Company Name: Exxon Mobil Corp.
Public Availability Date: February 7, 2008
Document Sections: INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 22, 2008
Direct Dial (202) 955-8653
Client No. C 26471-00003
Fax No. (202) 530-9677
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal of the AFL-CIO Reserve Fund Exchange Act of 1934Rule
14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that our client, Exxon Mobil Corporation (the
"Company"), intends to omit from its proxy statement and form of proxy for its
2008 Annual Meeting of Shareholders (collectively, the "2008 Proxy Materials") a
shareholder proposal and statements in support thereof (the "Proposal") received
from the AFL-CIO Reserve Fund (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 intends
to file its definitive 2008 Proxy Materials with the Commission; and
concurrently sent copies of this correspondence to the Proponent.
Rule 14a-8(k) provides that shareholder 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")
adopt a policy addressing conflicts of interest involving board members with
health industry affiliations. Specifically, the Proposal states:
Resolved: Shareholders request that the Board of Directors (the "Board") of
Exxon Mobil Corporation ("Exxon," or the "Company") adopt a policy addressing
conflicts of interest involving board members with health industry affiliations.
The policy shall provide for recusal from voting and from chairing board
committees when necessary. The policy shall address conflicts associated with
company involvement in public policy issues related to Board members' health
industry affiliations and shall be explicitly integrated with the Company's
existing policies regarding related party transactions. For the purposes of this
policy, "board members with health industry affiliations" means any Board member
who is also a director, executive officer or former executive officer of a
company or trade association whose primary business is in the health insurance
or pharmaceutical industries.
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 hereby respectfully request that the Staff concur in our view that the
Proposal may be excluded from the 2008 Proxy Materials pursuant to:
Rule 14a-8(i)(7) because the Proposal deals with matters related to the
Company's ordinary business operations; and
Rule 14a-8(i)(10) because the Company has substantially implemented the
Proposal.
ANALYSIS
I. The Proposal May Be Excluded under Rule 14a-8(i)(7)
Because It Deals with Matters Related to the Company's Ordinary Business
Operations.
Rule 14a-8(i)(7) permits the omission of a shareholder proposal dealing with
matters relating to a company's "ordinary business" operations. According to the
Commission release accompanying the 1998 amendments to Rule 14a-8, the
underlying policy of the ordinary business exclusion is "to confine the
resolution of ordinary business problems to management and the board of
directors, since it is impracticable for shareholders to decide how to solve
such problems at an annual shareholders meeting." Exchange Act Release No. 40018
(May 21, 1998) (the "1998 Release").
In the 1998 Release, the Commission described the two "central considerations"
for the ordinary business exclusion. The first is that certain tasks are "so
fundamental to management's ability to run a company on a day-to-day basis" that
they cannot be subject to direct shareholder oversight. The second consideration
relates to "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."
As discussed in more detail below, the Proposal relates to the Company's
ordinary business operations because: (A) the Proposal pertains to
implementation of policies and procedures relating to conflicts of interest or
health care matters; and (B) the Proposal relates to employee benefits. In
well-established precedent, the Staff consistently has concurred that
shareholder proposals relating to both of these matters implicate ordinary
business matters, and as such, these types of proposals are excludable under
Rule 14a-8(i)(7).
A. The Proposal Involves Ordinary Business Matters Because It Seeks to
Micro-Manage the Company's Policies and Procedures Relating to Conflicts of
Interest.
The Proposal requests that the Board adopt a policy addressing conflicts of
interest that arise as a result of Board members with "health industry
affiliations" and Company decision-making regarding health care. At the outset,
we note that the Company is primarily in the business of finding, gathering,
developing, producing, refining, processing, transporting, and selling oil and
gas and oil and gas products. Thus, the Company does not operate in the health
care industry, and the extent of its involvement in this regard is as a health
care consumer with respect to the benefits it provides its employees. Moreover,
the Company's Board and its committees typically do not engage in discussions
regarding "pharmaceutical or health insurance issues." Instead, the Company's
management is responsible for such matters as part of its day-to-day management
function.
The Staff repeatedly has concurred that, pursuant to Rule 14a-8(i)(7) or its
predecessor, a shareholder proposal relating to the adoption or amendment of
codes of conduct and related policies may be excluded, including proposals
relating to limiting potential director conflicts of interest. For example, in
Westinghouse Electric Corp. (avail. Jan. 28, 1997), the shareholder proposal
requested that the board "refrain from any business relationship with any
nonmanagement director for which the non-management director directly or
indirectly receives compensation beyond the director fee." The Staff concurred
with the exclusion of the proposal under the predecessor to Rule 14a-8(i)(7)
because the "proposal is directed at matters relating to the conduct of the [c]ompany's
ordinary business operations (i.e., business relationships)." Further, in
Genetronics Biomedical Corp. (avail. Apr. 4, 2003), a shareholder proposal
sought to require that the company's officers and directors avoid "all"
financial conflicts of interest and not do business with any company in which an
officer or director has a financial stake. The Staff concurred in the exclusion
of the proposal under Rule 14a-8(i)(7) because the proposal appeared to include
matters relating to non-extraordinary transactions.
More generally, in Costco Wholesale Corp. (avail. Dec. 11, 2003) the Staff
permitted the company to exclude under Rule 14a-8(i)(7) a proposal to develop a
"Code of Ethics that would ... address issues of bribery and corruption" and to
make a report thereon. The Staff stated that the proposal could be excluded
under Rule 14a-8(i)(7) "as relating to ordinary business operations (i.e., terms
of its code of ethics)." See also Verizon Communications Inc. (avail. Feb. 23,
2007) (shareholder proposal requesting the formation of a board committee to
monitor adherence to ethical business practices was excludable under Rule
14a-8(i)(7)); Chrysler Corp. (avail. Mar. 18, 1998) (permitting the exclusion of
a proposal that requested the board review or amend the code of standards for
the company's international operations); USX Corp. (avail. Dec. 28, 1995)
(permitting the exclusion of a proposal on the basis of "ordinary business
operations (i.e., the terms of a corporate Code of Ethics)" where the company
already maintained a comprehensive set of applicable policies); McDonald's Corp.
(avail. Mar. 19, 1990) (permitting the exclusion of a proposal requesting a
"code of business conduct" where one part of the code was to address
employer/employee relations and the company's business policies); NYNEX Corp.
(avail. Feb. 1, 1989) (permitting the exclusion of a proposal that requested an
amendment to the code of corporate conduct where the "particular topics to be
addressed in the [c]ompany's code of conduct" included the ordinary business
operations of the company); Transamerica Corp. (avail. Jan. 22, 1986) (allowing
the omission of a proposal requesting a code of corporate conduct addressing
relations with various constituencies, conflicts of interest and equal
employment opportunity).
