Company Name: Tyco International, Ltd.
Public Availability Date: December 4, 2007
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
October 23, 2007
Direct Dial
(202) 955-8653
Fax No.
(202) 530-9677
Client No.
C 92220-00106
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareowner Proposal of William C. Thomson, Jr., Comptroller, City of New
York, on behalf of the Boards of Trustees of the New York City Pension Funds
Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that our client, Tyco International Limited ("Tyco"
or the "Company"), intends to omit from its proxy statement and form of proxy
for its 2008 Annual Shareowners Meeting (collectively, the "2008 Proxy
Materials") a shareowner proposal and a statement in support thereof (the
"Proposal") received from William C. Thomson, Jr., Comptroller, City of New
York, on behalf of the New York City Employees' Retirement System, the New York
City Fire Department Pension Fund and the New York City Board of Education
Retirement System (the "Proponent").
Pursuant to Rule 14a-8(j), we have:
enclosed herewith six (6) copies of this letter and its attachments;
filed this letter with the Securities and Exchange Commission (the
"Commission") no later than eighty (80) calendar days before Tyco files its
definitive 2008 Proxy Materials with the Commission; and
concurrently sent copies of this correspondence to the Proponent.
Rule 14a-8(k) provides that shareowner proponents are required to send companies
a copy of any correspondence that the proponents elect to submit to the
Commission or the staff of the Division of Corporation Finance (the "Staff").
Accordingly, we are taking this opportunity to inform the Proponent that if the
Proponent elects to submit additional correspondence to the Commission or the
Staff with respect to this Proposal, a copy of that correspondence should
concurrently be furnished to the undersigned on behalf of Tyco pursuant to Rule
14a-8(k).
On behalf of our client, we hereby respectfully request that the Staff concur in
our view that the Proposal may be excluded from the 2008 Proxy Materials
pursuant to Rule 14a-8(i)(10) because Tyco has substantially implemented the
Proposal.
THE PROPOSAL
The Proposal states: "RESOLVED: Shareholders request that the Board of Directors
issue a sustainability report to shareholders, at reasonable cost, and omitting
proprietary information, by December 31, 2008."
While not part of the Proposal, the supporting statement states that the report
"should include the company's definition of sustainability, as well as a
company-wide review of company policies, practices, and indicators related to
measuring long-term social and environmental sustainability." The Proposal
recommends the use of the Global Reporting Initiative's Sustainability Reporting
Guidelines (the "GRI Guidelines") to prepare the report.
A copy of the Proposal and supporting statement, as well as related
correspondence from the Proponent, is attached to this letter as Exhibit A.
ANALYSIS
The Proposal May Be Excluded under Rule 14a-8(i)(10) Because Tyco Has
Substantially Implemented the Proposal.
The Proposal calls for Tyco to issue a sustainability report by December 31,
2008. However, Tyco already reports on the global sustainability policies and
practices requested by the Proponent in the "Corporate Responsibility" section
of its website. Accordingly, Tyco has substantially implemented the Proposal,
and the Proposal is excludable pursuant to Rule 14a-8(i)(10). Notably, the Staff
permitted the exclusion under Rule 14a-8(i)(10) of an identical proposal
submitted by the Proponent to Honeywell International Inc. for inclusion in its
2007 proxy statement on the basis that the disclosures on the company's website
substantially implemented the proposal. See Honeywell International Inc. (avail.
Feb. 21, 2007); see also Honeywell International Inc. (avail. Feb. 21, 2006). As
Tyco's sustainability disclosures are very similar in both form and content to
the disclosures in Honeywell, the Tyco Proposal likewise is excludable under
Rule 14a-8(i)(10).
A. The "Substantially Implements" Standard under Rule 14a-8(i)(10)
Rule 14a-8(i)(10) permits a company to exclude a shareowner proposal if the
company has substantially implemented the proposal. Although the original
interpretation of Rule 14a-8(i)(10) permitted exclusion of proposals only where
the action requested by the proposal had been "fully effected," in the 1983
amendments to the proxy rules, the Commission adopted an interpretative change
to permit companies to omit proposals that have been "substantially
implemented." Amendments to Rule 14a-8 Under the Securities Exchange Act of 1934
Relating to Proposals by Security Holders, Exchange Act Release No. 20091, at
II.E.6 (August 16, 1983) (the "1983 Release"). In adopting this interpretation
of Rule 14a-8(i)(10), the Commission stated that "the previous formalistic
application of this provision defeated its purpose." Id.
