Company Name: Dow Chemical Co.
Public Availability Date: January 31, 2008Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 8, 2008
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Stockholder Proposal of The Great Neck Capital Appreciation LTD Partnership
Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that our client, The Dow Chemical Company (the
"Company"), intends to omit from its proxy statement and form of proxy for its
2008 Annual Meeting of Stockholders (collectively, the "2008 Proxy Materials") a
stockholder proposal (the "Proposal") received from The Great Neck Capital
Appreciation LTD Partnership, naming John Chevedden as its designated
representative (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 the Company 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 stockholder 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
the Company pursuant to Rule 14a-8(k).
THE PROPOSAL
The Proposal requests that the board of directors of the Company (the "Board")
amend the Company's "bylaws and any other appropriate governing documents in
order that there is no restriction on the shareholder right to call a special
meeting, compared to the standard allowed by applicable law on calling a special
meeting." The Proposal also includes statements in support thereof (the
"Supporting Statement") advocating the need for "[s]hareholder control over
timing" of special meetings and the need for special meetings to consider
"takeover offer[s]," "major acquisition[s]" and "restructuring[s]." A copy of
the Proposal, as well as related correspondence with the Proponent, is attached
to this letter as Exhibit A.
BASES FOR EXCLUSION
We believe that the Proposal may properly be excluded from the 2008 Proxy
Materials pursuant to:
Rule 14a-8(i)(2) because implementation of the Proposal would cause the
Company to violate state law; and
Rule 14a-8(i)(3) because the Proposal is impermissibly vague and indefinite so
as to be inherently misleading.
Alternatively, if the Staff declines to concur that the Proposal is excludable
in its entirety on the bases described above, we respectfully request that the
Staff concur in the exclusion under Rule 14a-8(i)(3) of a portion of the
Supporting Statement that is materially false and misleading in violation of
Rule 14a-9.
ANALYSIS
I. The Proposal May Be Excluded under Rule 14a-8(i)(2)
Because Implementation of the Proposal Would Cause the Company To Violate State
Law.
Rule 14a-8(i)(2) permits a company to exclude a stockholder proposal if
implementation of the proposal would cause it to violate any state, federal or
foreign law to which it is subject. The Company is incorporated under the laws
of the State of Delaware. For the reasons set forth below and in the legal
opinion regarding Delaware law from Morris, Nichols, Arsht & Tunnell LLP,
attached hereto as Exhibit B (the "Delaware Law Opinion"), the Company believes
that the Proposal is excludable under Rule 14a-8(i)(2) because, if implemented,
the Proposal would cause the Company to violate the Delaware General Corporation
Law (the "DGCL").
The Proposal requests that the Board amend the Company's "bylaws and any other
appropriate governing documents in order that there is no restriction on the
shareholder right to call a special meeting, compared to the standard allowed by
applicable law on calling a special meeting." Further, the Proposal cites the
importance of "[s]hareholder control over timing" of special meetings and the
need for special meetings to be held to consider "takeover offer[s]," "major
acquisition[s]" and "restructuring[s]." However, Delaware law provides
restrictions with respect to these same matters. Thus, as discussed below and as
supported by the Delaware Law Opinion, implementation of the Proposal would
cause the Company to violate state law since the Proposal requests "no
restriction" on the right of stockholders to call special meetings.
As discussed in the Delaware Law Opinion, the Company's Board of Directors
"cannot adopt a bylaw that guarantees each ... stockholder the unrestricted
right to call a special meeting because all special meetings are subject to
certain restrictions, imposed by the DGCL, that cannot be eliminated by a bylaw
or any other `governing document'...." Specifically, Delaware law limits the
subject matter to be considered at special meetings of stockholders and the
ability of stockholders to control the timing of special meetings. For example,
as stated in the Delaware Law Opinion, "Section 222(b) of the DGCL specifies
that a special meeting cannot be held on less than ten days' notice to the
stockholders." In contrast, the Supporting Statement indicates that the Proposal
is necessary because "[s]hareholder control over timing" of special meetings is
"especially" important in certain situations.
