Company Name: Walt Disney Co.
Public Availability Date: November 30, 2007
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX 1
INQUIRY LETTER
APPENDIX 2
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
October 16, 2007
Meredith B. Cross
By electronic mail (cfletters@sec.gov)
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: The Walt Disney CompanyNotice of Intent to Omit Shareholder Proposal from
Proxy Materials Pursuant to Rule 14a-8 Promulgated under the Securities Exchange
Act of 1934, as amended, and Request for No-Action Ruling
Ladies and Gentlemen:
On behalf of our client, The Walt Disney Company, a Delaware corporation (with
its consolidated subsidiaries, "Disney" or the "Company"), we are filing this
letter under Rule 14a-8(j) under the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), to notify the Securities and Exchange Commission
(the "Commission") of Disney's intention to exclude a shareholder proposal (the
"Proposal") from the proxy materials for Disney's 2008 Annual Meeting of
Shareholders (the "2008 Proxy Materials"). The Proposal was submitted by William
C. Thompson, Jr., Comptroller of the City of New York, on behalf of the Board of
Trustees of the New York City Teachers' Retirement System (the "Proponent").
Disney asks that the staff of the Division of Corporation Finance of the
Commission (the "Staff") not recommend to the Commission that any enforcement
action be taken if Disney excludes the Proposal from its 2008 Proxy Materials
under Rule 14a-8(i)(7) because the Proposal addresses matters relating to the
Company's ordinary business operations.
In accordance with Rule 14a-8(j), six copies of this letter and its attachments
are enclosed. Also, in accordance with Rule 14a-8(j), a copy of this letter and
its attachments is being mailed on this date to the Proponent, informing him of
the Company's intention to omit the Proposal from its 2008 Proxy Materials.
Pursuant to Rule 14a-8(j), this letter is being submitted not less than 80 days
before the Company files its definitive 2008 Proxy Materials with the
Commission.
THE PROPOSAL
A copy of the Proposal and related correspondence is attached to this letter as
Exhibit A. For the convenience of the Staff, the text of the Proposal is set
forth below:
Whereas, a number of educational groups, including Teaching Tolerance (www.tolerance.org)
and Educators for Social Responsibility (www.esrnational.org), have drawn
attention to Disney's use of negative and discriminatory racial, ethnic and
gender stereotypes in its animated films and associated products, and
Whereas, we believe that negative generalizations that are assigned to groups of
people by race, class, gender, religion, or country of origin in Disney products
can have a harmful impact on the social, psychological and educational
development of, and opportunities provided to, both children and adults, and can
also help foster negative impressions of U.S. cultural influence abroad,
Therefore, be it resolved, that shareholders request that management report on
steps the company is currently taking to avoid the use of negative and
discriminatory racial, ethnic and gender stereotypes in its products.
The report should include:
1. A statement of the existing company policy regarding the avoidance of
negative stereotyping and discrimination in Disney's portrayal of racial and
ethnic minorities, and women, in all phases of production, marketing and
promotion, and the procedures currently used to inform company personnel of this
policy; and
2. A description of Disney's existing process for ensuring non-racist,
non-sexist depictions and images in all of its products, irrespective of the
geographic market of the product.
GROUNDS FOR EXCLUSION
The Proposal, which is nearly identical to a proposal the Proponent made last
year and with respect to which the Staff agreed to take no action if the Company
excluded, may be excluded under Rule 14a-8(i)(7) because it addresses matters
related to Disney's ordinary business operations. The Company believes that
decisions involving the nature, content and presentation of its animated films
and the marketing and production of the films and related products implicate
exactly the type of day-to-day management decisions excluded from the
shareholder proposal process under Rule 14-8(a)(i)(7).
The Company is a diversified worldwide entertainment company with operations in
four business segments: media networks, parks and resorts, studio entertainment
and consumer products. The Company acquires, produces and distributes animated
films through its studio entertainment segment. The Company's consumer products
segment partners with licensees, manufacturers, publishers and retailers
throughout the world to design, promote and sell a wide variety of products
based on existing and new Disney characters and other intellectual property.
The Company does not quarrel with the Proponent's stated goal of avoiding the
use of negative or discriminatory stereotypes based on race, ethnicity, religion
or gender in its products. That is an objective the Company shares. However, the
Company firmly believes that the Proposal implicates ordinary business matters
that are appropriately addressed by management of the Company and not by its
shareholders. As a result, the Proposal may properly be excluded from the 2008
Proxy Materials under Rule 14a-8(i)(7).
Under Rule 14a-8(i)(7) of the Exchange Act, a shareholder proposal may be
omitted from a company's proxy statement if the proposal "deals with matters
relating to the company's ordinary business operations." In Exchange Act Release
No. 34-40018 (May 21, 1998) (the "1998 Release"), the Commission explained that
the underlying policy of the ordinary business exclusion is to confine the
resolution of ordinary business problems to management and the board of
directors. The Commission also explained that the ordinary business exclusion
rests on "two central considerations." The first consideration is the subject
matter of the proposal. The 1998 Release provides that "[c]ertain tasks are so
fundamental to management's ability to run a company on a day-to-day basis that
they could not, as a practical matter, be subject to direct shareholder
oversight." Id. The second consideration is the degree to which the proposal
attempts to "micro-manage" the company by "probing too deeply into matters of a
complex nature upon which shareholders, as a group, would not be in a position
to make an informed judgment." Id.
