Company Name: General Electric Co. (Recon.)
Public Availability Date: February 15, 2008
Document Sections:INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 25, 2008
Direct Dial
(202) 955-8671
Fax No.
(202) 530-9569
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: Request for Reconsideration by General Electric Company Shareowner Proposal
of Therisa Kreilein Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
On behalf of our client, General Electric Company ("GE"), we respectfully
request that the staff of the Division of Corporation Finance (the "Staff") of
the Securities and Exchange Commission (the "Commission") reconsider its
response dated January 9, 2007 denying GE no-action relief with respect to a
shareowner proposal and a statement in support thereof (the "Proposal") received
from Theresa Kreilein (the "Proponent"). The Proponent submitted the Proposal
for inclusion in GE's proxy statement and form of proxy for its 2008 Annual
Shareowners Meeting (collectively, the "2008 Proxy Materials").
We believe that Staff reconsideration is warranted because the Proponent has not
demonstrated that she satisfied the procedural requirements of Rule 14a-8(b).
Specifically, we continue to believe that the Proponent failed to timely provide
documentary evidence demonstrating her beneficial ownership of GE's securities
and that the Proponent has not demonstrated otherwise, even to this date. GE has
no record of having correspondence from the Proponent that she states was sent
to GE, and the Proponent's December 14, 2007 letter to the Staff did not timely
satisfy the proof of ownership requirements.
In addition, the Proponent did not copy this firm or GE on her correspondence
with the Staff, so that GE did not have an opportunity to address assertions
that the Proponent made to the Staff. Thus, we believe Staff reconsideration is
necessary to avoid abuse of the Rule 14a-8 process.
Pursuant to Rule 14a-8(j), we have enclosed herewith six (6) copies of this
letter and its attachments and concurrently sent copies of this correspondence
to the Proponent. Rule 14a-8(k) provides that shareowner proponents are required
to send companies a copy of any correspondence that the proponents elect to
submit to the Commission or the staff of the Division of Corporation Finance
(the "Staff"). Accordingly, we are taking this opportunity to inform the
Proponent that if the Proponent elects to submit additional correspondence to
the Commission or the Staff with respect to this Proposal, a copy of that
correspondence should concurrently be furnished to the undersigned on behalf of
GE pursuant to Rule 14a-8(k).
BASIS FOR RECONSIDERATION
I. Background.
The Proponent submitted the Proposal to GE on October 29, 2007, and GE received
the Proposal on October 30, 2007. See Exhibit A. The Proponent, who does not
appear on the records of GE's stock transfer agent as a shareowner of record,
included with the Proposal a typewritten letter, dated October 29, 2007, from a
Mr. Randy Pepmeier of Edward Jones Investments, as custodian, regarding the
Proponent's ownership of GE shares (the "Custodian's Letter"), included as part
of Exhibit A attached hereto. The Custodian's Letter states that on December 12,
2003, the Proponent purchased 165 shares of GE stock and that the Proponent held
approximately 183 shares of GE stock as of October 29, 2007. In addition to that
typewritten portion of the Custodian's letter, there is also a handwritten note
which reads, "These shares were continuously held and never sold, since
12/12/2003."
As set forth in the request for no-action relief GE submitted to the Staff on
December 7, 2007 (the "No-Action Request"), because of the handwriting on the
Custodian's Letter, the documentation submitted by the Proponent did not satisfy
the standard of Staff Legal Bulletin No. 14 of "proving his or her eligibility
to submit a proposal." Staff Legal Bulletin No. 14 (July 13, 2001) ("SLB 14").
See AMR Corp. (avail. Mar. 15, 2004) (concurring that ownership substantiation
with a handwritten note regarding continuous ownership did not satisfy the
proponent's burden of providing "documentary support of a claim of beneficial
ownership" under Rule 14a-8(b) and Rule 14a-8(f)(1), but allowing the proponent
additional time to correct the deficiency because, unlike GE's Deficiency Notice
(as defined below), the company failed to inform the proponent of what would
constitute the appropriate documentation to demonstrate ownership under Rule
14a-8(b)). Accordingly, GE sent a letter on November 13, 2007 (within 14
calendar days of GE's receipt of the Proposal) notifying the Proponent of the
requirements of Rule 14a-8 and requesting that the Proponent demonstrate that
she satisfied the standards of Rule 14a-8(b) (the "Deficiency Notice"). The
Deficiency Notice, a copy of which is attached hereto as Exhibit B, included a
copy of Rule 14a-8. The Deficiency Notice was timely sent to the Proponent's
Post Office Box via overnight mail and to the Proponent's representative, Myron
Kreilein, via email, on November 13, 2007, within 14 days of GE's receipt of the
Proposal.
As provided by the U.S. Postal Service Certified Mail receipt, attached hereto
as Exhibit C, the Proponent received the Deficiency Notice on November 17, 2007.