The Proposal also calls for the amendment of the Company's bylaws or other
governing documents to enable a stockholder to call a meeting with "no
restriction" on what the stockholder specifies as the purpose of the meeting,
which would include even matters that are not a proper subject for stockholder
action. The Supporting Statement specifically discusses giving stockholders the
ability to unilaterally call a special meeting for the purpose of considering
these improper matters, including "takeover offer[s]," "major acquisition[s]"
and "restructuring[s]." As discussed in the Delaware Law Opinion, "under the
DGCL, a stockholder cannot call a special meeting to enable the stockholders to
vote on merger agreements or charter amendments because the DGCL does not permit
stockholders to vote on such items unless they have first been approved by the
Board and then submitted for stockholder approval." Thus, the Proposal seeks to
create rights that are inconsistent with the DGCL.
The Staff previously has concurred with the exclusion, under Rule 14a-8(i)(2) or
its predecessor, of stockholder proposals that requested the adoption of a
by-law or charter amendment that was invalid because it would violate state law,
even when the proposal is phrased in precatory terms. See, e.g., PG&E Corp.
(avail. Feb. 14, 2006) (Staff concurred with omission of a proposal requesting
the amendment of the company's governance documents to institute majority voting
in director elections because Section 708(c) of the California Corporation Code
required that plurality voting be used in the election of directors);
Hewlett-Packard Co. (avail. Jan. 6, 2005) (Staff concurred with omission of a
proposal recommending that the company amend its bylaws so that no officer may
receive annual compensation in excess of certain limits without approval by a
vote of "the majority of the stockholders" because Delaware law requires per
share voting, not per capita voting as requested in the proposal); GenCorp Inc.
(avail. Dec. 20, 2004) (Staff concurred with the exclusion of a proposal
requesting an amendment to the company's governing instruments to provide that
every stockholder resolution approved by a majority of the votes cast be
implemented by the company because the proposal would conflict with Section
1701.59(A) of the Ohio Revised Code regarding the fiduciary duties of
directors). See also The Boeing Co. (avail. Mar. 4, 1999) (Staff concurred with
the exclusion of a proposal requesting that every corporate action requiring
stockholder approval be approved by a simple majority vote of shares since the
proposal would conflict with provisions of the DGCL that require a vote of at
least a majority of the outstanding shares on certain issues); Tribune Co.
(avail. Feb. 22, 1991) (Staff concurred with the exclusion of a proposal
requesting that the company's proxy materials be mailed at least 50 business
days prior to the annual meeting since the proposal would conflict with Sections
213 and 222 of the DGCL, which set forth certain requirements regarding the
notice of, and the record date for, stockholder meetings).
The Proposal requests that the Board act so that there is "no restriction on the
shareholder right to call a special meeting, compared to the standard allowed by
applicable law on calling a special meeting." However, Delaware law imposes
certain restrictions on the procedures for calling, and the substance of,
special meetings, none of which can be altered by the Company. Therefore, the
Proposal is excludable pursuant to Rule 14a-8(i)(2) because, as supported by the
Delaware Law Opinion, implementation of the Proposal would cause the Company to
violate applicable state law.
II. The Proposal May Be Excluded under Rule
14a-8(i)(3) Because It Is Impermissibly Vague and Indefinite so as To Be
Inherently Misleading.
Rule 14a-8(i)(3) permits the exclusion of a stockholder proposal if the proposal
or supporting statement is contrary to any of the Commission's proxy rules or
regulations, including Rule 14a-9, which prohibits materially false or
misleading statements in proxy soliciting materials. For the reasons discussed
below, the Proposal is impermissibly misleading and vague and, therefore, is
excludable under Rule 14a-8(i)(3).
The Staff consistently has taken the position that vague and indefinite
stockholder proposals are inherently misleading and therefore excludable under
Rule 14a-8(i)(3) because "neither the stockholders voting on the proposal, nor
the company in implementing the proposal (if adopted), would be able to
determine with any reasonable certainty exactly what actions or measures the
proposal requires." Staff Legal Bulletin No. 14B (Sept. 15, 2004) ("SLB 14B").
In this regard, the Staff has permitted the exclusion of a variety of
stockholder proposals, including proposals requesting amendments to a company's
charter or bylaws. For example, in Alaska Air Group Inc. (avail. Apr. 11, 2007),
the Staff concurred with the exclusion of a stockholder proposal requesting that
the company's board amend the company's governing instruments to "assert, affirm
and define the right of the owners of the company to set standards of corporate
governance" as "vague and indefinite." See also Peoples Energy Corp. (avail.