The Proposal concerns conflicts of interest arising from directors with health
industry affiliations and Company decision-making regarding health care. As with
the shareholder proposals at issue in the precedents discussed above, the
Proposal concerns the Company's ordinary business operations because
decision-making regarding health care issues is a core function of management's
day-to-day operations. Moreover, the Proposal seeks to interfere with the
Company's activities in managing conflicts of interests. The Board's oversight
of potential director conflicts of interest in this regard is a complex process
that shareholders, "as a group, [are] not ... in a position to make an informed
judgment" about. See 1998 Release. Accordingly, the Proposal implicates the
Company's ordinary business operations and, thus, is excludable pursuant to Rule
14a-8(i)(7).
B. The Proposal Involves Ordinary Business Matters Because It Relates to
Employee Benefits.
The Proposal also is excludable under Rule 14a-8(i)(7) because it pertains to
health care costs and, thus, employee benefits. The design, maintenance, and
administration of health care coverage are part of the Company's ordinary
business operations. In its day-to-day employee benefits administration, the
Company determines the coverage and applicable eligibility requirements for
employees, retirees and others. Decisions that could impact the nature of health
care coverage provided to the Company's employees are best left to those who
handle such decisions on a daily basis. However, as discussed below, the
Proposal clearly seeks to interfere with such decision-making.
The Staff has found on several recent occasions that proposals pertaining to a
company's health care costs are excludable. See General Motors Corp. (avail.
Apr. 11, 2007); Target Corp. (avail. Feb. 27, 2007). In General Motors and
Target, the Staff concurred that a proposal involved a matter of ordinary
business where the proposal requested the board to prepare a report examining
the implications of rising health care expenses and how each company was
addressing that public policy issue without compromising the health and
productivity of its workforce. These recent letters are supported by ample
precedent. See, e.g., General Motors Corp. (avail. Mar. 24, 2005), (concurring
in the exclusion of a shareholder proposal requesting the formation of a
"directors committee to develop specific reforms for the health cost problem"
because it related to "employee benefits"). The Proposal requests that the Board
develop a policy addressing conflicts of interest that arise from Board members
with health industry affiliations making decisions regarding "pharmaceutical or
health insurance issues." The Proposal suggests that the benefits to the Company
of such a policy could include the Company increasing health care coverage and
lowering the attendant costs. In this regard, the Proposal states, "[h]ealth
care costs could be cut by as much as $1,160 per employee if Congress enacted
universal health insurance and required Medicare to negotiate prescription drug
prices directly with pharmaceutical companies." Moreover, the Proposal asserts
that a policy addressing conflicts of interests on these matters "could benefit
the Company," presumably by lowering the cost of health insurance.
The Proposal suggests that eliminating potential director conflicts of interest
could lead to comprehensive health insurance, which would result in lower health
care costs for the Company. Thus, the Proposal is excludable pursuant to Rule
14a-8(i)(7) because it relates to health care costs and employee benefits.
II. The Proposal May Be Excluded under Rule
14a-8(i)(10) Because it Has Been Substantially Implemented.
A. Background.
Rule 14a-8(i)(10) permits a company to exclude a shareholder proposal from its
proxy materials if the company has substantially implemented the proposal. The
Commission stated in 1976 that the predecessor to Rule 14a-8(i)(10) was
"designed to avoid the possibility of shareholders having to consider matters
which already have been favorably acted upon by the management...." Exchange Act
Release No. 12598 (July 7, 1976). When a company can demonstrate that it already
has taken actions to address each element of a shareholder proposal, the Staff
has concurred that the proposal has been "substantially implemented" and may be
excluded as moot. See, e.g., Exxon Mobil Corp. (avail. Jan. 24, 2001); The Gap,
Inc. (avail. Mar. 8, 1996); Nordstrom, Inc. (avail. Feb. 8, 1995). Moreover, a
proposal need not be "fully effected" by the company in order to be excluded as
substantially implemented. See Exchange Act Release No. 20091, at II.E.6. (Aug.
16, 1983); see also 1998 Release at n.30 and accompanying text. The Staff has
noted, "a determination that the company has substantially implemented the
proposal depends upon whether [the company's] particular policies, practices and
procedures compare favorably with the guidelines of the proposal." Texaco, Inc.
(avail. Mar. 28, 1991). In other words, substantial implementation under Rule
14a-8(i)(10) requires that a company's actions satisfactorily address the
underlying concerns of the proposal and that the essential objective of the
proposal has been addressed. See, e.g., Anheuser-Busch Cos., Inc. (avail. Jan.
17, 2007); ConAgra Foods, Inc. (avail. July 3, 2006); Johnson & Johnson (avail.
Feb. 17, 2006); The Talbots Inc. (avail. Apr. 5, 2002); Masco Corp. (avail. Mar.
29, 1999).
B. Existing Conflict of Interest Requirements Applicable to Company Directors.
The Company is listed on the New York Stock Exchange (the "NYSE") and, as such,
is required to comply with the NYSE's listing standards (the "Listing
Standards"). Section 303A.10 of the Listing Standards requires the Company to
adopt and disclose a code of business conduct and ethics for its directors. See
Exhibit B. Section 303A.10 states that a "conflict of interest" exists "when an
individual's private interest interferes in any way - or even appears to
interfere - with the interests of the corporation as a whole," which may include
when a director "takes actions or has interests that may make it difficult to
perform his or her company work objectively and effectively." To this end, the
Company has adopted a Code of Ethics and Business Conduct (the "Code"), which
includes the Conflicts of Interest Policy, and is applicable to Company
employees and members of the Board. See Exhibit C and available at http://www.exxonmobil.com/corporate/files/corporate/investor_governance_ethics.pdf.
The Company's Code includes a specific section on conflicts of interest, which
provides that all employees and directors are "expected to avoid any actual or
apparent conflict between their own person interests and the interests of the
[Company]", which could arise when the director or employee "takes actions or
has personal interests that may interfere with his or her objective and
effective performance of work for the [Company]."
Moreover, the Company is subject to Item 404(b) of Regulation S-K, which
requires the disclosure of a company's "policies and procedures for the review,
approval, or ratification of any transaction required to be reported under" Item
404(a) of Regulation S-K. Item 404(a) requires disclosure of related party
transactions, including transactions where a director has or will have a "direct
or indirect material interest." In this regard, in addition to the Code
discussed above, the Company has adopted "Guidelines for Review of Related
Person Transactions" (the "Related Party Policy") (available as Exhibit D and at
http://www.exxonmobil.com/corporate/investor_governance_policies_related.aspx),
which provide that the Board, acting through the Board Affairs Committee, will
determine whether such a transaction is reportable. In making its decision, a
director is required to "abstain from the decision regarding transactions
involving that director or his or her family members." The Related Party Policy
is also explicitly subject to the Code.
