CompanyName: Home Depot, Inc.
Public Availability Date: January 24, 2008
Document Sections:INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 17, 2007
Office of Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal of People for the Ethical Treatment of Animals
Ladies and Gentlemen:
On behalf of The Home Depot, Inc. (the "Company"), the purpose of this letter is
to notify the staff of the Division of Corporation Finance (the "Staff") of the
Company's intention to exclude a shareholder proposal from the Company's proxy
materials for its 2008 Annual Meeting of Shareholders (the "2008 Proxy
Materials"). The People for the Ethical Treatment of Animals (the "Proponent")
submitted the proposal (the "Proposal"), which is attached as Exhibit A.
In accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, we hereby respectfully request that the Staff confirm that no
enforcement action will be recommended against the Company if the Proposal is
omitted from the 2008 Proxy Materials. Pursuant to Rule 14a-8(j), enclosed are
six copies of this letter and Exhibit A. A copy of this letter, including
Exhibit A, is being mailed on this date to the Proponent in accordance with Rule
14a-8(j), informing it of the Company's intention to omit the Proposal from the
2008 Proxy Materials. The Company intends to commence distribution of its
definitive 2008 Proxy Materials on or around April 11, 2008. Pursuant to Rule
14a-8(j), this letter is being submitted not less than 80 days before the
Company files its definitive 2008 Proxy Materials with the Securities and
Exchange Commission.
The Proposal sets forth the following resolution:
"RESOLVED that shareholders encourage Home Depot to end its sale of glue traps
because they are cruel and inhumane to the target animals and pose a danger to
companion animals and wildlife as well."
The Proposal requests that the Company end the sale of glue traps in the
Company's stores. The Company intends to omit the Proposal on the following
grounds:
A. Rule 14a-8(i)(7) - Relates to Ordinary Business Operations
Under Rule 14a-8(i)(7), a proposal may be omitted from a registrant's proxy
statement if such proposal "deals with a matter relating to the company's
ordinary business operations." In Securities Exchange Act Release No. 34-40018
(May 21, 1998), the Securities and Exchange Commission noted that the policy
underlying the ordinary business exclusion rests on two central policy
considerations. 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 could not,
as a practical matter, 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.
In seeking to dictate the types of products sold in Company stores, the Proposal
implicates both of the above-described policy considerations. The Company is the
world's largest home improvement retailer, selling tens of thousands of
different products to a broad base of customers throughout the United States,
Mexico, Canada and China. Decisions concerning product selection are inherently
based on complex considerations outside the purview of shareholders. The ability
to make such decisions is fundamental to management's ability to control the
operations of the Company and, as such, is not appropriately delegated to
shareholders.
The Staff has been asked on numerous occasions to consider proposals seeking the
prohibition of specific items from sale. In each instance, the Staff has taken
the position that proposals regarding the selection of products for sale relate
to a company's ordinary business operations and thus may be excluded from the
company's proxy materials pursuant to Rule 14a-8(i)(7). See, PetSmart, Inc.,
Apr. 14, 2006 (proposal that the company issue a report based on studies on pet
bird relinquishment and to indicate whether the company intended to end the sale
of all birds in its stores); Marriot International, Inc., Feb. 13, 2004
(proposal that the company issue and enforce a corporate policy against any of
its hotels or resorts which it owns or manages from selling or offering to sell
any sexually explicit materials through pay-per-view or in its gift shop and to
cancel any contracts with vendors to provide such material); Wal-Mart Stores,
Inc., Mar. 20, 2001 (proposal that the company discontinue the sale of tobacco
and tobacco-related products by the end of the year); Albertson's, Inc., Mar.
23, 2001 (proposal that the company discontinue the sale of tobacco and
tobacco-related products); Albertson's, Inc., Mar. 18, 1999 (proposal requests
the board to take the steps necessary to assure that the company no longer
sells, advertises, or promotes tobacco products); J.C. Penney Company, Inc.,
Mar. 2, 1998 (proposal requesting that the board adopt a policy to stop selling
cigarettes unless management could demonstrate that certain of its subsidiaries
were able to fully implement FDA regulations restricting youth access to
tobacco); CVS Corporation, Mar. 2, 1998 (proposal that the board adopt a policy
to stop selling cigarettes unless management can demonstrate that its stores are
able to fully implement FDA regulations restricting youth access to tobacco);
Walgreen Co., Sept. 29, 1997 (proposal that the company stop selling tobacco
products); Rite Aid Corporation, Mar. 5, 1997 (proposal that the board adopt a
policy to stop selling cigarettes unless management can demonstrate that its
stores are able to fully implement FDA regulations restricting youth access to
tobacco); Wal-Mart Stores, Inc., Mar. 3, 1997 (proposal that the board adopt a
policy to stop selling cigarettes by January 1, 1998 unless management can
demonstrate that its stores are able to fully implement FDA regulations
restricting youth access to tobacco); and J.C. Penney Company, Inc., Mar. 3,
1997 (proposal that the board adopt a policy to stop selling cigarettes unless
management can demonstrate that its stores are able to fully implement FDA
regulations restricting youth access to tobacco).