Nov. 23, 2004) (concurring in the exclusion as vague of a proposal requesting
that the board amend the charter and bylaws "to provide that officers and
directors shall not be indemnified from personal liability for acts or omissions
involving gross negligence or reckless neglect").
Moreover, the Staff has on numerous occasions concurred that a proposal was
sufficiently misleading so as to justify exclusion where a company and its
stockholders might interpret the proposal differently, such that "any action
ultimately taken by the [c]ompany upon implementation [of the proposal] could be
significantly different from the actions envisioned by shareholders voting on
the proposal." Fuqua Industries, Inc. (avail. Mar. 12, 1991). See also Bank of
America Corp. (avail. June 18, 2007) (concurring with the exclusion of a
stockholder proposal calling for the board of directors to compile a report
"concerning the thinking of the Directors concerning representative payees" as
"vague and indefinite"); Puget Energy, Inc. (avail. Mar. 7, 2002) (permitting
exclusion of a proposal requesting that the company's board of directors "take
the necessary steps to implement a policy of improved corporate governance");
Dyer v. SEC, 287 F.2d 773, 781 (8th Cir. 1961) ("[I]t appears to us that the
proposal, as drafted and submitted to the company, is so vague and indefinite as
to make it impossible for either the board of directors or the stockholders at
large to comprehend precisely what the proposal would entail.").
While the Proposal is not a model of clarity, on its face it requests that the
Board amend the bylaws and any other appropriate governing documents to place
"no restriction" on the right of stockholders to call special meetings, without
regard to the requirements set forth in Delaware corporate law related to
stockholders calling special meetings. Reading the Supporting Statement
reinforces that the Proposal appears to request that the Board eliminate even
restrictions set forth under state law, because as noted above the Supporting
Statement references to the need for stockholder control over the timing and
subject matter of special meetings. If the Proponent intends another meaning of
the Proposal, the language of the Proposal and Supporting Statement does not
make that meaning evident and only serves to demonstrate the vagueness of, and
ambiguities in, the Proposal. For example, the Proposal references "no
restriction" on the "right" of stockholders to call special meetings "compared
to the standard allowed by applicable law on calling a special meeting."
However, under Delaware law stockholders do not possess a "right" to call
special meetings; only the board of directors is specifically granted the power
to call special meetings. See DGCL, 211(d). In addition, while Delaware law
imposes some restrictions on stockholders' ability to call special meetings (as
discussed above), it otherwise "allows" for the adoption of a wide variety of
bylaw or charter provisions to enable stockholders to call a special meeting.
Stated differently, Delaware law does not establish a default standard for when
stockholders can call a special meeting; a provision authorizing a special
meeting to be called by holders of 40% of a company's common shares or by any
person who has held more than 25% of a company's common shares for more than a
year would each be "allowed by applicable law," as would many other standards.
Thus, in the absence of default standards in Delaware law, the reference to a
"comparison" to the "standard allowed by applicable law" fails to clarify the
Proposal's meaning, leaving it vague and misleading.
Similar to the Staff's findings on numerous occasions, the Company's
stockholders "cannot be expected to make an informed decision on the merits of
the Proposal without at least knowing what they are voting on." Here, the
Proposal is comparable to others proposals that the staff has permitted
companies to exclude due to vague language and references that do not inform
stockholders of the manner in which the proposal is intended to operate or that
conflict with state law. The Boeing Corp. (avail. Feb. 10, 2004) (concurring
that a proposal that the company amend its bylaws to require that an independent
director serve as chairman could be excluded under Rule 14a-8(i)(3) "as vague
and indefinite because it fails to disclose to shareholders the definition of
`independent director' that it seeks to have included in the bylaws"); State
Street Corp. (avail. Mar. 1, 2005) (Staff concurred that a proposal could be
excluded where it referenced state laws that were not applicable to the
company); see also Capital One Financial Corp. (avail. Feb. 7, 2003) (excluding
a proposal under Rule 14a-8(i)(3) where the company's stockholders "would not
know with any certainty what they are voting either for or against"). Moreover,
neither the Company's stockholders nor the Board would be able to determine with
any certainty what actions the Company would be required to take in order to
comply with the Proposal. Accordingly, we believe that as a result of the vague
and indefinite nature of the Proposal, the Proposal is impermissibly misleading
and, thus, excludable in its entirety under Rule 14a-8(i)(3).