The Company's By-Laws at Article II Section 5 also address related party
transactions (available as Exhibit E and at http://www.exxonmobil.com/corporate/investor_governance_bylaws.aspx).
The By-Laws provide, among other things, that the Board or a committee thereof
has the discretion to authorize a related party transaction in certain
circumstances.
Additionally, the Company is incorporated in New Jersey, and New Jersey law
addresses conflicts of interests, which would include any potential conflicts
with "health industry affiliated" directors. Directors of New Jersey
corporations are subject to fiduciary duties, including a duty of loyalty. The
duty of loyalty requires that a corporate director have "utmost fidelity" in
dealing with a company and its shareholders. See, e.g., Daloisio v. Peninsula
Land Co., 43 N.J. Super. 79, 88 (1956). Where a director's loyalty is split, the
director must show that the transaction was fair and not merely for his selfish
purposes. See In re PSE & G Shareholder Litigation, 173 N.J. 258, 290 and 382
(2002). Such transactions must be attendant with "absolute good faith," which
ensures that directors will not use their fiduciary positions to impair the
corporation. See Hill Dredging Corp. v. Risley, 18 N.J. 501, 531 (1955). The New
Jersey Business Corporation Act (the "NJBCA") also provides that a corporation
may not relieve a director from personal liability if he or she breaches the
duty of loyalty, which is defined as an act which that person "knows or believes
to be contrary to the best interests of the corporation or its shareholders in
connection with a matter in which he has a material conflict of interest.
N.J.S.A 14A:2-7(3) (2007).
Because conflicts of interest implicate the duty of loyalty, the Company's Board
would follow general corporate practice in this regard. If a conflict of
interest arises, the Board would require disclosure of the director's interest
in the matter. The Board would then consider the potential conflict and may
request that the director take action, which may require recusal from
deliberations and voting on the matter, and approval of the matter by the
"disinterested" directors (directors who do not have a conflict). In addition,
the Company's Related Party Policy provides that recusal is mandatory if the
conflict is due to a related party transaction. The NJBCA also sets forth
procedures for approving contracts or transactions between a corporation and
another organization where one of the corporation's directors serves a director
or officer, and contracts or transactions in which a director has a financial
interest, which procedures are designed to safeguard the board's decision-making
process from potential conflicts and maintain the enforceability of the contract
or transaction. See N.J.S.A 14A:6-8 (2007).
While the Code, the Related Party Policy and New Jersey law do not specifically
address "health industry affiliations," this is to be expected as it is not
possible to identify in advance all the types of potential conflicts of interest
that might arise. Instead, the Code's provision related to conflicts of interest
is intended to be a broad statement of ethical responsibility so that the Board
can deal with specific situations as they occur. Thus, through Board actions
adopting the Code and the Related Party Policy and through New Jersey law, the
Company has implemented the essential objective of the Proposal - addressing
conflicts of interest by health industry affiliated directors. See, e.g., The
Talbots, Inc. (avail. Apr. 5, 2002) (concurring with the exclusion of a proposal
requiring the establishment of a code of corporate conduct regarding human
rights because the company had an existing Standard for Business Practice and
Code of Conduct); The Gap, Inc. (avail. Mar. 16, 2001) (permitting the exclusion
of a proposal that requested a report on the child labor practices of the
company's vendors because the company had established a code of vendor conduct,
monitored vendor compliance and published related information); Nordstrom Inc.
(avail. Feb. 8, 1995) (proposal that the company commit to a code of conduct for
overseas suppliers was substantially addressed by existing company guidelines
and, thus, was excludable as moot).
Moreover, the fact that the Company has not implemented the Proposal through a
specific amendment to the Company's "existing policies regarding related party
transactions" alone is irrelevant since existing provisions in the Code, the
Related Party Policy and New Jersey law "compare favorably with the guidelines
of the [P]roposal." See Texaco, Inc. (avail. Mar. 28, 1991) (concurring in the
exclusion of a proposal requesting the company subscribe to a set of
environmental guidelines as substantially implemented where the company's
"particular policies, practices and procedures compare favorably with the
guidelines of the proposal"). For example, in Intel Corp. (avail. Feb. 14,
2005), the company received a proposal asking that it "establish a policy" of
expensing all future stock options. The company argued that the proposal had
been substantially implemented through the Financial Accounting Standards
Board's adoption of Statement No. 123(R), requiring the expensing of stock
options. Although the proponent asserted that adoption of the accounting
standard was different from company adoption of a policy as requested under the
proposal, the Staff concurred that the new accounting standard had substantially
implemented the proposal and permitted its exclusion.
Thus, the Company's adoption of its Code of Ethics and Business Conduct, Related
Party Policy and By-Laws, as well as its adherence to New Jersey law and the
Listing Standards, demonstrate that it has substantially implemented the
Proposal and the Proposal is excludable under Rule 14a-8(i)(10).
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. We would be happy to provide you with any additional
information and answer any questions that you may have regarding this subject.
Moreover, 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) 955-8653, or James E. Parsons, Counsel in the Company's
Corporate and Securities Law Group at (972) 444-1478.
Sincerely,
/s/
Amy L. Goodman
ALG/csh
Enclosures
cc: James E. Parsons, Exxon Mobil Corporation Daniel F. Pedrotty, AFL-CIO
Reserve Fund
[APPENDIX 1]
December 3, 2007
By UPS Next Day Air
Mr. Henry H. Hubble, Secretary
Exxon Mobil Corporation
5959 Las Colinas Boulevard
Irving, Texas 75039-2298
Dear Mr. Hubble:
On behalf of the AFL-CIO Reserve Fund (the "Fund"), I write to give notice that
pursuant to the 2007 proxy statement of Exxon Mobil Corporation (the "Company"),
the Fund intends to present the attached proposal (the "Proposal") at the 2008
annual meeting of shareholders (the "Annual Meeting"). The Fund requests that
the Company include the Proposal in the Company's proxy statement for the Annual
Meeting. The Fund is the beneficial owner of 4,000 shares of voting common stock
(the "Shares") of the Company and has held the Shares for over one year. In
addition, the Fund intends to hold the Shares through the date on which the
Annual Meeting is held.
The Proposal is attached. I represent that the Fund or its agent intends to
appear in person or by proxy at the Annual Meeting to present the Proposal. I
declare that the Fund has no "material interest" other than that believed to be
shared by stockholders of the Company generally. Please direct all questions or
correspondence regarding the Proposal to me at (202) 637-5379.