Decisions involving the nature, content and presentation of the Company's
animated films and the marketing and promotion of the films and related products
are the essence of the ordinary business operations of the Company's studio
entertainment and consumer products segments. Just last year, the Staff
permitted Disney to exclude a proposal (the "2007 Proposal") that was virtually
identical to the current Proposal because it related to Disney's ordinary
business operations. See The Walt Disney Company (avail. Nov. 22, 2006; recon.
denied January 5, 2007) ("the 2007 No-Action Letter"). Like the Proposal, the
2007 Proposal requested that Disney's management issue a report on the Company's
actions to avoid the use of "negative racial, ethnic and gender stereotypes in
its products". In fact, the primary difference between the requested reports is
that the current Proposal also references "discriminatory" stereotypes in
addition to "negative" stereotypes. However, the objective of both proposals is
the samethe avoidance of racist or sexist depictions and images in the
Company's products. The mere addition of the word "discriminatory" does not
change the character of the Proposal. Accordingly, since the current Proposal is
substantially similar to the 2007 Proposal, the Proposal is likewise excludable
under Rule 14a-8(i)(7) as it relates to Disney's ordinary business operations.1
The matters addressed in the Proposal do not rise to the level of the social
policy issues that compel inclusion of proposals that would otherwise be omitted
under Rule 14a-8(i)(7). In the 1998 Release, the Commission indicated that
proposals that deal with ordinary business matters would not be excluded if they
raised "sufficiently significant social policy issues" (emphasis added). The
Commission stated in the 1998 Release that there are no "bright-line "tests and
that determination of whether a policy issue rises to the level to overcome the
ordinary business exclusion is made on a case-by-case basis. In the Staff's
reconsideration of the 2007 No-Action Letter, the Staff found no basis to
reconsider its decision that the 2007 Proposal could be excluded from the
shareholder proposal process even though the Proponent claimed that the 2007
Proposal was subject to inclusion under the Commission's language in the 1998
Release. The addition in this year's Proposal of references to discrimination
does not change at all the nature or significance of the issue addressed by the
Proposal. Like the 2007 Proposal, this year's Proposal addresses the avoidance
of racist or sexist depictions and images in the Company's products. The 2007
Proposal was not comparable to a proposal on employment discrimination or other
significant discrimination matters and the addition of a few words in this
year's Proposal does not make it any more comparable to proposals on employment
or other significant discrimination matters.
The Staff consistently has affirmed that shareholder proposals concerning the
nature, presentation and content of programming and film production, including
proposals relating to alleged racial, ethnic, religious or gender matters, are
excludable under Rule 14a-8(i)(7) as matters relating to the conduct of ordinary
business operations. For example, in General Electric Company (avail. Jan. 6,
2005), the Staff concurred with the exclusion of a proposal requesting that GE's
board of directors publicly state its policies on race and guest courtesy, as
relating to the nature, presentation and content of television programming. In
addition, in General Electric Company (avail. Jan. 10, 2002), the Staff
concurred with the exclusion of a proposal requesting that NBC produce and
present television programming that would present the Polish-American image in a
positive light and thereby offset the negative and stigmatized image of
Polish-Americans. Similarly, in General Electric Company (avail. Jan. 21, 1998),
the Staff allowed the exclusion of a proposal requesting that NBC follow a
television code requiring "special sensitivity" in the use of material relating
to sex, race, color, age, creed, religion and national or ethnic origin on the
basis that it related to the ordinary business function of the content of
programming. Furthermore, in Gannett Co., Inc. (avail. Jan. 21, 1997), the Staff
allowed the exclusion of a proposal requesting that Gannett establish a policy
prohibiting its newspapers from publishing anti-Catholic and anti-Semitic
material and that such policy be overseen by an ecumenical group with power to
censure as constituting ordinary business directed at the editorial and related
policies for the company's newspapers.
On numerous prior occasions, the Staff has also concurred that proposals
relating to the manner in which a company advertises its products, including
proposals concerning racial, ethnic, religious or gender matters in advertising,
marketing and packaging of products and related promotional activities concern
ordinary business operations. For example, in Federated Department Stores, Inc.
(avail. Mar. 27, 2002) and Tootsie Roll Industries, Inc. (avail. Jan. 31, 2002),
the Staff concurred in the exclusion of a proposal requesting that the company,
among other things, identify and dissociate from any offensive imagery to the
American Indian community in product marketing, advertising, endorsements,
sponsorships and promotions. Likewise, in The Quaker Oats Co. (avail. March 16,
1999), the Staff concurred that a proposal requesting the formation of an
employee committee to review all advertising contracts for content that "demeans
or slanders any people based on race, ethnicity or religion" was excludable as
ordinary business. See also RJR Nabisco Holdings Corp. (avail. Feb. 23, 1998)
and PepsiCo, Inc. (avail. Feb. 23, 1998) (in each case, the Staff concurred with
the exclusion of a proposal requesting that the company prepare a report
describing the company's policy and practice to assure, both domestically and
globally, that the company use only "non-racist portrayals and designations" in
its advertising and that the company report to shareholders how it will monitor
and enforce these policies); General Mills, Inc. (avail. July 14, 1992)(Staff
concurrence with the exclusion of a proposal requesting that the company (i)
establish a policy of not advertising on the Geraldo Rivera show and other
"trash TV" programs or on any programs which are insulting to people of any
racial, ethnic or religious group and (ii) establish a special management
committee to implement these policies); H.J. Heinz (avail. June 14, 1991)(Staff
concurrence with the exclusion of a proposal requesting that the company refrain
from labeling products with characters, signs or symbols of any specific race,
religion, culture or creed as ordinary business operations); Consolidated Foods
Corporation (avail. July 21, 1983)(Staff concurrence with the exclusion of a
proposal requesting that the company advertise its products in a manner which
enhances the image of women); and Columbia Pictures Industries Incorporated
(avail. Aug. 29, 1975)(Staff concurrence with the exclusion of a proposal to
improve female screen roles "since it involves a request that the Board of
Directors take action with respect to a matter relating to the conduct of
ordinary business operations of the[c]ompany (viz., the formulation of
guidelines related to the attistic [sic] character of[c]ompany products)"). Even
though matters of race, religion and gender may have public policy implications,
in the context of media businesses like the Company, proposals relating to
creative content and advertising are excluded because content and advertising
are at the core of their ordinary business. See, e.g., General Electric Company
(avail. Jan. 6, 2005).
In each of the above cited no-action requests, the proponent sought action by
the company or a report of practices or plans relating to racial, ethnic,
religious or gender matters in programming or advertising. Such matters involve
difficult judgments depending on specific and changing factual circumstances,
including:
what portrayals might be construed as stereotyping in the various different
markets in which the Company operates;
the effect of the context in which the portrayals are made; the relative risk
that a portrayal will be seen as negative or offensive in light of the artistic
judgments of the producers, writers, directors and actors involved in the
project;
contractual requirements that may limit the Company's influence over the
content of products it distributes; and
the overall relationship of the Company and those involved in the production
with the racial, ethnic, religious or gender community involved.