III. The Proposal Requires Revision Because the
Proposal Contains False and Misleading Statements in Violation of Rule 14a-9.
Should the Staff not concur that the Proposal is excludable under Rule
14a-8(i)(2) or Rule 14a-8(i)(3) as set forth above, we respectfully request that
the Staff concur in the exclusion of a portion of the Supporting Statement in
accordance with Rule 14a-8(i)(3). Rule 14a-8(i)(3) permits the exclusion or
revision of a stockholder proposal or supporting statement if the proposal or
supporting statement is contrary to any of the Commission's proxy rules or
regulations (including Rule 14a-9, which prohibits materially false or
misleading statements).
In SLB 14B, the Staff clarified its views regarding when modification or
exclusion of a stockholder proposal or supporting statement is appropriate under
Rules 14a-8(i)(3) and 14a-9. Moreover, the Staff has indicated that modification
or exclusion is appropriate when "the company demonstrates objectively that a
factual statement is materially false or misleading." Specifically, the
Supporting Statement indicates, "Fidelity and Vanguard support a shareholder
right to call a special meeting," which we believe is materially false and
misleading. The Proponent makes this statement in an attempt to bolster support
for the Proposal, which would place "no restriction on the shareholder right to
call a special meeting." However, according to Vanguard's proxy voting
guidelines, Vanguard's "funds support shareholders' right to call special
meetings of the board (for good cause and with ample representation) and to act
by written consent. The funds will generally vote for proposals to grant these
rights to shareholders and against proposals to abridge them" (emphasis added).
Exhibit C. Similarly, Fidelity's proxy voting guidelines contain no reference to
an unqualified right of stockholders to call special meetings. See Exhibit C.
The Proposal's reference to Fidelity and Vanguard's "support [of] a shareholder
right to call a special meeting" suggests that these well-known, influential
institutional investors support the Proposal's request for there to be "no
restriction" on the right to call a stockholder meeting, which is materially
false and misleading.
In an analogous situation, the company in Bob Evans Farms, Inc. (avail. June 26,
2006) sought the exclusion of contact information for the five largest
stockholders of the company from a proposal where the inclusion of that
information suggested, without any actual support, that those stockholders
supported the proposal. The Staff permitted the exclusion of that portion of the
stockholder proposal as being "materially false or misleading." Moreover, the
Staff has on many occasions permitted companies to rely on Rule 14a-8(i)(3) to
exclude proposals or portions of proposals from proxy statements when those
portions made the proposal materially false or misleading. See e.g., Bank of
America Corp. (avail. Feb. 12, 2007) (permitting the exclusion of a portion of a
proposal as "materially false and misleading" where the company argued the
portion was unrelated and irrelevant to the actions requested by the proposal);
Procter & Gamble Co. (avail. Jul. 15, 2004) (permitting the exclusion of
portions of a stockholder proposal as "materially false and misleading" where
the portions mischaracterized the company's animal research); Amerada Hess Corp.
(avail. Mar. 15, 2004); Kerr-McGee Corp., (avail. Mar. 15, 2004).
For the reasons stated above, we respectfully submit that the Proposal must be
amended to delete the sentence "Fidelity and Vanguard support a shareholder
right to call a special meeting" because it is materially false and misleading
under Rule 14a-8(i)(3).
CONCLUSION
Based upon the foregoing analysis, we respectfully request that the Staff concur
that it will take no action if the Company excludes the Proposal from its 2008
Proxy Materials. Alternatively, should the Staff not concur that the Proposal is
excludable in its entirety, we respectfully request that the Staff concur in the
exclusion of a portion of the Supporting Statement in accordance with Rule
14a-8(i)(3). 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 be of any further assistance in this matter, please do not hesitate to
call me at (202) 955-8671, my colleague Elizabeth A. Ising at (202) 955-8287 or
Thomas E. Moran, the Company's Assistant Secretary and Counsel, at (989)
638-2176.