Sincerely,
/s/
Daniel F. Pedrotty
Director
Office of Investment
DFP/ms
opeiu #2, afl-cio
Attachment
[APPENDIX 2]
Resolved: Shareholders request that the Board of Directors (the "Board") of
Exxon Mobil Corporation ("Exxon," or the "Company") adopt a policy addressing
conflicts of interest involving board members with health industry affiliations.
The policy shall provide for recusal from voting and from chairing board
committees when necessary. The policy shall address conflicts associated with
company involvement in public policy issues related to Board members' health
industry affiliations and shall be explicitly integrated with the Company's
existing policies regarding related party transactions. For the purposes of this
policy, "board members with health industry affiliations" means any Board member
who is also a director, executive officer or former executive officer of a
company or trade association whose primary business is in the health insurance
or pharmaceutical industries.
Supporting statement
Exxon directors William W. George, William R. Howell, Steven S. Reinemund, and
Walter V. Shipley are also directors of Novartis AG, Pfizer Inc., Johnson &
Johnson, and Wyeth, respectively.
In our view, our Company's existing director independence policies do not
adequately address the financial and professional interests of our Company's
health industry affiliated directors, nor does our Company require that health
industry affiliated directors recuse themselves from Board decisions related to
pharmaceutical or health insurance issues that are significant social policies.
Access to affordable, comprehensive health insurance is the most significant
social policy issue in America, according to polls by NBC News/The Wall Street
Journal, the Kaiser Foundation, and The New York Times/CBS News. John Castellani,
president of the Business Roundtable has stated that 52 percent of his members
say health costs represent their biggest economic challenge, explaining that
"The current situation is not sustainable in a global, competitive workplace." (BusinessWeek,
7/3/2007)
Our Company currently has Other Postretirement Benefit (which includes
healthcare benefits) liabilities of more than $6.3 billion, according to its
10-K. Health care costs could be cut by as much as $1,160 per employee if
Congress enacted universal health insurance and required Medicare to negotiate
prescription drug prices directly with pharmaceutical companies. (Dr. Kenneth
Thorpe, Emory University, 2007)
We are concerned that the financial and professional interests of health
industry affiliated directors could improperly influence our Company's position
on significant social policy issues that could benefit the Company.
We believe that chairing committees or voting by health industry affiliated
directors on Board decisions on health issues may create the appearance of a
conflict of interest. In our opinion, this proposal will help prevent health
industry affiliated directors from compromising their duty of loyalty to our
Company's shareholders.
[INQUIRY LETTER]
February 6, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Exxon Mobil Corporation's Request to Exclude Proposal Submitted by the
AFL-CIO Reserve Fund
Dear Sir/Madam:
This letter is submitted in response to the claim of Exxon Mobil Corporation
("Exxon Mobil" or the "Company"), by letter dated January 22, 2008, that it may
exclude the shareholder proposal ("Proposal") of the AFL-CIO Reserve Fund
("Fund" or the "Proponent") from its 2008 proxy materials.
I. Introduction
Proponent's shareholder proposal to Exxon Mobil urges;
that the Board of Directors adopt a policy addressing conflicts of interest
involving board members with health industry affiliations. The policy shall
provide for recusal from voting and from chairing board committees when
necessary. The policy shall address conflicts associated with company
involvement in public policy issues related to their health industry
affiliations and shall be explicitly integrated with the company's existing
policies regarding related party transactions. For the purposes of this policy,
"board members with health industry affiliations" means any Board member who is
also a director, executive officer or former executive officer of a company or
trade association whose primary business is in the health insurance or
pharmaceutical industries (emphasis added).
Exxon Mobil's letter to the Commission stated that it intends to omit the
Proposal from its proxy materials to be distributed to shareholders in
connection with the Company's 2008 annual meeting of shareholders. Exxon Mobil
argues that the Proposal is in violation of:
Rule 14a-8(i)(7) as an ordinary business matter, despite the fact that the
Proposal addresses a significant social policy issue, and
Rule 14a-8(i)(10) because Exxon Mobil has substantially implemented the
Proposal, even though the statutory, regulatory and Company Code of Conduct for
directors is inapplicable to conflicts of interest involving significant social
policy issues.
The Proposal was carefully crafted to address the significant social policy
issue of health care reform and the conflicts of interest that arise when health
industry affiliated directors vote or chair board actions on this issue. The
statutory and regulatory requirements on director conflicts of interest cited by
Exxon Mobil, together with the Company's own policies and procedures on
conflicts of interest, address commercial transactions, not conflicts of
interest on significant social policy issues.
II. Health industry affiliated director conflicts of interest are significant
social policy issues and may not be excluded under Rule 14a-8(i)(7).
A. Health care reform is a significant social policy issue.
The Commission stated in Exchange Act Release No. 40018 that "proposals that
relate to ordinary business matters but that focus on `sufficiently significant
social policy issues...would not be excludable, because the proposals would
transcend day-to-day business matters....'" The Proposal before Exxon Mobil is
just such a proposal. It addresses the significant social policy issue of health
care reform and conflicts of interest that are presented by the Company's health
industry affiliated directors on this issue. The Proposal does not ask the
Company to provide any information or reports on its internal operations, nor
does it attempt to micromanage the Company. Instead it urges the Board to
integrate the Company's existing policies with an amended policy to protect the
Company and shareholders from health industry affiliated director conflicts of
interest.
Health care reform is, in fact, the most important domestic issue in America.
Public opinion polls by The Wall Street Journal/NBC News, the Kaiser Foundation
and The New York Times all document its significance. In the latest Wall Street
Journal/NBC News poll, for example, 52 percent of Americans "say the economy and
health care are most important to them in choosing a president, compared with 34
percent who cite terrorism and social and moral issues.... That is the reverse
of the percentages recorded just before the 2004 election. The poll also shows
that voters see health care eclipsing the Iraq war for the first time as the
issue most urgently requiring a new approach." 1
Many businesses now cite health care costs as their biggest economic challenge.
Indeed, Exxon Mobil is a member of the Business Roundtable, whose president,
John Castellani, has called health care reform a top priority for business and
Congressional action." 2 In September, the CEOs of Kelly Services and Pitney
Bowes, Inc., together with GE's Global Health Director, called on Congress to
enact health care reform.3 They joined other leading business coalitions,
including the National Coalition on Health Care and the National Business Group
on Health. The latter's membership consists of 245 major companies, including 60
of the Fortune 100.4 Each organization maintains that the cost of health care
for business is now greater than it should be and will continue to rise as long
as 47 million Americans who have no health insurance remain without coverage.