Judgments such as these, made by management familiar with the changing factual
landscape and the interaction of various aspects of the Company's business, are
precisely the type of judgments managementnot shareholdersmust make.
Furthermore, management must be free to make these judgments in light of
sometimes rapidly changing public expectations and sensitivities that cannot be
anticipated. Therefore, such judgments need to be made in an environment free of
constraints that may be or become inappropriate in a given set of circumstances.
Shareholder proposals will necessarily restrict the ability of management to
exercise the business judgment necessary in these circumstances.
The limitation of a proposal to a request for a report does not render more
acceptable a proposal that deals with matters within the ordinary business
judgment of the company. The Commission has stated that the Staff "will consider
whether the subject matter of the special report...involves a matter of ordinary
business" and "where it does, the proposal will be excluded." See Exchange Act
Release No. 34-20091 (Aug. 16, 1983). In accordance with this directive, the
Staff consistently has permitted the exclusion of proposals seeking the
preparation of reports on matters of ordinary business. See, e.g., AT&T Corp.
(avail. Feb. 21, 2001); The Mead Corporation (avail. Jan. 31, 2001); General
Electric Company (avail. Jan. 27, 2000); Johnson Controls, Inc. (avail. Oct. 26,
1999); Wal-Mart Stores, Inc. (avail. Mar. 15, 1999); Nike, Inc. (avail. July 10,
1997); and General Electric Company (avail. Feb. 2, 1993).
CONCLUSION
Based upon the foregoing analysis, the Company hereby respectfully requests that
the Staff confirm that it will not recommend enforcement action if the Proposal
is excluded from the Company's 2008 Proxy Materials. Please do not hesitate to
call me at (202) 663-6644 or Roger Patterson of Disney at (818) 560-6126 if you
require additional information or wish to discuss this submission further.
Please acknowledge receipt of this letter by stamping the enclosed additional
copy of this letter and returning it to me in the enclosed stamped,
self-addressed envelope.
We request that you transmit your response by facsimile to the undersigned at
(202) 663-6363 and understand that you can transmit your response to the
Proponent care of Patrick Doherty at (212) 669-4072.
Thank you for your attention to this matter.
Sincerely,
/s/
Meredith B. Cross
Attachment: Exhibit A
cc: Alan N. BravermanSenior Executive Vice President, General Counsel and
Secretary, The Walt Disney Company
Roger J. PattersonVice President, Counsel, The Walt Disney Company
Patrick DohertyOffice of the Comptroller of New York City
-----FOOTNOTES-----
1 The Staff has permitted Disney to exclude other proposals in the past relating
to the content of its news and entertainment products on ordinary business
grounds. See The Walt Disney Company (avail. Dec. 7, 2004), The Walt Disney
Company (avail. Nov. 10, 1997) and The Walt Disney Company (avail. Nov. 4,
1997).
[INQUIRY LETTER]
September 14, 2007
BY FAX
Mr. Alan N. Breverman
Senior Vice President, General Counsel and Secretary
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521-1030
Dear Mr. Braverman:
The Office of the Comptroller of New York City is the custodian and trustee of
the New York City Teachers' Retirement System (the "Fund"). The Fund's board of
trustees has 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.
A letter from The Bank of New York certifying the fund's ownership, continually
for over a year, of shares of The Walt Disney Company common stock is enclosed.
The fund intends 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 fund 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
pd:ma
Enclosures
[Text is illegible]
[APPENDIX 1]
Submitted by William C. Thompson, Jr., Comptroller, City of New York, on behalf
of the Board of Trustees of the New York City Teachers' Retirement System
NEGATIVE AND DISCRIMINATORY STEREOTYPING IN DISNEY PRODUCTS
Whereas, a number of educational groups, including Teaching Tolerance
(www.rolerance.org) and Educators for Social Responsibility
(www.esrnational.org), have drawn attention to Disney's use of negative and
discriminatory racial, ethnic and gender stereotypes in its animated films and
associated products, and
Whereas, we believe that negative generalizations that are assigned to groups of
people by race, class, gender, religion or country of origin in Disney products
can have a harmful impact on the social, psychological and educational
development of, and opportunities provided to, both children and adults, and can
also help foster negative impressions of U.S cultural influence abroad.
Therefore, be it resolved, that shareholders request that management report on
steps the company is currently taking to avoid the use of negative and
discriminatory racial, ethnic and gender stereotypes in its products.
The report should include.
1. A statement of the existing company policy regarding the avoidance of
negative stereotyping and discrimination in Disney's portrayal of racial and
ethnic minorities, and woman, in all phases of production, marketing and
promotion, and the procedures currently used to inform company personnel of this
policy; and
2. A description of Disney's existing process for ensuring non-racist,
non-sexist depictions and images in all of its products, irrespective of the
geographic market of the product.
[INQUIRY LETTER]
November 16, 2007
BY EMAIL and EXPRESS MAIL
Securities and Exchange Commission
Division of Corporation Finance
Office of the Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: The Walt Disney Company Shareholder Proposal submitted by the Teachers'
Retirement System of the City of New York
To Whom It May Concern:
I write on behalf of the Teachers' Retirement System of the City of New York
(the "Teachers")in response to the October 16, 2007 letter (the "October 16
Letter") sent to the Securities and Exchange Commission (the "Commission") by
the firm of WilmerHale on behalf of The Walt Disney Company ("Disney" or the
"Company"). In that letter, the Company contends that the Teachers' shareholder
proposal (the "Proposal") may be omitted from the Company's 2008 proxy statement
and form of proxy (the "Proxy Materials") pursuant to Rule 14a-8(i)(7) under the
Securities Exchange Act of 1934.