GE never received a reply to the Deficiency Notice from either the Proponent or
the Proponent's representative.
After GE failed to receive any response or further communication from the
Proponent and the Proponent's representative, we submitted the No-Action Request
on December 7, 2007, asking that the Staff concur in our view that the Proposal
could be excluded from the 2008 Proxy Materials because of the Proponent's
failure to establish her requisite eligibility to submit the Proposal under Rule
14a-8(b) and Rule 14a-8(f)(1), among other reasons. As stated in the No-Action
Request, we attached all of the correspondence that GE had received from the
Proponent as of December 7, 2007.
On January 14, we received a response from the Staff, dated January 9, 2007 (the
"Staff's Response"). The Staff's Response stated that the Staff was unable to
concur in our view that GE could exclude the Proposal under Rule 14a-8(b) and
Rule 14a-8(f)(1). The Staff's Response also included correspondence from the
Proponent that was never delivered to GE or to this firm.1 Specifically, the
correspondence consisted of a cover letter from the Proponent, dated December
14, 2007, to which the Proponent attached a second letter from Mr. Randy
Pepmeier at Edward Jones Investments, dated November 12, 2007, purporting to
verify the Proponent's continuous beneficial ownership of GE's securities (the
"Second Custodian's Letter"). Because the Proponent did not copy GE on this
correspondence, prior to our receipt of the Staff's Response, GE did not have an
opportunity to respond to the Proponent's assertions.
The Proponent's correspondence to the Staff claims that the Second Custodian's
Letter "was sent on Nov 15 and was postmarked Nov 15." GE has searched
internally and has no record of having received the Second Custodian's Letter,
nor any response to the Deficiency Letter that the Proponent received on
November 17, 2007. Moreover, the Proponent's correspondence with the Staff does
not include any proof of delivery of the Second Custodian's Letter to GE.2
II. Reconsideration Is Warranted Because Denial of No-Action Relief Is
Inconsistent with the History and Application of Rule 14a-8(b) and
14a-8(f).
The Proponent has not demonstrated that she timely satisfied the proof of
ownership requirements of Rule 14a-8. GE has no record of having received the
Second Custodian Letter and the Proponent has not demonstrated that it was
timely delivered to GE. The Proponent's December 14, 2007 letter to the Staff
did not timely satisfy the proof of ownership requirements.
Rule 14a-8(f) provides that a company may exclude a shareowner proposal if the
proponent fails to provide evidence of eligibility under Rule 14a-8, including
the ownership requirements, provided that the company timely notifies the
proponent of the deficiency and the proponent fails to correct the deficiency
within the required time. GE satisfied its obligation under Rule 14a-8 in the
Deficiency Notice to the Proponent, which included a copy of the shareowner
proposal rules set forth in Rule 14a-8 and clearly stated the ownership
requirements of Rule 14a-8(b), the type of documentation necessary to
demonstrate ownership under Rule 14a-8(b) and the Proponent's timeframe for
responding to the Deficiency Notice. In addition, the Deficiency Notice clearly
stated the address and fax number to which the Proponent's response should have
been sent.
As noted above, the Proponent received the Deficiency Notice on November 17,
2007. GE has informed us that, after a careful review, it has not located any
correspondence received from either the Proponent or the Proponent's
representative after her initial submission of the Proposal. Thus, GE did not
receive a copy of the Second Custodian's Letter on or after the date when it was
written (November 12, 2007), and the Proponent also failed to contact or
communicate with GE after she had received the Deficiency Notice (November 17,
2007). Even if the Proponent had copied GE on her December 14, 2007,
correspondence with the Staff, by that time the Proponent's response would have
exceeded the 14-day response time provided for in Rule 14a-8(f).
Accordingly, we believe that Staff reconsideration is warranted because the
Proponent, in neglecting to respond to the Deficiency Notice, has failed to meet
the procedural requirements of Rule 14a-8(b) and Rule 14a-8(f). Rule 14a-8(b)(2)
states that a proponent "must prove" his or her eligibility. In addition, Rule
14a-8(f) places the burden of providing documentary evidence of ownership in
response to a company's deficiency notice on shareowner proponents. SLB 14, at
Section G.4., states that "a shareholder's response to a company's notice of
defect(s) must be postmarked, or transmitted electronically, no later than 14
days from the date the shareholder received the notice of defect(s). Therefore,
a shareholder should respond to the company's notice of defect(s) by a means
that allows the shareholder to demonstrate when he or she responded to the
notice" (emphasis added).