For the reasons discussed above, as the Proposal deals with issues and
considerations that involve the Company's ordinary business and are thus not
matters that should be subject to direct shareholder control, the Company seeks
to omit the Proposal from its 2008 Proxy Materials in accordance with Rule
14a-8(i)(7).
B. Rule 14a-8(i)(5) - Relevance to Company Operations
Rule 14a-8(i)(5) permits the omission of a shareholder proposal if it is not
significantly related to the business of a company. This Rule specifically
permits the exclusion of proposals that relate to business matters that account
for less than five percent of company assets as of the end of its most recent
fiscal year and for less than five percent of its net earnings and gross sales.
For fiscal 2006, the Company's total assets were $52.3 billion, net earnings
were $5.8 billion and gross sales were $90.8 billion. The Company is the world's
largest home improvement retailer and glue traps are among thousands of products
offered for sale. The Company's store base consists of over 2,000 stores; each
store carries in excess of 30,000 products. Glue traps represent significantly
less than five percent of Company assets, net earnings and gross sales and are
not significantly related to the Company's core home improvement business.
Consequently, the required quantitative thresholds provided by Rule 14a-8(i)(5)
have not been satisfied and thus omission from the 2008 Proxy Materials is
warranted. See, Merck & Co., Inc., Jan. 4, 2006; The Walt Disney Company, Nov.
29, 2002; American Stores Company, Mar. 24, 1999; and Tribune Company, Jan. 27,
1994.
Moreover, glue traps do not raise the type of economic, social, environmental or
other broadly sensitive issue of the type that the Staff has found to be
"significantly related" to a company's business as a whole. See, Halliburton
Company, Feb. 26, 2001. We believe, therefore, that the proposal fits squarely
within the intended scope of Rule 14a-8(i)(5). The Staff has concurred
previously in the omission of such proposals. See, Lucent Technologies, Nov. 21,
2000, where the Staff concurred with the company that a proposal relating to the
company forgiving and refunding certain lease payments to residential customers
who have leased obsolete telephone equipment from the company for a minimum of
five years could be excluded from the proxy materials on the basis that the
amount of revenue, earnings, and assets attributable to the company's consumer
leases of telephone equipment was less than five percent and the proposal was
not otherwise significantly related to the company's business.
For those reasons, as the Proposal deals with a product that represents less
than five percent of Company assets, net earnings and gross sales and is not
significantly related to the Company's business, the Company seeks to omit the
Proposal from its 2008 Proxy Materials in accordance with Rule 14a-8(i)(5).
Accordingly, the Company respectfully requests that the Staff not recommend
enforcement action if the Company omits the Proposal from its 2008 Proxy
Materials. If the Staff does not concur with the Company's position, we would
appreciate an opportunity to confer with the Staff concerning this matter prior
to the issuance of a response. The Proponent is requested to copy the
undersigned on any response it may choose to make to the Staff.
Kindly acknowledge receipt of this letter by stamping and returning the enclosed
copy of the first page and returning it in the enclosed envelope. If you have
any questions with respect to this matter, please telephone me at (770)
384-2858. I may also be reached by fax at (770) 384-5842.
Very truly yours,
/s/
Jonathan M. Gottsegen, Director
Corporate and Securities Practice Group
[APPENDIX 1]
December 12, 2007
Mr. James C. Snyder, Jr.,
Secretary
The Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339
Re: Shareholder Proposal for Inclusion in the 2008 Proxy Materials
Dear Ms. Snyder:
Attached to this letter is a sharehclder proposal submitted for inclusion in the
proxy statement for the 2008 anntial meeting. Also enclosed is a letter from
People for the Ethical Treatment of Animals' (PETA) brokerage firm, Morgan
Stanley, confirming ownership of 103 shares of The Home Depot, Inc. common
stock. PETA has held these shares continuously for more than one year and
intends to hold them through and including the date of the 2008 annual
shareholders meeting.