I have reviewed the Proposal as well as the October 16 Letter. Based upon that
review, as well as a review of Rule 14a-8, it is my opinion that the Proposal
may not be omitted from the Company's 2008 Proxy Materials. The Proposal, which
seeks a report on Disney's current steps to avoid the use of discriminatory
racial, gender and other stereotypes, relates to significant social policy
issues, which transcend "ordinary business." Accordingly, the Teachers
respectfully request that the Division of Corporation Finance (the "Division" or
the "Staff") deny the relief that Disney seeks.
I. The Teachers' Proposal
The Proposal consists of two whereas clauses followed by a resolution. Among
other things, the whereas clauses note that: (a) a number of educational groups,
including Teaching Tolerance (www.tolerance.org) and Educators for Social
Responsibility (www.esrnational.org) have drawn attention to Disney's use of
negative and discriminatory racial, ethnic and gender stereotypes in its
animated films and associated products; and (b) negative generalizations
assigned to groups of people by race, class, gender, religion, or country of
origin in Disney products can have a harmful impact on the social, psychological
and educational development of, and opportunities provided to, both children and
adults, and can also foster negative impressions of U.S. cultural influences
abroad.
The Resolved clause then reads:
Therefore, be it resolved, that shareholders request that management report on
steps the company is currently taking to avoid the use of negative and
discriminatory racial, ethnic and gender stereotypes in its products.
The report should include:
1. A statement of the existing company policy regarding the avoidance of
negative stereotyping and discrimination in Disney's portrayal of racial and
ethnic minorities, and women, in all phases of production, marketing and
promotion, and the procedures currently used to inform company personnel of this
policy; and
2. A description of Disney's existing process for ensuring non-racist,
non-sexist depictions and images in all its products, irrespective of the
geographic market of the product.
II. The Company's Opposition and the Teachers' Response
In its October 16 Letter, the Company requested that the Division not recommend
enforcement action to the Commission if the Company omits the Proposal under SEC
Rule 14a-8(i)(7) (relates to the conduct of the company's ordinary business
operations and does not involve significant social policy issues). Pursuant to
Rule 14a-8(g), the Company bears the burden of proving that this exclusion
applies. As detailed below, because avoiding discriminatory stereotyping is not
a matter of "ordinary business," the Company has failed to meet its burden, and
its request for no-action relief should, accordingly, be denied.
A. The Proposal Transcends Ordinary Business, Because the Avoidance of
Discriminatory Stereotypes Implicates a Significant Social Policy Issue.
1. The Teachers' current Proposal properly focuses on discriminatory
stereotypes.
"Significant discrimination matters," such as those presented by the Teachers'
current Proposal, are the key example that the Division itself has used of a
significant social policy issue that transcends ordinary business matters.
In Exchange Act Release No. 34-40018, "Amendments to Rules on Shareholder
Proposals," (May 21, 1998) (the "1998 Release"), the Commission formally adopted
amendments to Rule 14a-8 on shareholder proposals, and reversed the Division's
prior Cracker Barrel position which had permitted companies to exclude
shareholder proposals relating to employment discrimination based on sexual
preference. While the 1998 Release was formally limited to such proposals, the
Release noted more general considerations to be applied when determining whether
any proposal falls within the "ordinary business" exclusion. The Release
described the first of those considerations as follows:
The first [consideration] relates to the subject matter of the proposal. Certain
tasks are so fundamental to management's ability to run a company on a
day-to-day basis that they could not, as a practical matter, be subject to
direct shareholder oversight. Examples include the management of the workforce,
such as the hiring, promotion and termination of employees, decisions on
production quality and quantity, and the retention of suppliers. However
proposals relating to such matters but focusing on sufficiently significant
social policy issues (e.g., significant discrimination matters) generally would
not be considered to be excludable, because the proposals would transcend the
day-to-day business matters and raise policy issues so significant that it would
be appropriate for a shareholder vote.
(Emphasis added.)
The current Proposal focuses directly on such discrimination, and reflects
changes from the Teachers' prior Proposal to Disney, as to which a no-action
letter was issued, The Walt Disney Company (November 22, 2006, reconsideration
denied January 5, 2007). Thus, the second Whereas clause of the current Proposal
now explicitly states that negative generalizations, i.e., stereotypes, can have
harmful impact on the "social, psychological and educational development of, and
opportunities provided to, both children and adults." (New language underlined).
Further, the Resolved clause of the current Proposal now seeks a report that
includes a statement of Disney's existing policy regarding the avoidance of
negative stereotyping and discrimination in Disney's portrayal of racial and
ethnic minorities and women. (We have attached to this letter a redlined markup
showing all of the changes in Teachers' 2007 Disney Proposal from the 2006
Proposal). In sum, the report that Teachers' current Proposal seeks relates
clearly to a significant social policy issue: the policies in place to avoid the
discrimination, in employment and other life opportunities, that would result
from the dissemination of negative racial, gender, ethnic and other stereotypes
by the world's predominant media company.
There is no merit to the Company's assertion in its October 16 Letter that the
Proposal is "virtually identical" to the 2007 Proposal (October 16 letter at p.
2). Rather, the Teachers 2007 Proposal throughout now focuses even more directly
on the one social policy issue that the Commission chose to highlight as
significant in the 1998 Release. As such, the Company should not be permitted to
exclude it.
The second consideration set forth in the 1998 Release should also preclude a
finding that avoiding discriminatory stereotypes is a matter of "ordinary
business":
The second consideration is the degree to which the proposal seeks to
"micro-manage" the company by probing too deeply into matters of a complex
nature upon which shareholders, as a group, would not be in a position to make
an informed judgment. This consideration may come into play in a number of
circumstances, such as where the proposal involves intricate detail, or seeks to
impose specific time-frames or methods for implementing complex policies.
1998 Release.
A report on negative stereotyping and discrimination is not a matter too complex
for meaningful shareholder consideration. To the contrary, when a company faces
significant social policy issues, such as avoiding harmful group stereotypes and
discrimination, shareholders are fully able to review and consider a report.