Sincerely,
/s/
Ronald O. Mueller
Enclosure
cc: Thomas E. Moran, The Dow Chemical Company
John Chevedden
[APPENDIX 1]
November 5, 2007
Mr. Andrew N. Liveri
Chaiman
Dow Chemical Company (DOW)
2030 Dow Center
Midland MI 48674
Rule 14a-8 Proposal
Dear Mr. Liveri.
This Rule 14a-8 proposal is respectfully submitted in support of the long-term
performance of our company. This proposal is submitted for the next annual
shareholder meeting. Rule 14a-8 requirements are intended to be met including
the continuous ownership of the required stock value until after the date of the
respective shareholder meeting and the presemation of this proposal at the
annual meeting. This submitted format with the shareholder-supplied emphasis, is
intended to be used for definitive proxy publication. This is the proxy for John
Chevedden and/or his designee to act on my behalf regarding this Rule 14a-8
proposal for the fortheoming shareholder meeting before, during and after the
forthcoming shareholder meeting. Please direct all future communication to John
Chevedden at:
olmsted7p (at) earthlink.net
(In the interest of company cost savings and improving the efficiency of the
rule 14a-8 process please communicate via email.)
PH: 310-371-7872
2215 Nelson Ave., No. 205, Redondo Beach, CA 90278
Your consideration and the consideration of the Board of Directors is
appreciated in support of the long-term performance of our company. Please
acknowledge receipt of this proposal by email.
Sincerely,
/s/
Mark Eiliberto,
General Partner
cc: Charles J. Kali
Corporate Secretary
PH: 989 636-1000
FX: 989 636-3518
Thomas Moran
Assistant Secretary
PH: 989-638-2176
FX: 989-638-1740
[APPENDIX 2]
[DOW: Rule 14a-8 Proposal, November 8, 2007]
3 - Special Shareholder Meetings
RESOLVED, Special Shareholder Meetings, Shareholders ask our board to amend our
bylaws and any other appropriate governing documents in order that there is no
restriction on the shareholder right to call a special meeting, compared to the
standard allowed by applicable law on calling a special meeting.
Special meetings allow investors to vote on important matters, such as a
takeover offer, that can arise between annual meetings. If shareholders cannot
call special meetings, management may become insulated and investor returns may
suffer.
Shareholders should have the ability to call a special meeting when they think a
matter is sufficiently important to merit expeditious consideration. Shareholder
control over timing is especially important regarding a major acquisition or
restructuring, when events unfold quickly and issues may become moot by the next
annual meeting.
Fidelity and Vanguard support a shareholder right to call a special meeting. The
proxy voting guidelines of many public employee pension funds, including the New
York City Employees Retirement System, also favor this right. Governance ratings
services, such as The Corporate Library and Governance Metrics International,
take special meeting rights into account when assigning company ratings.
Eighteen (18) proposals on this topic averaged 56%-support in 2007 - including
74%-support at Honeywell (HON) according to RiskMetrics (formerly Institutional
Shareholder Services).
Please encourage our board to respond positively to this proposal:
Notes:
Mark Filiberto, General Partner, The Great Neck Capital Appreciation LTD
Partnership, 1981 Marcus Ave., Suite C114, Lake Success, NY 11042 sponsored this
proposal.
The above format is requested for publication without re-editing, re-formatting
or elimination of text, including beginning and concluding text, unless prior
agreement is reached. It is respectfully requested that this proposal be
proofread before it is published in the definitive proxy to ensure that the
integrity of the submitted format is replicated in the proxy materials. Please
advise if there is any typographical question.
Please note that the title of the proposal is part of the argument in favor of
the proposal. In the interest of clarity and to avoid confusion the title of
this and each other ballot item is requested to be consistent throughout all the
proxy materials.
The company is requested to assign a proposal number (represented by "3" above)
based on the chronological order in which proposals are submitted. The requested
designation of "3" or higher number allows for ratification of auditors to be
item 2.