The 1998 amendments to the proxy rules, which (among other things) implemented
the current Rule 14a-8(i)(10), reaffirmed the position that a proposal may be
omitted if it has been "substantially implemented." See Amendments to Rules on
Shareholder Proposals, Exchange Act Release No. 40018 at n.30 and accompanying
text (May 21, 1998). Consequently, as noted in the 1983 Release, in order to be
excludable under Rule 14a-8(i)(10), a shareowner proposal does not need to be
"fully effected" it need only be "substantially implemented." Applying this
standard, the Staff has stated "a determination that the [c]ompany has
substantially implemented the proposal depends upon whether [the company's]
particular policies, practices and procedures compare favorably" with those
requested under the proposal, and not on the exact means of implementation.
Texaco, Inc. (avail. Mar. 28, 1991) (emphasis added) (involving a proposal
requesting the company to adopt a set of environmental guidelines which involve
implementing operational and managerial programs as well as making provision for
periodic assessment and review). In other words, Rule 14a-8(i)(10) permits
exclusion of a shareowner proposal where a company has implemented the essential
objective of the proposal, even where the manner by which the company implements
the proposal does not precisely correspond to the actions sought by a shareowner
proponent. See 1983 Release; AMR Corp. (avail. Apr. 17, 2000); Masco Corp.
(avail. Mar. 29, 1999); Erie Indemnity Co. (avail. Mar. 15, 1999).
Thus, in determining whether a proposal has been substantially implemented under
Rule 14a-8(i)(10), the Staff has evaluated whether the relevant policies,
practices and procedures of the company "compare favorably" with what would be
achieved under the proposal.
B. Tyco's Sustainability Report
In applying this framework to the Proposal, it is clear that Tyco has
substantially implemented the Proposal. The Proposal calls for the Company to
issue a sustainability report by December 31, 2008, and Tyco has already
reported on its global sustainability policies and practices. Moreover, Tyco has
reported on indicators relating to measuring long-term social and environmental
sustainability. These sustainability disclosures are updated regularly, and Tyco
plans to keep these disclosures current. The sustainability categories in Tyco's
reporting address the categories mentioned by the Proponent in the supporting
statement.
The sustainability report requested by the Proponent can be found on Tyco's
website under the "Corporate Responsibility" link, which is prominently
identified on the Tyco website homepage, http://www.tyco.com/livesite/Page/Tyco/Our+Commitment/Overview/.
The Tyco Corporate Responsibility homepage contains direct links to other pages
of Tyco's website (e.g. the "Community" homepage and the "Environment, Health &
Safety" homepage) where the information comprising Tyco's sustainability report
is included.
Tyco's concept and definition of sustainability appear prominently on its
Corporate Responsibility homepage where the Company states:
Tyco is an equal opportunity employer that promotes diversity and the fair and
respectful treatment of all. We are active contributors to the communities in
which we work, creating positive relationships and fostering new growth. Our
role in protecting the environment for generations to come is an important one.
We are committed to integrating diverse suppliers into our strategic sourcing
process and providing these businesses with a solid foundation for building
capacity.
This statement covers "long-tem social and environment sustainability," which is
the topic of the Proposal. As described in more detail below, Tyco discusses in
detail its policies and practices related to sustainability in separate sections
of its Corporate Responsibility homepage.