Indeed, following the guidance set forth in Staff Legal Bulletin 14C (June 28,
2005) ("SLB 14C"), the Staff has rejected companies' requests to use Rule
14a-8(i)(7) to exclude proposals requesting greater corporate disclosure on the
impact of companies' products and activities on such public concerns as health,
safety and the environment. See General Electric Company (January 31, 2007)
(requesting that the board prepare a report on global warming resulting from its
activities); CVS Corporation (March 3, 2006) (requesting board publish a report
evaluating the feasibility of reformulating all of its private label cosmetics
products to be free of chemicals linked to cancer, mutation or birth defects);
Exxon Mobil Corporation (March 12, 2007) (requesting that the company provide
information at its pumps regarding carbon dioxide emissions generated by the
sale of gasoline); PepsiCo., Inc. (March 2, 2007) (requesting that the company
adopt a policy to identify and label all food products manufactured or sold by
the company that may contain genetically engineered ingredients). Thus, pursuant
to the Division's guidance in SLB 14C, shareholders should be given the chance
to vote on the Proposal that Disney report on how it deals with this serious
issue of public concern.
2. Stereotypes, such as those Disney has used, have been proven to lead to
discrimination, including in employment.
While we submit that the discriminatory effects of racial, gender and ethnic
stereotypes, particularly in the area of employment, are self-evident, we note
that recent research in social sciences and economics has confirmed direct links
between racial and gender stereotypes and biases and resulting employment
discrimination. We note further that the United States Supreme Court has held
that such a linkage was demonstrated in a case before it, and therefore found
unlawful and actionable discrimination.
The research shows that unconscious bias is a significant source of
discrimination, which restricts employment opportunities for minorities and
women. "Unconscious Bias Theory in Employment Discrimination Litigation,"
Harvard Civil RightsCivil Liberties Review, 481, 503 (Summer 2005), available
at www.law.harvard.edu/students/orgs/crcl/vol40_2/. "Researchers have
demonstrated that individuals tend to process incoming information by relying on
cognitive shortcutsin essence, stereotypes. Bias against another thus begins to
occur at the point when new information is processed by the individual, such as
upon a first meeting, and continues with each interaction between two people."
Id. at 482. "Specifically, in the employment context, stereotyping is likely to
occur when a member of a previously omitted group (or protected class) assumes a
job considered nontraditional for his group. Another condition shown to enable
stereotyping in the employment context is the perceived lack of fit between the
target's category (i.e. female, minority, etc.) and occupation." Id. at 484. For
example, a study on the effect of using blind selection processes in orchestral
auditions revealed that the blind process substantially enhanced the probability
that a female musician would advance beyond the preliminary round and eventually
be chosen for a position in the orchestra. Id. at 486.
Just such an effect of stereotyping and bias on employment decisions was
demonstrated in a recent labor market study, which found that a "black-sounding"
name remains a significant impediment to getting a job. Using a randomized field
experiment, fictitious resumes were sent in response to help-wanted ads in
Boston and Chicago newspapers. To affect the employers' perceptions of race, the
researchers assigned stereotypically "black-sounding" names to half of the
applicants; and assigned stereotypically "white-sounding names" the other half
of the applicants, although all applicants otherwise had identical resumes. The
authors found that the applicants with the stereotypically white-sounding names
received 50 percent more callbacks than those with black-sounding names. M.
Bertrand, and S. Mullainathan: "Are Emily and Greg More Employable than Lakisha
and Jamal? A Field Experiment on Labor Market Discrimination," The American
Economic Review, 94(4), pp. 991-1013 (2004), available as a National Bureau of
Economic Research Working Paper at www.nber.org/papers/w9873.
Similarly, a study analyzing the hiring decisions of 700 law firms revealed that
gender stereotypes, i.e., men as decisive and aggressive and women as indecisive
and passive, influence personnel decisions to a statistically significant
degree. "Gorman Releases New Study of Gender Bias in Hiring," Inside UVAOnline
(October 7-25, 2005), available at
www.virginia.edu/insideuva/2005/17/gorman.html. These findings were reported to
be the first time that the conclusion that employers discriminated according to
gender stereotypes has been substantiated by real-world data, i.e, evidence from
the workplace, as opposed to controlled laboratory experiments. Id. Similar
conclusions were reached in a 2007 research report sponsored by IBM, "The
Double-Bind Dilemma for Women in Leadership: Damned if You Do, Doomed if You
Don't," available at www.catalystwomen.org/files/full/2007%20Double%20Bind.pdf.
All of these studies show that racial or gender stereotypes, disseminated
through the population by culture, media and otherwise, result directly in
employment discrimination, the issue that the 1998 Release used as its example
of one that transcends ordinary business matters.
Finally, the United States Supreme Court, in Price Waterhouse v. Hopkins, 490
U.S. 228 (1989), has held that unlawful employment discrimination can result
from such stereotypes, and is actionable under Title VII of the Civil Rights Law
of 1964. As the Court's statement of the facts found, Hopkins was a very highly
praised candidate for partnership at the accounting firm, with excellent skills
and a "strong character." However, her nomination for partnership was put aside
after she had been critiqued by male partners as "macho" and in need of a "charm
school," and told to walk, talk and dress more femininely, and to wear makeup,
have her hair styled, and wear jewelry. Id. at 233-235. The Court, after
reviewing that inequitable treatment, held that an employer may not discriminate
based upon sex stereotypes:
As for the legal relevance of sex stereotyping, we are beyond the day when an
employer could evaluate employees by assuming or insisting that they matched the
stereotype associated with their group, for "`[i] forbidding employers to
discriminate against individuals because of their sex, Congress intended to
strike at the entire spectrum of disparate treatment of men and women resulting
from sex stereotypes.'"... An employer who objects to aggressiveness in women
but whose positions require this trait places women in an intolerable and
impermissible catch 22: out of a job if they behave aggressively and out of a
job if they do not. Title VII lifts women out of this bind.
Id. at 251 (citations omitted).
As both respected academic researchers and the Nation's highest Court have found
that employment discrimination is a wrongful result of racial and gender
stereotyping, the Company's shareholders have a legitimate policy interest in a
Proposal that asks what the Company is doing to avoid spreading those
stereotypes, and thereby causing such discrimination.