Other leading business organizations have recently announced their support for
health care reform: Divided We Fail, a coalition of the AARP, the Business
Roundtable, the Service Employees international Union (SEIU) and the National
Federation of Independent Business, states that it will "make access to quality,
affordable health care and long-term financial security top issues in the
national political debate." 5 In addition, Wal-Mart has joined with SEIU calling
on Congress to enact health care reform.6
Underscoring the significance of health care reform as a major social policy
issue, the American Cancer Society has taken the unprecedented step of
redirecting its entire $15 million advertising budget "to the consequences of
inadequate health care coverage" in the United States.7
B. Health industry affiliated director conflicts on health care reform are
significant social policy issues.
Health industry affiliated director conflicts of interest are themselves a
significant policy issue in the media and in Congress. During Congressional
consideration of amendments to the Hatch-Waxman Act, for example, directors at
both Verizon and Georgia-Pacific were instrumental in terminating each company's
support for and involvement in Business for Affordable Medicine, a business
coalition supporting federal legislation to strengthen the Act.8 The coalition
had been organized by the governors of 12 states, Verizon, Georgia-Pacific and
other major corporations to reduce expenditures on prescription drugs, a major
problem for business and state Medicaid programs. The Congressional Budget
Office estimated that the legislation would reduce total spending on
prescription drugs by $60 billion, or 1.3 percent, over the next 10 years. An
examination of Verizon's proxy revealed that its CEO, Ivan Seidenberg, the
chairman of its Human Resources Committee, Walter Shipley, John R. Stafford,
retired CEO of Wyeth, and Richard L. Carrion, were each directors of Wyeth,
which successfully lobbied Verizon to end its involvement in the coalition.9
At General Motors, where health care costs have long been a central concern,
three of the eleven independent directors on the board are directors of
pharmaceutical companies. The Company's presiding director, George Fisher, also
serves as a director of Eli Lilly and Company. Percy N. Barnevik, a director
since 1997, retired as CEO of AstraZeneca PLC in 2004 and serves as chairman of
GM's Public Policy Committee. Director Karen Katen retired as executive vice
president of Pfizer in 2007, served as an officer of PhRMA and continues to
serve as chair of the Pfizer Foundation. Each director's holdings in Eli Lilly,
AstraZeneca and Pfizer, respectively, vastly outweigh his or her holdings in GM.
In 2007, The New York Times reported that GM was the only U.S. auto company
purchasing the brand-name drug, Nexium, manufactured by AstraZeneca, at a cost
to GM of $110 million per year. Senior management and labor leaders at GM had
decided to eliminate Nexium from the GM formulary.10 That decision was
overturned, according to senior labor and management leaders at GM, after the GM
board of directors reviewed it. At the same time, and despite its extensive
federal legislative activity, GM failed to take any action to support
legislation to reform the Medicare prescription drug program to require
prescription drug price negotiations between pharmaceutical companies and the
federal government.11
Conflicts of interest among health industry affiliated directors have also been
documented by Chrysler Corporation's former vice president of public policy,
Walter B. Maher. Writing in the American Journal of Public Health, Maher
described how "a representative of the insurance industry" [the CEO of
Prudential Insurance] successfully blocked Chrysler Corporation's efforts to
persuade Business Roundtable members to support health care reform." 12
At least 21 major companies (Attachment "A"), including Exxon Mobil, have
multiple health industry affiliated directors serving on their boards of
directors.13
1. Companies now recognize health care reform as a significant social policy
issue and have amended their conflicts of interest policies for health industry
affiliated directors accordingly.
At the same time Proponent filed the Proposal at Exxon Mobil, Proponent filed
virtually identical proposals on this same issue at the American Express
Company, the McGraw-Hill Companies and Electronic Data Systems (EDS). In
addition, proponents filed proposals calling upon companies to adopt principles
on the significant social policy issue of health care reform at IBM, General
Electric and Bristol-Meyers Squibb. Instead of seeking No-Action Letters from
the Commission to exclude these proposals, American Express, McGraw-Hill, IBM,
General Electric and Bristol-Meyers Squibb each commenced dialogues with
proponents and each has agreed to revise director conflicts of interest policies
or issue corporate statements of principles for health care reform.14 Proponents
have agreed to withdraw the proposals and, in the case of Bristol-Meyers Squibb,
the company has withdrawn its request to the Commission for a No-Action Letter.
Finally, EDS, whose request for a No-Action Letter was granted, Electronic Data
Systems Corporation (January 24, 2008), nevertheless agrced to amend its
conflicts of interest policies after dialogue with the Proponent.15
C. The Proposal presents a significant public policy issue that is not addressed
by, but is entirely compatible with, Exxon Mobil's existing policies on
conflicts of interest.
Rule 14a-8(i)(7) permits a company to exclude a proposal if it "deals with a
matter relating to the company's ordinary business operations." The Commission
has stated that a proposal that is otherwise excludable under the ordinary
business exclusion is includable, however, if it raises a significant policy
issue. (Securities Exchange Act Release No. 40,018 (May 21, 1998).)
Exxon Mobil appears to have ignored the fact that the Proposal specifically
states that the Proposal urges the board to adopt a policy addressing:
conflicts associated with company involvement in public policy issues related to
their [directors'] health industry affiliations and shall be explicitly
integrated with the company's existing policies regarding related party
transactions (emphasis added).
Instead, the Company repeatedly misconstrues the Proposal as a conflicts of
interest policy request that micromanages ordinary business matters of employee
benefits. It does nothing of the kind. The Proposal addresses health care reform
as an external, significant social policy issue facing the Nation and the
Company. The Proposal focuses on health industry affiliated director conflicts
associated with Company involvement in this significant social policy issue.
Indeed, Exxon Mobil has stated that the Company's board of directors will
discuss health care reform and make decisions on this significant social policy
issue after the presidential election in November 2008.16
Exxon Mobil directors William W. George, William R. Howell, Steven S. Reinemund,
and Walter V. Shipley are also directors of Novartis AG, Pfizer Inc., Johnson &
Johnson, and Wyeth, respectively. As pharmaceutical company directors, however,
they must routinely take positions on the significant social policy issue of
health care reform that are in conflict with the interests of Exxon Mobil. For
example, Johnson & Johnson, Wyeth and Novartis are opposed to any amendments to
Medicare that would empower the federal government to negotiate prices of
prescription drugs with pharmaceutical companies, or to establish a Medicare
formulary. With the exception of pharmaceutical companies like Johnson &
Johnson, Wyeth and Novartis, Exxon Mobil and all other businesses would realize
significant savings from such an amendment to Medicare because the prices of
prescription drugs would decline substantially.17
Proponent agrees with the Company that it is not in the business of health care,
nor does its board of directors routinely deal with the significant social
policy issue of health care reform. But it is precisely because health care
reform is a significant social policy issue that Exxon Mobil's health industry
affiliated directors must recuse themselves from chairing committees or voting
on this issue. Exxon Mobil's existing policies and practices do not require them
to recuse themselves because the issue is not considered to be one of the
personal financial interests covered by the Company's existing policies and
practices. Unless they recuse themselves from voting or chairing committees,
there is at least the appearance of a director conflict of interest at Exxon
Mobil.
