revisions that
are minor in nature and do not alter the substance of the proposal." Staff Legal
Bulletin No. 14B, B.2 (15 September 2004). The Proponents do not believe that
this change is necessary, but would be willing to make this amendment should the
Division conclude otherwise.3
The "Two Proposals" Objection.
TXI closes with a request for relief in the alternative that the Division should
reject TXI's (i)(3) objections. Specifically, the last paragraph of TXI's letter
asks the Division for no-action relief in connection with what TXI views as a
duplicate proposal, i.e., the so-called "Boothby Proposal." Rule 14a-8(i)(11)
does permit the exclusion of substantially duplicate proposals. However, as we
pointed out in note 1 supra, we deal here not with two proposals, but rather one
proposal with two sponsors. TXI's request for relief in the alternative is
therefore unnecessary, and the proposal can be included in TXI's proxy materials
with both Messrs. Woodard and Boothby identified as sponsors.
Conclusion.
In sum, TXI has failed to carry its burden of demonstrating that the proposal
may be excludeded under Rule 14a-8, and we ask the Division to advise that the
Division cannot concur with the Company's objections. Alternatively, the
Proponents ask the Division to advise that the Proposal may not be omitted with
wording changes of the sort discussed above.
Thank you for your consideration of these points. Please feel free to contact me
if additional information is required. I would be grateful as well if you could
fax or e-mail a copy of the Division's determination once it is available.
Very truly yours,
/s/
Cornish F. Hitchcock
cc: Wesley E. Schlenker, Esq.
-----FOOTNOTES-----
1 At the outset, we wish to correct a factual error in TXI's letter, namely,
that Messrs. Woodard and Boothby have submitted two independent (albeit
identical) proposals. In fact, the Proponents are jointly filing the same
proposal, not two independent proposals. We discuss the matter in more detail
below in conjunction with TXI's request to omit the "Boothby Proposal" under
Rule 14a-8(i)(11) if the Division should conclude that the "Woodard Proposal"
cannot be omitted.
2 Indeed, a joint communiqu|pi|qe issued at the end of the recent G-8 summit in
Germany took the noteworthy step of singling out the GRI framework as
appropriate for use in a particular industry. Specifically, the G-8 leaders
"encourage[d] mining sector companies to undertake regular reporting using inter
alia the Global Reporting Initiative (GRI) framework, and welcome the adaptation
of this instrument for small and medium enterprises as well as to the specific
needs of the mining sector." Growth and Responsibility in the World Economy:
Summit Declaration 84 (7 June 2007). See
http://www.g-8.de/nsc_true/Content/EN/Artikel/_g8-summit/anlagen/2007-06-07-gipfeldokument-wirtschaft-eng,templateId=raw,property=publicationFile.pdf/2007-06-07-gipfeldokument-wirtschaft-eng.
3 The suggested language can be added without exceeding the limitation of 500
words in a shareholder proposal.
[INQUIRY LETTER]
July 9, 2007
Office of the Chief Counsel
Division of Corporate Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Shareholder Proposals and Supporting Statemsnts (the "Proposals") of Charles
T. Woodard and Robert M. Boothby
Ladies and Gentlemen:
Reference is made to our letter dated May 30, 2007 (the "Original Request") in
which Texas Industries, Inc. (the "Company") requested that the Staff not
recommend enforcement action as a result of the omission of the Proposals from
the Company's proxy statement and form of proxy for its 2007 annual meeting of
stockholders.
This letter addresses the correspondence addressed to The Office of the Chief
Counsel by the proponents dated June 22, 2007 (the "Response").
The "Vague and Indefinite" Objection. The Response indicates that the GRI
guidelines have recently been changed, so they are no longer "vague and
indefinite". This raises a greater concern, suggesting that the GRI guidelines
change significantly over time. The changing nature of the GRI guidelines
reaffirms that they are vague and indefinite.
"An Alternative Formulation" . The Response argues strenuously that the wording
of the Proposals should not be changed. Yet the Response concludes by submitting
disfavored alternative wording because it is "minor in nature" and does "not
alter the substance of the proposal". In fact, the proponents demonstrate by
diligent preparation of the Response that such a change is considered to be
significant. Proponents have directed a large investment of legal resources to
ensure the proposal be included as written. The alternative formulation in the
Response is not minor, and is therefore untimely submitted.
Please call the undersigned at (972) 647-3330 if you have any questions or need
additional information.
Sincerely,
/s/
Wesley E. Schlenker
Assistant Secretary
Texas Industries, Inc.
cc via email: Cornish F. Hitchcock, Esq.
Jon Vandenburgh, United Steelworkers
Charles T. Woodard
Robert M. Boothby
[STAFF REPLY LETTER]
July 27, 2007
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Texas Industries, Inc.
Incoming letter dated May 30, 2007
The proposal requests that the board prepare a public sustainability report, at
reasonable expense and omitting proprietary information, by February 1, 2008.
We are unable to concur in your view that Texas Industries may exclude the
proposal under rule 14a-8(i)(3). Accordingly, we do not believe that Texas
Industries may omit the proposal from its proxy materials in reliance on rule
14a-8(i)(3).
Sincerely,
/s/
Tamara M. Brightwell
Special Counsel
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