1. Environment, Health and Safety; Product Responsibility
Tyco's Environment, Health and Safety Policy (the "EHS Policy"), which is
accessible in the "Environment, Health & Safety" section of the Corporate
Responsibility homepage, is the foundation for Tyco's commitment to world class
environment, health and safety programs. As explained in the EHS Policy, Tyco is
committed "to protecting the health and safety of [its] employees and protecting
the environment." The EHS Policy goes on to explain Tyco's goals in creating
sustainable opportunity, including:
Providing a safe working environment for all Tyco's employees, independent
contractors, vendors, and customers;
Operating Tyco facilities in a manner that prevents harm to public health and
the environment;
Conserving energy, water and raw materials;
Recycling and reducing waste where appropriate;
Being good neighbors by insuring that Tyco facilities do not pose unreasonable
risks to the community;
Participating in community activities related to environment, health and
safety; and
Designing Tyco products in a manner that eliminates unreasonable risks from
the manufacture, use and disposal of the products.
In addition, Tyco publishes annually an Environment, Health and Safety Report
(the "EHS Report"), which sets forth Tyco's EHS Management System and highlights
the Company's achievements towards environment, health and safety excellence.
The EHS Report is accessible in the Environment, Health & Safety section of
Tyco's Corporate Responsibility homepage. Tyco expects to publish an updated
version of its EHS Report in November 2007. Tyco's EHS Report explains that in
2005, Tyco began implementing a common EHS Management platform for improving EHS
performance and facilitating best practice exchange across all Tyco sites and
explains in detail how this EHS Management System and governance structure
operate. The EHS Management System builds on the goals and requirements of the
EHS Policy, discussed above, by specifying those elements necessary for
prevention, management, and mitigation of environment, health and safety risks.
The EHS Report further explains that "[a] critical function of an effective EHS
Management System is compliance assurance and measurements." The EHS Report goes
on to discuss in detail a wide array of performance indicators concerning the
sustainability factors outlined in Tyco's definition of sustainability. For
example, the EHS Report contains details on company-wide environment, health and
safety performance in a number of measurable categories including specific
disclosures relating to environment, health and safety penalties, environmental
remediation liabilities, safety and injury rate, and toxic releases.
The Proposal "recommends" that the Company use the GRI Guidelines in preparing
its sustainability report. Tyco does follow the GRI Guidelines in preparing its
EHS Report and includes an index that indicates the location in the EHS Report
where elements of the GRI Guidelines are referenced.
2. Community and Society
In the "Community" section of the Corporate Responsibility homepage, Tyco
reports on its social sustainability initiatives. The Company explains that
through contributions of funding and products, Tyco is committed to improving
the quality of life in communities around the world and "building capacity
through sustainable initiatives that will serve people and communities for years
to come." Tyco's Community Mission appears prominently on this page: "Tyco
strategically invests philanthropic resources to effect sustainable change
resulting in healthy, vital communities where employees live and work."
The Community section of the Corporate Responsibility homepage outlines the
eight core principles that guide Tyco's support of and involvement in community
programs:
Achieve Impactmeasurable change in people, communities and the environment;
Advance Business Goalsresponsive to both community and business interests;
Build Capacitybuild capacity to help communities effectively manage change;
Community Responsivenessresponsive to the needs of Tyco communities;
Employee Preferenceemployee interests help shape initiatives and programs;
Globalizationawareness of needs in communities throughout the world;
Promote Diversityreach underserved and diverse communities; and
Sustainabilitywork toward long-term solutions.
In addition, the Community homepage addresses social sustainability by reviewing
Tyco's strategic community initiatives: (1) community safety and health, with a
focus on safety and health among underserved populations, healthcare facilities,
affordable housing, and disaster relief; (2) environmental sustainability, with
a focus on clean water, smart-growth, efficient use of natural resources, and
preserving and restoring natural habitats; and (3) economic and educational
achievement, with a focus on providing educational opportunities for
underrepresented groups, offering resources to teachers, and celebrating and
leveraging diversity to benefit communities and businesses. Tyco's Community
homepage highlights certain specific community involvement efforts that Tyco has
undertaken. For example, ADT Security Services, Inc., a part of Tyco Fire &
Security, is working to expand a program called Code Adam, which provides
retailers, museums, theme parks, libraries, banks and restaurants with a
procedure for quickly locating missing children within their establishments. The
Community homepage further highlights the newly renovated Tyco Huangping
Elementary School developed via a partnership between Tyco International and
Baby Bamboo Operation, a non-profit group that helps establish education
facilities and programs for underprivileged children in rural China.