This proposal is believed to conform with Staff Legal Bulletin No. 14B (CF),
September 15, 2004 including:
Accordingly, going forward, we believe that it would not be appropriate for
companies to exclude supporting statement language and/or an entire proposal in
reliance on rule 14a-8(i)(3) in the following circumstances:
the company objects to factual assertions because they are not supported;
the company objects to factual assertions that, while not materially false or
misleading, may be disputed or countered:
the company objects to factual assertions because those assertions may be
interpreted by shareholders in a manner that is unfavorable to the company, its
directors, or its officers; and/or
the company objects to statements because they represent the opinion of the
shareholder proponent or a referenced source, but the statements are not
identified specifically as such.
See also: Sun Microsystems, Inc. (July 21, 2005).
Stock will be held until after the annual meeting and the proposal will be
presented at the annual meeting.
Please acknowledge this proposal promptly by email and advise the most
convenient fax number and email address to forward a broker letter, if needed,
to the Corporate Secretary's office.
[INQUIRY LETTER]
January 9, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
# 1 Dow Chemical Company (DOW)
Shareholder Position on Company No-Action Request
Rule 14a-8 Proposal: Special Shareholder Meetings
The Great Neck Capital Appreciation LTD Partnership
Ladies and Gentlemen:
The January 8, 2008 company no action request appears to be a deliberate
misreading of the resolution which in fact states:
RESOLVED, Special Shareholder Meetings, Shareholders ask our board to amend our
bylaws and any other appropriate governing documents in order that there is no
restriction on the shareholder right to call a special meeting, compared to the
standard allowed by applicable law on calling a special meeting.
In other words the proposal asks that the board amend the bylaws and any other
appropriate governing documents in order that there is no limit on the
shareholder right to call a special meeting compared to, relative to or
consistent with the limits allowed by the applicable Delaware law on
shareholders calling a special meeting.
The company provides no definition of the "compared to" phrase used in the
resolution that supports its conclusion of absolutely "no restriction."
Since the proposal establishes as a floor the limits called for by Delaware law,
the rule 14a-8 proposal does not restrict the company in its adherence to
Delaware law.
Thus the text in the supporting statement about enabling shareholders to have
some control over the timing and subject matter of a special meeting is again
calling attention to this issue within the limits allowed by the applicable
Delaware law on shareholders calling a special meeting.
Although the company argument is not clear it seems to claim that there is no
explicit "default standard" or bold heading of "default standard" in Delaware
law regarding shareholders calling special meetings and thus there is
purportedly no way to determine what is allowed by Delaware law on shareholders
calling special meetings. Apparently the company cannot accept the concept of an
implicit default standard based on analyzing the text of a statute.
The company bolsters the text in the resolution regarding Fidelity and Vanguard,
as a supplement to its deliberate misreading of the resolved statement, and then
complains to the staff about its own bolstered text. For instance the company
has essentially rewritten a proposal sentence to read that Fidelity and Vanguard
are among the mutual funds supporting "an unqualified right of shareholders" to
call a special meeting and then the company attacks its own words. There is no
text in the proposal about "an unqualified right of shareholders" in regard to
special meetings and therefore the company argument is misleading.
A copy of this letter is forwarded to the company in a non-PDF email. In order
to expedite the rule 14a-8 process it is requested that the company forward any
addition rule 14a-8 response in the same type format to the undersigned.
For these reasons it is requested that the staff find that this resolution
cannot be omitted from the company proxy. It is also respectfully requested that
the shareholder have the last opportunity to submit material in support of
including this proposalsince the company had the first opportunity.
Sincerely,
John Chevedden
cc:
The Great Neck Capital Appreciation LTD Partnership
Thomas Moran<temoran@dow.com>
Assistant Secretary
[INQUIRY LETTER]
January 24, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
# 2 Dow Chemical Company (DOW)
Shareholder Position on Company No-Action Request
Rule 14a-8 Proposal: Special Shareholder Meetings
The Great Neck Capital Appreciation LTD Partnership
Ladies and Gentlemen:
In further response to the January 8, 2008 company no action request that claims
this Delaware company is unable to adopt this resolutionthis is a timely
example of a Delaware company adopting this exact same resolution (bold added):
Form 8-K for BORDERS GROUP INC
18-Jan-2008
ITEM 5.03. AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGES IN FISCAL
YEAR
On and effective as of January 17, 2007, the Board of Directors adopted the
Fourth Amendment to the restated By-Laws of the Company. The purpose of the
Fourth Amendment was to provide that Special Meetings of Stockholders, for any
purpose or purposes, may be called by the Chief Executive Officer or by the
Board of Directors acting pursuant to a resolution adopted by a majority of the
entire Board of Directors, and shall be called by the Secretary upon the request
of the holders of at least twenty-five percent (25%) of the shares of the
Corporation outstanding and entitled to vote at the meeting. A copy of the
Fourth Amendment to the Restated By-Laws of the Company is attached hereto as
Exhibit 3.7 and is incorporated herein by reference.