The Deficiency Notice clearly stated the address and fax number to which the
Proponent's response should have been sent. The Proponent did not respond to the
Deficiency Notice, nor did the Proponent provide with its December 14, 2007,
correspondence with the Staff, any proof of delivery of the Second Custodian's
Letter to GE. Accordingly, we request that, unless the Proponent demonstrates
that the Second Custodian's Letter was timely delivered to GE, the Staff concur
that the Proposal may be excluded from the 2008 Proxy Materials because the
Proponent failed to provide GE with satisfactory evidence of her eligibility to
submit the Proposal within the 14-day period provided by Rule 14a-8(f).
As reflected in the AMR Corp. letter cited above, the proof of ownership
originally submitted to GE was not satisfactory to prove the Proponent's
eligibility under Rule 14a-8. The Staff has on numerous occasions taken
no-action positions concerning a company's omission of a shareowner proposal
based on a proponent's failure to provide satisfactory evidence of its
eligibility within 14 days of receiving a deficiency notice from the company.
See, e.g., Verizon Communications Inc. (avail. Jan. 15, 2008); Boeing Co.
(avail. Jan. 9, 2008); General Motors Corp. (avail. Apr. 5, 2007); Motorola,
Inc. (avail. Jan. 10, 2005); Johnson & Johnson (avail. Jan. 3, 2005). More
specifically, the Staff consistently has granted no-action relief when a
shareowner proponent "appears not to have responded" to a company's "request for
documentary support indicating that [the proponent] has satisfied" Rule
14a-8(b)'s ownership requirements. See, e.g., AGL Resources Inc. (avail. Jan.
11, 2008); Ford Motor Co. (Jan. 8, 2008); Bank of America Corp. (avail. Dec. 31,
2007); Occidental Petroleum Corp. (avail. Nov. 21, 2007); Int'l Paper Co.
(avail. Feb. 28, 2007); Int'l Business Machines Corp. (avail. Dec. 5, 2006).
Similarly here, the Proponent did not timely respond to GE's Deficiency Notice
nor did the Proponent provide any proof of delivery attempts to submit the
Second Custodian's Letter to GE. Moreover, even if the Proponent had copied GE
on her December 14, 2007, correspondence with the Staff, the Proponent's
response would have fallen outside of the 14-day window provided by Rule
14a-8(f). Despite the instructions provided in the Deficiency Notice, the
Proponent failed to provide GE with satisfactory evidence of her eligibility to
submit the proposal as required by Rule 14a-8(b) and Rule 14a-8(f)(1). Thus, we
ask that the Staff reconsider its position in the Staff's Response and concur
that GE may exclude the Proposal.
CONCLUSION
Based upon the foregoing analysis, we respectfully request that the Staff
reconsider its position set forth in the Staff's Response and concur that it
will take no action if GE excludes the Proposal from its 2008 Proxy Materials.
If we can provide additional correspondence to address any questions that the
Staff may have with respect to this no-action request, please do not hesitate to
call me at (202) 955-8671, my colleague Elizabeth A. Ising at (202) 955-8287 or
David M. Stuart, GE's Senior Counsel, at (203) 373-2243.
Sincerely,
/s/
Ronald O. Mueller
ROM/pah/jlk
Attachments
cc: David M. Stuart, General Electric Company
Theresa Kreilein
-----FOOTNOTES-----
1 The Proponent's correspondence with the Staff does not indicate that it was
also sent to either GE or to this firm. Citing Rule 14a-8(k), the No-Action
Request specifically called the Proponent's attention to the need to copy GE and
this firm on any correspondence the Proponent intended to send to the Staff.
2 In contrast, in response to the Staff's Response, which indicated that the
Proponent was required to revise the Proposal in order for the Proposal to avoid
exclusion under Rule 14a-8(i)(2), the Proponent sent a revised version of the
Proposal to this firm by both facsimile and overnight delivery, although in
doing so the Proponent presented the revised proposal on this firm's letterhead.
See Exhibit D.
[INQUIRY LETTER]
would like to present the attached shareholders proposal at the annual GE 2008
shareholders meeting. 1 intend to hold my GE stock beyond the day of the
shareholders meeting. If you (GE) choose to correspond, please send any
correspondence relating to this proposal to the P.O. box listed above by regular
mail so as not to present an inconvenience to me during normal working hours
(mail that must be signed during working hours is not possible for me with my
current employment).
Thanks and best regards.
/s/
10/29/07
[APPENDIX]
Whereas from 1892 to 2007, GE shares have appreciated on average nearly 7%. In
the last decade however, GE experienced a temporary unsustainable surge in
performance followed by a drastic performance decline "free fall". GE's
valuation followed this performance cycle enabling key executives to earn huge
profits from this performance swing, and then reposition themselves favorably
after GE's performance free fall.