C. Tyco Has "Substantially Implemented" the Proposal
1. Content of the Report
As noted above, the Proposal requests that Tyco's report include "the company's
definition of sustainability, as well as a company-wide review of company
policies, practices, and indicators relating to measuring long-term social and
environmental sustainability." Thus, the Proposal specifically permits Tyco to
define for itself the areas to be included in its concept of sustainability and
to decide how to measure its performance in those areas. Significantly, the
Proposal only recommends that Tyco use the Guidelines, which the Proposal
describe as "provid[ing] a flexible reporting system," to prepare the report.
Notably, the Staff permitted the exclusion under Rule 14a-8(i)(10) of an
identical proposal submitted by the Proponent to Honeywell International Inc.
for inclusion in its 2007 proxy statement on the basis that the disclosures on
the company's website substantially implemented the proposal. See Honeywell
International Inc. (avail. Feb. 21, 2007); see also Honeywell International Inc.
(avail. Feb. 21, 2006). The content of the sustainability disclosures provided
by Tyco is very similar to that in Honeywell. Like in Honeywell, Tyco's
sustainability information is extensive and provides specific and concrete
details about the Company's sustainability policies and practices, as well as
examples of Tyco's activities and progress toward implementing those policies
and practices. Consequently, since the Honeywell and Tyco proposals are
identical, and the sustainability disclosures of both companies are very
similar, the Tyco Proposal likewise is excludable under Rule 14a-8(i)(10).
Moreover, the type and amount of sustainability disclosures provided on Tyco's
website are at least as comprehensive as the content of other sustainability
disclosures that the Staff has previously viewed as substantially implementing
similar proposals. See, e.g., Kroger Co. (avail. Apr. 11, 2007) (report
generally discussing community activities, employee matters, the environment,
and human rights); ConAgra Foods, Inc. (avail. July 3, 2006) (report generally
addressing the company's values and activities related to the environment,
workplace, community, shareowners, and consumers); Raytheon Co. (avail. Jan. 25,
2006) (report generally covering environmental issues, community partnerships,
diversity, and workplace initiatives); ConAgra Foods, Inc. (avail. June 20,
2005) (report generally addressing the company's values and activities related
to the environment, workplace, community, shareowners, and consumers);
Albertson's Inc. (avail. Mar. 23, 2005) (report generally covering the company's
values, activities to engage its employees and the community, environmental
issues, activities related to consumers, and financial and information
technology information); Lowe's Companies, Inc. (avail. Mar. 21, 2005) (report
generally addressing the company's contributions to community, commitment to the
environment, work with charitable and educational organizations, and workplace
opportunity initiatives).
While the Staff did not permit the exclusion of a proposal requesting a
sustainability report under Rule 14a-8(i)(10) in Wendy's International, Inc.
(avail. Feb. 21, 2006), we note that the proponent of that proposal argued that
Wendy's sustainability disclosures omitted significant information such as
diversity, safety, and supplier diversity, and contained very limited
disclosures related to environmental and social sustainability. However, as
described above, Tyco's sustainability disclosures are far more comprehensive
and detailed than the disclosures made by Wendy's and are analogous to those in
cases where the Staff has permitted the exclusion of similar proposals.
2. Form of the Report
Tyco's presentation of its sustainability disclosures on its website
substantially implements the Proposal's request for a sustainability report.
Like in Honeywell, Tyco's sustainability disclosures are presented in such close
proximity and are so easily accessible that they should be deemed to be
delivered in one "envelope." See Securities Act Release No. 7856, "SEC
Interpretation: Use of Electronic Media" (Apr. 28, 2000). In Honeywell, the
disclosures comprising Honeywell's sustainability report were contained in a
"Sustainable Opportunity" section of the company's website and could be accessed
by clicking on a number of links contained in that section of the website.
Similarly, the disclosures comprising Tyco's sustainability report are contained
in the "Corporate Responsibility" section of Tyco's website and are accessible
through various links contained in that section of the Company's website. As the
form of Tyco's disclosures is extremely similar to the form of the disclosures
found to have substantially implemented an identical proposal in Honeywell, as
discussed above, the Staff should permit the exclusion of the Proposal as
substantially implemented under Rule 14a-8(i)(10).