The Company cites Westinghouse Electric Corporation, 1997 SEC No-Act. LEXIS 162
(January 28, 1997), in support of its argument to exclude the Proposal as a
matter of ordinary business. The proposal in Westinghouse, however, involved a
proposal that the board of directors "avoid business relationships with
non-management directors." Westinghouse already had policies relating to such
transactions in effect. The Proposal before Exxon Mobil, however, is a
significant social policy issue that involves a matter not covered by the
Company's existing policies and practices. It is certainly not a matter of
ordinary business and, as the Company has disclosed to shareholders, the board
of directors will decide the Company's policy on health care reform after the
November 2008 presidential election.18
Genetronics Biomedical Corporation, 2003 SEC No-Act. LEXIS 527 (April 4, 2003),
involved a conflicts of interest proposal, but Exxon Mobil conveniently ignores
the fact that the Commission's decision specifically noted that the proposal
before Genetronics attempted to deal with "all financial conflicts of interest"
involving directors and that it "appears to include matters relating to
non-extraordinary transactions." The Proposal before Exxon Mobil, however, is
carefully crafted to address only health industry affiliated director conflicts
of interest affecting the significant social policy issue of health care reform.
Verizon Communications, Inc., 2007 SEC No-Act. LEXIS 268 (February 23, 2007),
involved a proposal requesting the formation of a "Corporate Responsibility
Committee" to monitor the extent to which Verizon lives up to its claims
pertaining to integrity, trustworthiness and reliability." The breadth of that
proposal and its obvious involvement in ordinary business is in stark contrast
to the Proposal before Exxon Mobil, which goes to the matter of a significant
social policy issue and is narrowly targeted to be compatible with existing
procedures and practices at the Company.
Similarly, Costco Wholesale Corporation. 2003 SEC No-Act. LEXIS 817 (December
11, 2003), involved a proposal requesting that the board develop "a thorough
Code of Ethics that would also address issues of bribery and corruption" as well
as a report on the new code. The breadth and scope of the proposal centered on
the ordinary business of Costco. The Proposal before Exxon Mobil, however, is
narrowly targeted to the significant social policy issue and in no way impinges
upon the ordinary business of the Company.
Also cited by Exxon Mobil, Chrysler Corporation, 1998 SEC No-Act. LEXIS 415
(March 18, 1998), had nothing to do with conflicts of interest and, instead,
involved the development of a "comprehensive code of conduct to guide the
formulation of company policies, programs, and practices to address the new
challenges...in the global marketplace." The Chrysler proposal involved ordinary
business matters, unlike the Proposal before Exxon Mobil, which is centered on a
significant social policy issue.
USX Corporation, 1995 SEC No-Act. LEXIS 1005 (December 28, 1995), is also
inapposite. The proposal before USX involved a wholesale revision of the
company's code of ethics and conduct. That was a matter of ordinary business
before the company. The Proposal before Exxon Mobil, however, involves nothing
of the kind. It centers on a significant social policy issue that is not now
part of the Company's code of conduct.
McDonald's Corporation, 1990 SEC No-Act. LEXIS 517 (March 19, 1990), cited by
Exxon Mobil, is yet another case of a proposal involving a wholesale revision of
the company's code of conduct: "[T]he staff has particularly noted that the
proposal appears to be directed at the content and the implementation of
standards on such matters as the conduct of the Company's management, the
Company's employee/employer relations, the Company's customer and business
policies and the Company's relationship with its shareholders. In the Division's
view, these matters involve decisions dealing with the Company's business
operations as illustrated by the Company's existing policies with respect to the
conduct of directors and officers, employment policies on affirmative action and
equal employment opportunity and various other organizational policies
departments, and committees." In contrast, the Proposal before Exxon Mobil is
targeted to a significant social policy issue that is not addressed by Exxon
Mobil's existing policies and practices on conflicts of interest. It, however,
is entirely compatible with them.
Transamerica Corporation, 1986 SEC No-Act. LEXIS 1690 (January 22, 1986), was
also a case of a proposal seeking the wholesale adoption of a company-wide code
of conduct. Proponent does not dispute the fact that Exxon Mobil has a
company-wide code of conduct. The Proposal addresses a significant social policy
issue not addressed by the Company's code of conduct. It is not, therefore, a
matter of ordinary business.
Proponent does not dispute the fact that Exxon Mobil's management is involved
with ordinary business operations such as the purchase and management of health
care benefits at the Company. This Proposal has little, if anything, to do with
those matters. Instead, it involves the Company's board of directors stating
principles on a significant social policy issue, McDonald's Corporation, 2007
SEC No-Act. LEXIS 378 (March 22, 2007). (Statement on labor and human rights is
not ordinary business). The Proposal is a matter best addressed, as demonstrated
by other companies, including McGraw-Hill, IBM, EDS and American Express, that
received this same proposal, by amending the Company's code of conduct to deal
with health industry affiliated director conflicts as significant social policy
issue.
D. The Proposal addresses the significant social policy issue of health care
reform and does not relate to ordinary business matters of employee benefits.
Exxon Mobil claims that the Proposal pertains to health care costs and is
therefore excludable. Exxon Mobil's reasoning ignores the fact that significant
social policy issues, at some level, always involve costs. But that does not
make them excludable under Rule 14a-8(i)(7). Just as the significant social
policy issue of labor and human rights pertains to employee wage costs, and is
not excludable, so the significant social policy issue of health care reform
pertains to health benefits costs and is not, therefore, excludable. Framed as
it is in the Proposal before Exxon Mobil, the issue is one that is an
externality, involving the Company, but more importantly the Nation.
In Ford Motor Company, 2007 SEC No-Act. LEXIS 296 (March 1, 2007), the Staff
agreed that a proposal requesting that the board prepare a report "examining the
implications of rising health care expenses and how Ford is addressing this
issue without compromising the health and productivity of its workforce," could
not be excluded as ordinary business under rule 14a-8(i)(7). The proposal
requested a report focused exclusively on health care costs as a significant
social policy issue. Both the proposal and the supporting statement contained
extensive documentation on health care costs. Both carefully framed the issue as
one that in no way involved reporting on the internal risks posed to Ford's
ordinary business, including its employee benefits operations.