Please contact me if you need any further information. If The Home Depot, Inc.
will attempt to exclude any portion of this proposal under Rule 14a-8, please
advise me within 14 days of your receipt of this proposal. I can be reached at
757-284-7152 or via e-mail at StephareieD@peta.org.
Sincerely,
/s/
Stephanie Downs, Corporate Liaison
Corporate Affairs
Enclosures: 2008 Shareholder Resolution
Morgan Stanley letter
[APPENDIX 2]
Shareholder Resolution Regarding the Sale of Glue Traps
RESOLVED that shareholders encourage Home Depot to end its sale of glue traps
because they are cruel and inhumane to the target animals and pose a danger to
companion animals and wildlife as well.
Supporting Statement
Glue traps sold by Home Depot ensnare animals by trapping any who walk across
them by using a strong adhesive material. Animals captured in these traps are
physically glued to the base of the trap and essentially immobilized. Deah
usually occurs because of starvation or dehydrationbut not before days of pain
and suffering. Glue traps rip patches of skin and fur off the animals' bodies as
they struggle to escape and, as noted by one New York City "pest" control
manager, some trapped animals even chew off their own limbs in order to free
themselves.
A regulatory impact statement released by the Australian government cited a
study (State of Victoria, Department of Primary Industries, Draft Prevention of
Cruelty-to-Animals (Prohibition of Glue Trapping) Regulations 2005 (2005).) that
concluded that glue traps should be banned "because of the enormous distress
that these traps cause, even if the trapped animals are found after just a few
hours and then humanely dispatched."
Not only are glue traps cruel, they are also indiscriminate and catch nontarget
animals. Birds, squirrels, kittens, and other small animals may be crippled or
killed by traps placed in public areas and private residences.
The sale of glue trapsand the abusive method by which they killhas been the
subject of public debate and controversy in recent years. As a result, many
prominent retailersincluding Walgreens, CVS, Rite Aid, and Safewayhave banned
the sale of these cruel traps. Home Depot should follow suit and be a corporate
leader in ending the sale of this cruel and inhumane form of animal control.
We urge shareholders to encourage Home Depot to end its sale of these cruel
devices by supporting this resolution, which is a matter of significant social
and public policy.
[INQUIRY LETTER]
January 3, 2008
BYREGULAR & ELECTRONIC MAIL: cfletters@sec.gov
Office of the Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal of People for the Ethical Treatment of Animals ("PETA")
for Inclusion in the 2008 Proxy Statement of The Home Depot, Inc.
Ladies and Gentlemen:
This letter is filed in response to a letter dated December 17, 2007 submitted
to the SEC by The Home Depot, Inc. ("Home Depot" or "the Company"). The Company
seeks to exclude a shareholder proposal submitted by PETA based on Rule
14a-8(i)(7), asserting that that the proposal relates to ordinary business
operations. The Company also contends that the resolution is not significantly
related to business matters as required by Rule 14a-8(i)(5).
The resolution at issue reads as follows:
RESOLVED that shareholders encourage Home Depot to end its sale of glue traps
because they are cruel and inhumane to the target animals and pose a danger to
companion animals and wildlife as well.
For the reasons that follow, PETA respectfully disagrees with the Company's
position that the proposal should be omitted and urges the Staff to rule
accordingly.
The Proposal Is Not Excludable Under Rule 14a-8(i)(7) or (5):
Home Depot argues that the proposal involves the conduct of its "ordinary
business operations" and seeks to "micro-manage" the Company. (No action letter
p. 2.) The Company argues further that the sale of glue traps constitutes less
than five percent of the company's assets. (No action letter, p. 3.)
PETA has five responses to Home Depot's arguments. First, the proposal does not
seek to compel the Company to do anything. Rather, it is crafted so that
"shareholders encourage" the Company to discontinue the sale of an indisputably
cruel and inhumane device. The emphasis here is on the words "shareholders
encourage." Shareholders should be given an opportunity to vote on this
resolution so that the Board can discover the level of support for it. The Staff
positions cited in Home Depot's no action letter relate largely to proposals
seeking to require the Board to halt the sale of tobacco products, not to
encourage positive conduct.