We note that the Staff did not permit exclusion on substantially implemented
grounds of a similar proposal in Terex Corporation (avail. Mar. 18, 2005), where
Terex claimed that it substantially implemented the proposal through a number of
disclosures in scattered locations, including disclosures on its website
relating to corporate citizenship, press releases, the annual report to
shareowners, and financial and other disclosures in Commission filings. In
contrast, as in Honeywell where the Staff permitted exclusion, Tyco's
sustainability disclosures are distinguishable from those in Terex in that
Tyco's disclosures are readily accessible via the single Tyco "Corporate
Responsibility" webpage.
CONCLUSION
Based upon the foregoing analysis, we respectfully request that the Staff of the
Commission concur that it will take no action if Tyco excludes the Proposal from
its 2008 Proxy Materials pursuant to Rule 14a-8(i)(10). We would be happy to
provide you with any additional information and answer any questions that you
may have regarding this subject. In addition, the Company agrees to promptly
forward to the Proponent any response from the Staff to this no-action request
that the Staff transmits by facsimile to the Company only.
If we can provide additional correspondence to address any questions that the
Staff may have with respect to this no-action request, please do not hesitate to
call me at (202) 955-8653 or John S. Jenkins, Vice President and Corporate
Secretary of Tyco International, at (609) 720-4329.
Sincerely,
/s/
Amy L. Goodman
Enclosures
cc: Patrick Doherty, Office of the Comptroller, The City of New York
John S. Jenkins, Tyco International Limited
[INQUIRY LETTER]
August 7, 2007
Ms. Judith A. Reinsdorf
Vice President and Corporate Secretary
Tyco International Ltd.
90 Pitts Bay Road
Second Floor
Pembroke HM 08, Bermuda
Dear Ms. Reinsdorf
The Office of the Comptroller of New York City is the custodian and trustee of
the New York City Employees' Retirement System, the New York City Fire
Department Pension Fund, and custodian of the New York City Board of Education
Retirement System (the "funds"). The funds' boards of trustees have authorized
me to inform you of our intention to offer the enclosed proposal for
consideration of stockholders at the next annual meeting.
I submit the attached proposal to you in accordance with rule 14a-8 of the
Securities Exchange Act of 1934 and ask that it be included in your proxy
statement.
Letters from The Bank of New York certifying the funds' ownership, continually
for over a year, of shares of Tyco International Ltd. common stock are enclosed.
The funds intend to continue to hold at least $2,000 worth of these securities
through the date of the annual meeting.
We would be happy to discuss this initiative with you. Should the board decide
to endorse its provisions as company policy, our funds will ask that the
proposal be withdrawn from consideration at the annual meeting. Please feel free
to contact me at (212) 669-2651 if you have any further questions on this
matter.
Very truly yours,
/s/
Patrick Doherty
Enclosures
Tyco Int. sustainabilitysocial resp. 2007
[APPENDIX]
Sustainability. Report -
Submitted by William C. Thompson, Jr., Comptroller, City of New York, on behalf
of the Boards of Trustees of the New York City Pension Funds
WHEREAS:
Investors increasingly seek disclosure of companies' social and environmental
practices in the belief that they impact shareholder value. Many investors
believe companies that are good employers, environmental stewards, and corporate
citizens are more likely to be accepted in their communities and to prosper
long-term. According to Innovest, an environmental investment research
consultant, major investment firms including ABN-AMRO, Neuberger Herman,
Schroders, T. Rowe Price, and Zurich Scudder subscribe to information on
companies' social and environmental practices.
Sustainability refers to development that meets present needs without impairing
the ability of future generations to meet their own needs. The Dow Jones
Sustainability Group defines corporate sustainability as "a business approach
that creates long-term shareholder value by embracing opportunities and managing
risks deriving from economic, environmental and social developments."
Globally, approximately 1,900 companies produce reports on sustainability issues
(www.corporateregister.com), including more than half of the global Fortune 500
(KPMG International Survey of Corporate Responsibility Reporting 2005).