The Company, however, cites Staff decisions on proposals that centered on
matters of internal risk assessment and company finances relating to employee
benefits plans. General Motors Corporation, 2007 SEC No-Act. LEXIS 446 (April
11, 2007), involved a report on GM's health care costs for GM employees and
retirees and their dependents and their implication for various policy
developments in health care. Target Corporation, 2007 SEC No-Act. LEXIS 290
(February 27, 2007), also involved reporting on health care costs, a matter the
company dealt with in the ordinary course of business. Unlike the Proponent's
Proposal, which calls for the adoption of amendments to conflicts of interest
policies regarding a significant social policy issue, the health care reports
called for by the proposals in General Motors Corporation and Target Corporation
would have required each company to conduct internal risk assessments.
Commission decisions in both McDonald's Corporation, 2007 SEC No-Act. LEXIS 378
(March 22, 2007), and Costco Wholesale Corporation, 2004 SEC No-Act. LEXIS 806
(October 26, 2004), are relevant to the Proposal before Exxon Mobil. Like Exxon
Mobil, McDonald's and Costco each cited "ordinary business operations," to
exclude proposals on significant social policy issues that called for the
adoption of a company code of conduct. The Staff denied each company's request.
Exxon Mobil also argues that the Proposal deals with ordinary conflict of
interest matters that are routine business before the Board of Directors. The
plain language of the Proposal reveals that it is designed to deal with a
significant social policy issue affecting health industry affiliated directors.
The Commission decisions cited by Exxon Mobil do not support the exclusion of a
Proposal whose sole purpose is the address a significant social policy issue.
III. Exxon Mobil has failed to demonstrate that it has substantially implemented
the Proposal because health industry affiliated conflicts of interest on
significant social policy issues are completely unaffected by the Company's
existing policies and its compliance with statutory and regulatory authorities.
The Company would have the Commission believe it has substantially implemented
the Proposal, thereby permitting its exclusion under Rule 14a-8(i)(10). Exxon
Mobil cites Exchange Act Release No.12598 (July 7, 1976) to the effect that it
has "already taken actions to address each element" of the Proposal. A
comparison of the Proposal and Exxon Mobil's Code of Conduct clearly shows that
the Company has not adopted what the Proposal calls for, namely, a policy
addressing conflicts associated with company involvement in significant social
policy issues related to directors' health industry affiliations. Citing
Exchange Act Release No. 20091 at II.E.6 (August 16, 1983), 1998 Release at
n.30 and accompanying text, and Texaco, Incorporated, 1991 SEC No-Act. LEXIS 500
(March 28. 1991), the Company then appears to claim that its "'particular
policies, practices and procedures compare favorably with the guidelines of the
Proposal.'" They do not. The Proposal does not deal with the personal fiuancial
conflicts or related transactions addressed by the Company's existing policies
and procedures. Instead, the Proposal deals with a significant social policy
issue and the conflicts that arise when health industry affiliated directors
address this issue.
Exxon Mobil cites Texaco, Inc., 1991 SEC No-Act. LEXIS 500 (March 28, 1991), in
support of its claim that it had satisfactorily addressed the underlying
concerns of the Proposal. But Texaco involved a proposal calling for the
adoption of the Valdez environmental standards at the time the company had taken
environmental actions to address the very issues raised by the proposal. Exxon
Mobil is in no position to make such a claim because it has taken no action at
all. Unlike American Express, McGraw-Hill and EDS, each of which took action
after receiving this identical proposal, Exxon Mobil has done absolutely
nothing.
Exxon Mobil also cites Masco Corporation, 1999 SEC No-Act. LEXIS 390 (March 29,
1999), in support of its request to exclude the Proposal. Yet a review of that
decision reveals that Masco's board of directors had announced its intention to
approve a resolution in substantially the form submitted by the proponent.
Exxon. Mobil proposes to take no action whatsoever. Indeed, Exxon Mobil contends
that it has already taken the actions requested by the Proposal, when the
Company's own Code demonstrates that it has not done so.
NYSE Corporate Governance Standard 303A.10, which Exxon Mobil cites as evidence
of its substantial implementation of the Proposal, addresses the "private
interest" of a director that may appear to be in conflict with the interests of
the corporation as a whole. The conflicts presented by health industry
affiliated directors who deal with the significant social policy issue of health
care reform, however, are not private transactional interests. The very nature
of a significant social policy issue is its public character. There is no
personal financial stake involved. While it is true, for example, that the
market share of pharmaceutical companies rose as a result of the Medicare
Modernization Act, the personal, transactional matters framed by NYSE 303A.10
would not pick up the conflict for an Exxon Mobil director like William W.
George of Novartis AG, William R. Howell of Pfizer Inc., Steven S. Reinemund of
Johnson & Johnson, and Walter V. Shipley of Wyeth. Yet as Exxon Mobil directors,
they have a conflict of interest if they fail to advise Exxon Mobil of the
conflict or vote to oppose amendments to the Medicare Modernization Act that
would empower the federal government to negotiate prescription drug prices
directly with these pharmaceutical companies.
The same observations apply to Exxon Mobil's contention that Item 404(b) of
Regulation S-K substantially implements the Proposal. Indeed, Item 404(b) is
explicitly titled "Review, approval or ratification of transactions with related
persons" (emphasis added). There is no transaction involved with Exxon Mobil's
adoption or rejection of matters relating to the significant social policy issue
of health care reform. There is no financial transaction. Regulation S-K simply
does not apply and, like NYSE Standard 303A.10, Exxon Mobil's claim that it has
substantially implemented the Proposal falls far short of implementation.
Finally, the Company describes the director "duty of loyalty" under New Jersey
law as yet another basis for its claim of substantial implementation of the
Proposal. New Jersey law and the cases cited by Exxon Mobil, however, do not
stand for the principle that New Jersey's "duty of loyalty" standard would apply
to director conflicts involving a significant social policy issue. Instead, the
duty of loyalty is framed in the context of commercial transactions. For
example, in Daloisio v. Peninsula Land Co., 43 N.J. Super. 79,88 (1956): "The
principle, long established in this State, is that directors may not lawfully
enter into a contract affecting their corporation, in the benefit of which even
one of their number participates, without the knowledge and consent of the
stockholders."
The New Jersey Business Corporation Act clarifies the duty of loyalty:
As used in this subsection, an act or omission in breach of a person's duty of
loyalty means an act or omission which that person knows or believes to be
contrary to the best interests of the corporation or its shareholders in
connection with a matter in which he has a material conflict of interest."
(emphasis added). N.J. Stat. 14A:2-7(3).