The temporary unsustainable performance surge included a 19% per share net
earnings growth in 2000 or 27% improvement over the 15% in 1999. Dividend
increases where 17% in 1999 and again in 2000. Some shareholders believed that
GE could consistently. double per share net earnings approximately every four
years. Hundreds of key executives earned hundreds of millions of dollars,
justified by GE's valuation. CEO compensation was compared to company valuation
increases in GE proxy materials. Mr. Welch earned 125 million in one year in
part to company valuation. Mr. Immelt sold 85,000 GE shares, many with a price
of over $57 near the all time high price of around $60.
Following 2000 GE realizes ten billion in losses, more losses than the entire
net income in 1998. The fantastic performance related to the temporary
unsustainable earnings surge is criticized by Wall Street journalist Kathryn
Kranhold. GE per share net earnings growth experiences a free fall and declines
by 4% in 2005.
A comparison of the returns of the long term investor to that of Mr. Immelt
highlights the opportunity to align management to that of the long term
investor. The long term investor who purchases the GE shares that Mr. Immelt
sold on Oct 17, 2000, for 57.75 would in seven years on Oct 16, 2007 at a share
price of $41.00 experience a decline of 29%. Mr. Immelt however can take comfort
in that when he sold his 40,000 shares at 57.75, he was able to buy them at 6.67
earning him a handsome 766%. After the company's performance freefall, Mr.
Immelt buys at $34. The rise from $34 to $41 on Oct 16, 2007 earns him an
additional 17% yielding a total handsome gain of 897%. In the book "The Warren
Buffet Way" Warren is "quite content to hold securities indefinitely so long as
the prospective return in equity capital of the underlying business is
satisfactory, management is competent and honest, and the market does not
overvalue the business" By removing the current opportunity to profit handsomely
from extreme performance swings and the accompanying valuation swings,
management can be more aligned to that of the long term investor, as the company
has committed to return one half of the earnings to the shareholders in the form
of dividends.
This proposal recommends the stock ownership and holding requirements as
described on page 13 of the GE 2007 proxy material be improved. The improvement
is that the holding period is improved from one year to the life of the
executive. The executive may earn the dividends and bequeath their shares as
they choose.
Please vote yes to this proposal.
[INQUIRY LETTER]
Date: Tue. 5 Feb 2008 12:07:27 -0800 (PST)
From: "Myron Kreilein" <myron_kreilein@yahoo.com>
Subject: appeal response
To: myron@rplcorp.com
Dear Mr. Will Heins
This fax is a basic response to GE's appeal to the Kreilein proposal. A
substantial amount of text in the appeal is dedicated to a claim that of the two
brokers statements submitted, GE never received the second completely
typewritten statement.
The completely typewritten brokers statement is identical to the brokers
statement GE acknowledged receiving only completely typewritten. It was
postmarked before the date required by GE's letter and sent to Mr. David Stuart
at GE. This letter was never returned and was in all likelihood received by
someone at GE.
The existence of this second brokers statement with a date well within the
guidelines of GE's letter indicates a brokers statement was produced to respond
to GE's letter.
Please uphold your decision to present the proposal.
Thanks and best regards
Therisa Kreilein
/s/
Feb-05-2008
[INQUIRY LETTER]
November 12, 2007
Edward D. Jones & Co. Custodian
FBO Therisa Kreilein
ATTN: Myron Kreilein
On 12/12/2003 Therisa Kreilein purchased 165 shares of General Electric Common
Stock. These shares were held continuously and never sold since 12/12/2003.
Today her General Electric Common Stock is equal to 183.44089 shares which are
being held in her IRA account at Edward Jones.
Please accept this letter as confirmation of her General Electric holdings as we
have been requested by the account owner to furnish this information to you.
/s/
Randy Pepmeier
Edward Jones Investments
P.O. Box 372
Salem, IN 47167
812-883-4757
[STAFF REPLY LETTER]
February 15, 2008
Ronald O. Mueller
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5306
Re: General Electric Company
Incoming letter dated January 25, 2008
Dear Mr. Mueller:
This is in response to your letter dated January 25, 2008 concerning the
shareholder proposal submitted to GE by Therisa Kreilein. We also have received
letters from the proponent dated February 5, 2008 and February 6, 2008. On
January 9, 2008, we issued our response expressing our informal view that GE
could not exclude the proposal from its proxy materials for its upcoming annual
meeting under rules 14a-8(b) and
14a-8(f). You have asked us to reconsider our
position.
The Division grants the reconsideration request, as there now appears to be some
basis for your view that GE may exclude the proposal under rule 14a-8(f). In
this regard, we note your representation that GE did not receive a response to
GE's request for documentary support indicating that the proponent had satisfied
the minimum ownership requirement for the one-year period required by rule
14a-8(b). Accordingly, we will not recommend enforcement action to the
Commission if GE excludes the proposal from its proxy materials in reliance on
rules 14a-8(b) and 14a-8(f).
Sincerely,
/s/
Brian V. Breheny
Deputy Director
cc: Therisa Kreilein
P.O. Box 91956
Louisville, KY 40291
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