3. Disney Has Used Racial, Gender and Ethnic Stereotypes
Disney shareholders have a particular interest in learning about the measures
taken by their Company to avoid discriminatory stereotypes. While many of
Disney's very popular media creations are benign, the Company has, regrettably,
spread unfair stereotypes both in the distant past and more recently. Disney's
stereotypical depictions often remain in the marketplace literally for decades,
and so may continue to have an unfortunate influence almost indefinitely.
Shareholders may rightfully ask what policies the Company now has in place to
prevent a recurrence.
The best-known example is Disney's film, Song of the South, with its abundance
of patronizing racial stereotypes, which originally opened in 1946. Strikingly,
Disney continues to sell Song of the South in major international markets, and
thereby to disseminate those stereotypes, and to profit from them. Specifically,
the film remains a popular sales item on video and laserdisc in Britain, Hong
Kong, Spain, France, Germany, as well as in Italy, where the title is translated
as "The Stories of Uncle Tom." See "Disney Sings Dollars and Racism with Song of
the South," The Huffington Post (May 8, 2007), available at
www.huffingtonpost.com/earl-ofari-hutchinson/disney-sings-dollars-and- b
47972.html. Id. Thus, as a policy matter, Disney's use of discriminatory
stereotypes is particularly significant, as the influence of its media
presentations is both widespread and long-lasting.
Before Song of the South, in the still-popular Dumbo, the black crow characters
in the film appeared as African-American caricatures: the leader crow voiced by
a white man is named "Jim Crow." The other crows were all voiced by black
actors, and spoke in what the writers then saw as black dialect, replete with
bad grammar. "Digging for the Deeper Meaning in Disney Movies," Los Angeles
Times (August 21, 2004).
More recently, Disney's Aladdin made use of ethnic stereotypes of Arabs. A New
York Times editorial, "It's Racist, But Hey, It's Disney," (July 14, 1993),
noted the discriminatory stereotypes of Arabs in Disney's Aladdin, exemplified
in song lyrics:
Oh, I come from a land
From a faraway place
Where the caravan camels roam
Where they cut off your ears
If they don't like your face
It's barbaric, but hey, it's home.
In response to pressure from the American-Arab Anti-Discrimination Committee,
Disney agreed to change two lines in the video version, but the line, "It's
barbaric, but hey, it's home" remained. Id.
Disney has also made wide use of gender stereotypes in its widely-circulated
cartoon films. A pair of analysts noted in the written materials accompanying a
film on Disney's use of such images, that although Disney has also presented
more positive images: "The female characters in Disney movies present a
distorted version of femininityhighly sexualized bodies, coy seductiveness,
always needing to be rescued by a male." For example, "Ariel gives up her voice
in order to win the prince with her body in The Little Mermaid;" Beauty and the
Beast's Belle endures an abusive and violent Beast in order to redeem him, and
Snow White cleans the dwarfs' cottage to ingratiate herself. "Mickey Mouse
Monopoly: Disney, Childhood, and Corporate Power," C. Sun and M. Picker, Video
Study Guide, p. 1. (2001), available at
www.mediaed.org/videos/ CommercialismPoliticsAndMedia/MickeyMouseMonopoly/studyguide /MickeyMouseMonopoly.pdf.
The same analysts noted, as to racial and ethnic stereotypes in Disney
productions, "Representations of race and ethnicity in Disney animated features
are notable for their general scarcity, and when they do appear, they tend to
reinforce cultural stereotypes about these groups." Id. at 2. For example,
"Latinos are irresponsible chihuahuas in Lady and the Tramp;" "African-Americans
as jive crows in Dumbo;" "Latinos and African-Americans as street-gang thugs in
The Lion King;" "Arabs as barbarians in Aladdin," and "Native Americans as
savages in Peter Pan and Pocahontas." Id. Due to the lasting influences of DVD's
and other media, such stereotypes will remain in circulation indefinitely.
Disney's use of stereotypes continues to this day. Just last month, the ABC
Network, which Disney owns, became the subject of a significant and continuing
international public controversy concerning the use of stereotypes on its
popular television program, Desperate Housewives. The controversial episode
showed one of the main characters, after having received an unexpected medical
diagnosis, angrily demanding to check "those diplomas because I want to make
sure that they're not from some med school in the Philippines." Thousands of
Filipinos from the U.S. and the Philippines signed a petition demanding that ABC
apologize. "ABC Issues Public Apology: After the `Desperate Housewives'
Outrage," Asianjournal.com (October 3, 2007), available at
www.asianjournal.com/?c=124&a=23459. According to the New York university
professor who created the petition, "It's these types of comments that make
people believe the stereotypes that Filipinos are inferior and leads to all
sorts of discrimination." Id. ABC apologized a day after Philippines' President
Gloria Arroyo's office said it considered the Disney show's dialogue a "racial
slur."
In sum, Disney's policies to avoid racial, gender or ethnic stereotypes present
a truly significant public policy issue, because the use of such stereotypes by
the world's most influential media company has broad and long-lasting effects.
It is, therefore, not an encroachment upon the Company's ordinary business for
shareholders to ask about the existing policies to prevent the spread of such
stereotypesand the discriminatory damage they may cause.
B. The Past No-Action Letters Cited By the Company Do Not Support Exclusion of
the Teachers' Proposal
We note that the Company, in its no-action request, argues that Staff no-action
letters issued subsequent to the 1998 Release support its position. As an
initial matter, unlike the Teachers' Proposal to Disney, the proposals at issue
in those letters generally did not raise the explicit link between negative
stereotyping and resulting discrimination, and were not supported by their
proponents with current academic research and numerous specific examples of the
companies' use of negative racial, gender and ethnic stereotypes.