Companies increasingly recognize that transparency and dialogue about
sustainability are elements of business success. For example, Unilever's
Chairman stated in a 2003 speech, "So when we talk about corporate social
responsibility, we don't see it as something business "does" to society but as
something that is fundamental to everything we do. Not just philanthropy or
community investment. important though that is, but the impact of our operations
and products as well as the interaction we have with the societies we serve."
An October 6, 2004 statement published by social research analysts reported that
they value public reporting because "we find compelling the large and growing
body of evidence linking companies' strong performance addressing social and
environmental issues to strong performance in creating long-term shareholder
value... We believe that companies can more effectively communicate their
perspectives and report performance on complex social and environmental issues
through a comprehensive report than through press releases and other ad hoc
communications." (www.socialinvest.org)
RESOLVED: Shareholders request that the Board of Directors issue a
sustainability report to shareholders, at reasonable cost, and omitting
proprietary information, by December 31, 2008.
Supporting Statement
The report should include the company's definition of sustainability, as well as
a company-wide review of company policies, practices, and indicators related to
measuring 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.
The Global Reporting Initiative (www.globalreporting.org) is an international
organization with representatives from the business, environmental, human
rights, and labor communities. The Guidelines provide guidance on report
content, including performance in six categories (direct economic impacts,
environmental, labor practices and decent work conditions, human rights,
society, and product responsibility). The Guidelines provide a flexible
reporting system that permits the omission of content that is not relevant to
company operations. Almost 900 companies use or consult the Guidelines for
sustainability reporting.
[INQUIRY LETTER]
December 3, 2007
Direct Dial
(202) 955-8653
Fax No.
(202) 530-9677
Client No. C 92220-00106
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Withdrawal of No-Action Letter Request Regarding the Shareowner Proposal of
William C. Thompson, Jr., Comptroller, City of New York, on behalf of the Boards
of Trustees of the New York City Pension Funds Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
In a letter dated October 23, 2007, we requested that the staff of the Division
of Corporation Finance of the Securities and Exchange Commission (the "Staff")
concur that Tyco International Limited ("Tyco") could properly exclude from its
proxy materials for its 2008 Annual Shareowners Meeting a shareowner proposal
and statements in support thereof (the "Proposal") received from William C.
Thompson, Jr., Comptroller, City of New York, on behalf of the New York City
Employees' Retirement System, the New York City Fire Department Pension Fund and
the New York City Board of Education Retirement System (the "Proponent").
Enclosed is a letter from Patrick Doherty, the Proponent's representative, to
Tyco dated November 30, 2007, stating that the Proponent voluntarily withdraws
the Proposal. See Exhibit A. In reliance on this letter, we hereby withdraw the
October 23, 2007, no-action request relating to Tyco's ability to exclude the
Proposal pursuant to Rule 14a-8 under the Securities Exchange Act of 1934.
Please do not hesitate to call me at (202) 955-8653 or John S. Jenkins, Vice
President and Corporate Secretary of Tyco International, at (609) 720-4329 with
any questions in this regard.
Sincerely,
/s/
Amy L. Goodman
Enclosure
cc: John S. Jenkins, Tyco International Limited
Patrick Doherty, Office of the Comptroller, The City of New York
[STAFF REPLY LETTER]
December 4, 2007
Amy L. Goodman
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5306
Re: Tyco International Ltd
Dear Ms. Goodman:
This is in regard to your letter dated December 3, 2007 concerning the
shareholder proposal submitted by the New York City Employees' Retirement
System, the New York City Fire Department Pension Fund, and the New York City
Board of Education Retirement System for inclusion in Tyco's proxy materials for
its upcoming annual meeting of security holders. Your letter indicates that the
proponents have withdrawn the proposal, and that Tyco therefore withdraws its
October 23, 2007 request for a no-action letter from the Division. Because the
matter is now moot, we will have no further comment.
Sincerely,
/s/
Gregory Belliston
Special Counsel
cc: Patrick Doherty
The City of New York
Office of the Comptroller
Bureau of Asset Management
1 Centre Street, Room 736
New York, NY 10007-2341
|