The "material conflict of interest" standard contained in New Jersey law has
only been applied to commercial transactions, not significant social policy
issues. As a result, Exxon Mobil has never dealt with the conflicts of interest
that are inherent in its consideration of health care reform. In fact, Exxon
Mobil's proxy statement for 2007 describes each of its health industry
affiliated directors as independent for the purposes of New Jersey law,
Regulation S-K, NYSE Corporate Govemance Standard 303A.10 and the Company's
policies and procedures on conflicts of interest.19 Yet the four health industry
affiliated directors of Exxon Mobil20 will face both the appearance of and an
actual conflict of interest when the Company's board of directors addresses the
issue of health care reform. If Exxon Mobil does not act as American Express,
McGraw-Hill and EDS and adopt in some form the amendments proposed by the
Proponent, shareholders will have no assurance that the interests of
pharmaceutical companies have not determined the outcome of the Company's
decisions on health care reform.
IV. Conclusion.
Exxon Mobil has failed to meet its burden of demonstrating that it is entitled
to exclude the Proposal under Rule 14a-8(g).
The Proposal presents a significant social policy issue that transcends
day-to-day business matters at Exxon Mobil. It is, therefore, not excludable
under Rules 14a-(i)(7) and 14a-8(j).
A review of the Exxon Mobil Code of Conduct with respect to director involvement
in significant social policy issues clearly shows that Exxon Mobil has not
substantially implemented the Proposal. It may not be excluded under Rules
14a-8(i)(10) and 14a-8(j).
Consequently, since Exxon Mobil has failed to meet its burden of demonstrating
that it is entitled to exclude the Proposal under Rule 14a-8(g), the Proposal
should come before Exxon Mobil's shareholders at the 2008 annual meeting.
If you have any questions or need additional information, please do not hesitate
to call me at 202-637-5335. I have enclosed six copies of this letter for the
Staff, and I am sending a copy to Counsel for the Company.
Sincerely,
/s/
Robert E. McGarrah, Jr.
Counsel
Office of Investment
REM/ms
opeiu, #2, afl-cio
cc: Amy L. Goodman, Gibson, Dunn & Crutcher LLP
Attachments
-----FOOTNOTES-----
1 The Wall Street Journal. December 4, 2007, p A1.
2 "Business Roundtable Unveils Principles for Health Care Reform," Press Rclease,
June 6, 2007. http://www.busincssroundtable.org//newsroom/document.aspx?qs-5886BF807822B0F19D5448322FB51711FCFS0C8.
Accessed December 4, 2007.
3 Presentations by Carl Camden, CEO, Kelly Services; Michael Critelli, Chairman
and CEO, Pitney Bowcs, Inc.: and Robert Galvin, M.D., Director, Global Health.
General Electric Corporation, at Conference on Business and National Health Care
Reform, sponsored by the Century Foundation and the Commonwealth Fund.
Washington, DC, September 14, 2007.
4 "National Health Care Reform: The Position of the National Business Group on
Health," National Business Group on Health, Washington, DC (July, 2006). http://www.businessgrouphealth.org/pdfs/nationalhealthcarereformpositionstatement.pdf.
(Accessed December 4, 2007).
5 The Wall Street Journal, November 13, 2007, p. B4.
6 The New York Times, February 7, 2007.
7 The New York Times, August 31. 2007.
8 The New York Times, September 4, 2002.
9 Verizon Communications, SEC Def. 14A. 2003.
10 The New York Times. October 5, 2007.
11 Correspondence: John J. Sweeney, President, AFL-CIO, and G. Richard Wagoner,
CEO, General Motors Corporation, June 14, 2007 and August 8, 2007.
12 Maher. W.B., "Rekindling ReformHow Gocs Business?" 93 Am J Pub Health 92
(2003)?
13 Letter and Report to SEC Chairman Christopher Cox from AFL-CIO Office of
Investment Director, Daniel F. Pedrotty. October 4, 2007.
14 The McGraw-Hill Companies: http://mcdia.corporate-ir.net/media files/irol/96/96562/Director
Code Ethics 2008.pdf. (Accessed January 30, 2008); American Express Company:
email correspondence between Stepben P. Norman, Corporate Governance Officer and
Secretary, The American Express Company, and Daniel F. Pedrotty, Director.
AFL-CIO Office of Investment, January 3, 2008; Bristol-Meycrs Squibb website
posting: http://www.bms.com/sr/key_issues/content/data/reform.html; Letter from
Heather L. Maples, Special Counsel, Division of Corporation Finance, U.S.
Securities and Exchange Commission, to Amy L. Goodman, Gibson, Dunn and Crutcher
LLP, January 10, 2008; IBM: Letter from Randy MacDonald, Senior Vice President,
Human Resources. IBM Corporation, to Dan Pedrotty, Director, AFL-CIO Office of
Investment, December 12, 2007 (attached); GE: Letter from David N. Stewart,
Scnior Counsel, Investigations/Regulatory, General Electric to Sister Barbara
Kraemer, President, School Sisters of St. Francis of St. Joseph's Convent,
January 25, 2008.
15 Email from David B. Hollander. Legal Manager-Corporatc Acquisitions and
Finance, EDS, to Robert E. McGarrah, Jr., Counsel, AFL-CIO Office of Investment.
February 1, 2008.
16 Sr. Betty Kenny, OSF, Coordinator, Justice & Peace. Rochester Minnesota
Franciscans, and Michael Crosby, "Memorandum on Exxon Mobil dialogue on health
care reform," January 2008.
17 House Committee on Oversight and Government Reform, "Private Medicare Drug
Plans: High Expenses and Low Rebates Increase the Cost of Medicare Drug
Coverage." Washington. DC, October 2007, p.i.
18 Sr. Betty Kenny, OSF, Op. cit.
19 Exxon Mobil Corporation, SEC Def. 14A. Definitive Proxy Statement, April 11,
2007, pp 9-11.
20 William W. George of Novartis AG, William R. Howell of Pfizer Inc., Steven S.
Reinemund of Johnson & Johnson, and Walter V. Shipley of Wyeth.
[STAFF REPLY LETTER]
February 7, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Exxon Mobil Corporation Incoming letter dated January 22, 2008
The proposal requests that the board adopt a
policy addressing conflicts of interest involving board members with health
industry affiliations, including conflicts associated with company involvement
in public policy issues related to these affiliations.
There appears to be some basis for your view that ExxonMobil may exclude the
proposal under rule 14a-8(i)(7), as relating to ExxonMobil's ordinary business
operations (i.e., terms of its conflicts of interest policy). Accordingly, we
will not recommend enforcement action to the Commission if ExxonMobil omits the
proposal from its proxy materials in reliance on rule 14a-8(i)(7). In reaching
this position, we have not found it necessary to address the alternative basis
for omission upon which ExxonMobil relies.
Sincerely,
/s/
Heather L. Maples
Special Counsel
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