Moreover, to the extent that those prior no-action letters would be in conflict
with the 1998 Release, we respectfully submit that the Staff should give those
prior letters no weight. Recently, in American Federation of State, County &
Municipal Employees, Employees Pension Plan v. American International Group,
Inc., 462 F.3d 121 (2d Cir. 2006), the Second Circuit accorded no weight to an
SEC interpretation of Rule 14a-8 that conflicted with the Release that the
Commission had issued when the Rule was last revised: "Because the
interpretation of Rule 14a-8(i)(8) that the SEC advances in its amicus
briefthat the election exclusion applies to proxy access bylaw
proposalsconflicts with the 1976 statement, it does not merit the usual
deference we would reserve for an agency's interpretation of its own
regulations." Id. at 129. The Court continued: "Accordingly, we deem it
appropriate to defer to the 1976 Statement, which represents the SEC's
interpretation of the election exclusion the last time the Rule was
substantively revised." Id. The AIG Court then decided the matter based upon the
Commission's initial 1976 guidance.
Here, it is would appear that the Staff may have issued no-action letters
inconsistent with the plain guidance contained in the 1998 Release. Accordingly,
we submit that those post-1998 no-action letters cited by the Company regarding
"social policy" proposals purportedly analogous to the Proposal cannot properly
support the exclusion of the Teachers' Proposal.
Finally, there are two recent no-action decisions which support denial of the
Company's request. The Staff refused to allow exclusion of two proposals calling
for companies to adopt non-discrimination policies, one element of which was
"Corporate advertising policy will avoid the use of negative stereotypes based
on sexual orientation or gender identity." Aquila, Inc. (March 2, 2006); Armor
Holdings, Inc. (April 3, 2007). The Staff rejected arguments that those
proposals could be excluded as relating to ordinary business. It should do so
here, as well.
As the 1998 Release provides no basis for excluding the Teachers' Proposal, the
Company has failed to carry its burden of proving that the Proposal may be
excluded under Rule 14a-8(i)(7).
III. Conclusion
For the reasons stated above, the Teachers respectfully submit that the
Company's request for "no-action" relief should be denied. Should you have any
questions or require any additional information, please contact me.
Thank you for your time and consideration.
Very truly yours,
/s/
Janice Silberstein
Associate General Counsel
cc: Meredith B. Cross, Esq.
WilmerHale, LLP
1875 Pennsylvania Avenue, NW
Washington, DC 20006
[APPENDIX 2]
REDLINE OF TEACHERS' 2007 DISNEY PROPOSAL VERSUS 2006 PROPOSAL
Submitted by William C. Thompson, Jr., Comptroller, City of New York, on behalf
of the Board[Boards] of Trustees of the New York City Teachers' Retirement
System
NEGATIVE AND DISCRIMINATORY STEREOTYPING IN DISNEY PRODUCT[ION]S
Whereas, a number of educational groups, including Teaching Tolerance
(www.tolerance.org) and Educators for Social Responsibility
(www.esrnational.org), have drawn attention to Disney's use of negative and
discriminatory racial, ethnic and gender stereotypes in its animated films and
associated products, and
Whereas, we believe that negative generalizations that are assigned to groups of
people by race, class, gender, religion, or country of origin in Disney products
can have a harmful impact on the social, psychological and educational
development of, and opportunities provided to, both children and adults, and can
also help foster negative impressions of U.S cultural influence abroad,
Therefore, be it resolved, that shareholders request that management report on
steps the company is currently taking[undertaking and will undertake,] to avoid
the use of negative and discriminatory racial, ethnic and gender stereotypes in
its products.
The report should include:
1. A statement of the existing company policy regarding the avoidance of
negative stereotyping and discrimination in Disney's portrayal of racial and
ethnic minorities, and women, in all phases of production, marketing and
promotion, and the procedures currently used to inform company personnel of this
policy; and
2. A description of Disney's existing[the] process for ensuring non-racist,
non-sexist depictions and images in all of its products, irrespective of the
geographic market of the product.
[INQUIRY LETTER]
November 21, 2007
By electronic mail (cfletters@sec.gov)
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: The Walt Disney CompanyResponse to Proponent's Letter dated November 16,
2007
Ladies and Gentlemen:
This letter is in response to the letter dated November 16, 2007 to you from
Janice Silberstein, Associate General Counsel of the Office of the Comptroller
of the City of New York, on behalf of the Teachers' Retirement System of the
City of New York (the "Proponent"), a copy of which is attached hereto as
Exhibit A (the "Proponent's Letter"). In the Proponent's Letter, the Proponent
requests that the Staff of the Division of Corporation Finance not grant the
no-action request dated October 16, 2007 (the "October Letter") submitted by us
on behalf of our client, The Walt Disney Company ("Disney"). Capitalized terms
used herein and not otherwise defined herein have the meanings set forth in the
October Letter.
The Proposal requests a report on the steps Disney "is currently taking to avoid
the use of negative and discriminatory racial, ethnic and gender stereotypes in
its products." As noted in the October Letter, the Proponent submitted a nearly
identical proposal to Disney last year, and the Staff granted Disney's request
for no-action under the ordinary business exclusion in Rule 14a-8(i)(7), and
reaffirmed that decision upon request for reconsideration by the Proponent. See
The Walt Disney Company (avail. Nov. 22, 2006; recon. denied January 5, 2007)
(the "2007 No-Action Letter"). After reviewing the Proponent's Letter, we
continue to believe that the Proposal may properly be excluded under Rule
14a-8(i)(7).
Like last year, the Proponent attempts to characterize the Proposal as
comparable to an employment discrimination proposal, and, as a result, asserts
that it may not be excluded as relating to Disney's ordinary business under the
Commission's statements relating to "significant discrimination matters" in the
1998 Release. The Proponent claims that the Proposal is significantly different
from the 2007 Proposal in that, in the Proponent's view, it focuses more
directly on discrimination matters. According to the Proponent, this year's
Proposal relates to avoidance of employment discrimination that the Proponent
believes would result from negative stereotypes allegedly included in Disney's
products. After describing various studies concerning the possible sources of
discriminatory behavior, the Proponent asserts that negative stereotyping has
been shown to cause discrimination and that Disney has used racial, gender and
ethnic stereotypes in its products. Finally, the Proponent claims that the
numerous precedents we have cited to support the application of Rule 14a-8(i)(7)
either do not support our view or are incorrect. Each of these assertions is
clearly incorrect.