This is evidence that this resolution is understood in practice and not just in
theory.
The January 8, 2008 company no action request appears to be an implicit
admission that the best way to attack this resolution is to redraft the original
resolution which states:
RESOLVED, Special Shareholder Meetings, Shareholders ask our board to amend our
bylaws and any other appropriate governing documents in order that there is no
restriction on the shareholder right to call a special meeting, compared to the
standard allowed by applicable law on calling a special meeting.
In other words the proposal asks that the board amend the bylaws and any other
appropriate governing documents in order that there is no limit on the
shareholder right to call a special meeting compared to, relative to or
consistent with the limits allowed by the applicable Delaware law on calling a
special meeting.
The company provides no definition of the "compared to" phrase used in the
resolution to support its conclusion of absolutely "no restriction."
Since the proposal establishes as a floor the limits called for by Delaware law,
the rule 14a-8 resolution does not restrict the company in its adherence to
Delaware law.
Thus the text in the supporting statement about enabling shareholders to have
some control over the timing of a special meeting is again calling attention to
this issue within the limits allowed by the applicable Delaware law on calling a
special meeting.
Although the company argument is not clear it seems to claim that there is no
explicit "default standard" or heading of "default standard" in Delaware law
regarding special meetings and thus there is no way to determine what is allowed
by Delaware law on special meetings. Apparently the company cannot accept the
concept of an implicit default standard based on analyzing the text of a
statute.
The company should not be permitted to unilaterally redraft this resolution in
key places and then argue that the company redrafting of the resolution should
be excluded (implicit company-added words are in bold):
RESOLVED, Special Shareholder Meetings, Shareholders ask our board to amend our
bylaws and any other appropriate governing documents in order that there is
absolutely no restriction on the shareholder right to call a special meeting,
regardless of the standard allowed by applicable law on calling a special
meeting.
The company also redrafts the supporting text in the resolution regarding
Fidelity and Vanguard, consistent with its redrafting of the resolved statement,
and then complains about its own redrafting. For instance the company has
essentially redrafted a proposal sentence to read that Fidelity and Vanguard
support "an unqualified right of shareholders" to call a special meeting and
then the company attacks its redrafting. There is no text in the proposal about
"an unqualified right of shareholders" in regard to special meetings and
therefore the company argument is false.
A copy of this letter is forwarded to the company in a non-PDF email. In order
to expedite the rule 14a-8 process it is requested that the company forward any
addition rule 14a-8 response in the same type format to the undersigned.
For these reasons it is respectfully requested that concurrence not be granted
to the company. It is also respectfully requested that the shareholder have the
last opportunity to submit material in support of including this proposalsince
the company had the first opportunity.
Sincerely,
John Chevedden
cc:
The Great Neck Capital Appreciation LTD Partnership
Thomas Moran<temoran@dow.com>
Assistant Secretary
[STAFF REPLY LETTER]
January 31, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: The Dow Chemical Company Incoming letter dated January 8, 2008
The proposal asks the board to amend the "bylaws and any other appropriate
governing documents in order that there is no restriction on the shareholder
right to call a special meeting, compared to the standard allowed by applicable
law on calling a special meeting."
There appears to be some basis for your view that
Dow Chemical may exclude the proposal under rule 14a-8(i)(3) as vague and
indefinite. Accordingly, we will not recommend enforcement action to the
Commission if Dow Chemical omits the proposal from its proxy materials in
reliance on rule 14a-8(i)(3). In reaching this position, we have not found it
necessary to address the alternative basis for omission upon which Dow Chemical
relies.
Sincerely,
/s/
Heather L. Maples
Special Counsel
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