As with the 2007 Proposal, it is clear that the Proposal deals directly with
Disney's ordinary businessthat is, decisions involving the nature, content and
presentation of its animated films and the marketing and production of the films
and related products. As noted in our October Letter, the Staff has consistently
affirmed that shareholder proposals concerning the nature, presentation and
content of programming and film production, including proposals relating to
alleged racial, ethnic, religious or gender matters, are excludable under Rule
14a-8(i)(7) 8(i)(7) as matters relating to the conduct of ordinary business
operations. See Staff No-Action letters cited in the October Letter. The
Proponent attempts to avoid this clearly controlling precedent by
mischaracterizing its Proposal as relating to employment discrimination through
an attenuated chain of possible events, when it is plain that the Proposal
relates specifically to the depiction of characters and similar matters in
Disney's products. Thus, like the 2007 Proposal, the Proposal is excludable
under Rule 14a-8(i)(7).
The Proponent includes a lengthy discussion of instances that it claims
represent negative stereotyping in Disney's products. While this is not the
place to debate the issue, we wish to emphasize that Disney strongly opposes the
use of negative or discriminatory stereotypes based on race, ethnicity, religion
or gender in its products and disputes the Proponent's characterization of its
products.
None of the Staff no-action letters, SEC releases or court decisions cited in
the Proponent's Letter change the analysis or the result concerning the
application of Rule 14a-8(i)(7) to the Proposal. As noted above, the Staff's
no-action letters consistently permit exclusion of proposals like the Proposal
under the ordinary business exclusion. Two recent noaction action letters cited
by the Proponent as supporting inclusion of its ProposalAquila, Inc. (avail.
March 2, 2006) and Armor Holdings, Inc. (avail. April 3, 2007)addressed
proposals directly relating to employment policies prohibiting discrimination
based on sexual orientation and gender identity. These letters, which appear to
be governed by the 1998 Release, do not support the Proponent's position.
Finally, as it did last year, the Proponent asserts that as a result of the
Second Circuit's decision in American Federation of State, County and Municipal
Employees v. American International Group, Inc., 462 F.3d 121 (2d Cir. 2006)
(the "AIG Decision"), the Staff's noaction letters that permit exclusion of
proposals like the Proposal should not be given any weight because they conflict
with the 1998 Release. As we explained last year, the AIG Decision has no
application to the Proposal. The AIG Decision dealt with the exclusion in Rule
14a-8(i)(8) of proposals relating to election for membership on a company's
board. The Second Circuit objected to Staff no-action positions that it thought
were inconsistent with a prior public Commission statement the last time the
rule was substantively revised, and reversed the Staff's position. The Staff's
no-action letters regarding the exclusion of proposals concerning the nature,
presentation and content of programming and film production, including proposals
relating to alleged racial, ethnic, religious or gender matters, are not
inconsistent with the 1998 Release. The 1998 Release addressed matters of
employment discrimination and neither the Proposal nor the no-action letters on
which we rely address employment discrimination.
* * * * * * * * * *
For the reasons set forth above and in our October Letter, we believe that the
Proposal is properly excludable under Rule 14a-8(i)(7). Accordingly, on behalf
of Disney we respectfully request that the Staff not recommend to the Commission
that any enforcement action be taken if Disney excludes the Proposal from its
2008 Proxy Materials under Rule 14a-8(i)(7) because the Proposal relates to
Disney's ordinary business operations.
Please do not hesitate to call me at 202.663.6644 or Roger Patterson of Disney
at 818.560.6126 if you require additional information. We request that you
transmit your response by facsimile to the undersigned at 202.663.6363 and
understand that you can transmit your response to the Proponent care of Patrick
Doherty at 212.669.4072.
Thank you for your attention to this matter.
Sincerely,
/s/
Meredith B. Cross
Attachment: Exhibit A
cc: Alan N. BravermanSenior Executive Vice President, General Counsel and
Secretary, The Walt Disney Company
Roger J. PattersonManaging Vice President, Counsel, The Walt Disney Company
Patrick DohertyOffice of the Comptroller of New York City
Janice SilbersteinOffice of the Comptroller of New York City
[INQUIRY LETTER]
November 27, 2007
BY EMAIL and EXPRESS MAIL
Securities and Exchange Commission
Division of Corporation Finance
Office of the Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: The Walt Disney Company Proposal submitted by the Teachers' Retirement
System of the City of New York ("Teachers")
To Whom It May Concern:
This letter is in brief response to the November 21, 2007 reply letter from The
Walt Disney Company ("Disney") to the Securities and Exchange Commission, as to
Disney's request to exclude Teachers' Proposal for a report on Disney's policies
for avoiding discriminatory racial, ethnic and gender stereotypes. Disney's
continued mischaracterization in its letter of the Teachers' Proposalas not
relating to employment discriminationis made possible only by Disney's ignoring
Teachers' detailed presentation, in its November 16, 2007 letter to the
Commission (at pp. 4-6), showing how respected academic scholars and the United
States Supreme Court have found that such negative stereotyping leads directly
to employment discrimination. Indeed, Disney's complete failure to address the
Teachers' presentation confirms that Disney has no answer to it.
Accordingly, as the Proposal does relate to the avoidance of employment
discrimination, it transcends "ordinary business," and we respectfully submit
that Disney's no-action request should be denied.
Very truly yours,
/s/
Janice Silberstein
cc: Meredith B. Cross, Esq.
WilmerHale, LLP
1875 Pennsylvania Avenue, NW
Washington, DC 20006
[STAFF REPLY LETTER]
November 30, 2007
Response of the Office of Chief Counsel Division of Corporation Finance
Re: The Walt Disney Company
Incoming letter dated October 16, 2007
The proposal requests a report on steps Disney is taking to avoid the use of
negative and discriminatory racial, ethnic and gender stereotypes in its
products.
There appears to be some basis for your view that Disney may exclude the
proposal under rule 14a-8(i)(7), as relating to Disney's ordinary business
operations (i.e., the nature, presentation and content of programming and film
production). Accordingly, we will not recommend enforcement action to the
Commission if Disney omits the proposal from its proxy materials in reliance on
rule 14a-8(i)(7).
Sincerely,
/s/
Mark F. Vilardo
Special Counsel
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