Second, the proposal involves broad and significant social and public policy
considerations. Many large chains have acquiesced to public pressure and ceased
selling glue traps because they are so cruel to the target animals, not to
mention that they are indiscriminate in choice of victims. It is universally
recognized that these devices trap, immobilize and kill kittens, gerbils,
hamsters, guinea pigs, and other small "non-target" companion animals. They also
ensnare and kill non-target wildlife such as birds. No less than four nationwide
chains, namely Walgreens, CVS, Rite Aid, and Safeway, have banned the sale of
these appalling contraptions for precisely these reasons.
And third, the sale of glue traps supersedes the ordinary business rule because
it implicates issues that are, and continue to be, the subject of public debate
and controversy. As proof, the companies mentioned above would not have ceased
selling glue traps were it not for the fact that they recognized their inherent
cruelty and yielded to the public outcry to end such sales.
Further evidence that this issue is of significant public concern are the
numerous news articles in major media publications about glue traps that
regularly appear. Some examples include:
1. A January 10, 2006 Chicago Tribune article titled "Be Kind to your mice",
which lists "the top five reasons to be humane to any mouse in your house."
Number five states: "Glue is for crafts, not creatures. Gruesome glue traps
cause animals to slowly starve or suffocate to death. Many mice become so
desperate that they chew off their own limbs trying to free themselves."
2. A January 15, 2006 Philadelphia Inquirer article titled "Getting rid of
rodents intruding in your home" stated: "But others consider [glue traps]
barbaric because the trapped rodents struggle and die slowly. More and more
people are using traps that capture mice alive, which is the method the Humane
Society of the United States recommends."
3. A March 2, 2006 Associated Press Financial Wire article titled "Investors
still seeks a better mousetrap" stated: "There is little agreement on the best
way to kill a mouse. Some people recoil at the thought of snap traps, which
often work like tiny guillotines. Others are horrified by glue traps, which kill
their prey slowly by starvation or suffocation." [Emphasis added]
4. A November 6, 2006 Philadelphia Inquirer article titled "House vs. mouse: The
latest ideas in humanely showing our disease-ridden fall visitors the door"
clearly noted that humane rodent control is a public issue: "Mice love us. We
give them warmth. We give them food. We give them shelter. They have followed
humans around the planet for so long that naturalists can't even agree on where
they started. They can be found in every human settlement of any size and, in
this country, in 21 million homes. Now, people are starting to love them back.
Sort of. We're trying to figure out how to get rid of them - even kill them -
without hurting them." [Emphasis added]
Fourth, the Company's continued sale of these products, and the inherent risk to
corporate image and the likelihood of reputation damage, involve shareholders'
economic interests. The trend is that more and more large and small scale
businesses are ending the sale of these products because they are so cruel and
inhumane. Home Depot's determination to sell these products, despite the trend
to the contrary, highlights the Company's disregard for the significant animal
welfare issues involved.
Lastly, the fact that Hone Depot alleges that the sale of glue traps accounts
for less than five percent of the Company's assets, supports PETA's position but
is irrelevant. When the social, economic and ethical issues are balanced against
the revenues generated by this repugnant product, the former considerably
outweigh the latter, thus highlighting the social and public policy
implications. If, as Home Depot claims, this product accounts for minimal
revenue, yet causes terrible pain and suffering to animals, is highly
controversial, and carries with it the potential for reputational and image
damage to the Company, then the exceptions to the five percent rule are more
than satisfied.
Moreover, adoption of this resolution would not directly impact the Company (or
have an effect on its sales), as the resolution simply seeks to have
shareholders "encourage" the company to do something (rather than seeking to
have the company do something).
The Staff has repeatedly found that proposals "focusing on sufficiently
significant social policy issues ... generally would not be considered to be
excludable, because the proposals would transcend the day-to-day business
matters and raise policy issues so significant that it would be appropriate for
a shareholder vote." Exchange Act Release No. 34-40018 (May 21, 1998).
Similarly, the Staff has refused to uphold the ordinary business operations
exclusion when the proposal falls within a range of issues with "significant
policy, economic or other implications." Exchange Act Release No. 34-12999 (Nov.
22, 1976).
Conclusion:
The Company's position that PETA's resolution is excludable under Rules
14a-8(i)(7) and (5) is insupportable. The proposal embraces a significant social
and public policy issue, and does not involve micro-managing the Company. For
the foregoing reasons, we respectfully request that the SEC advise the Company
that it will take enforcement action if it fails to include the Proposal in its
2008 proxy materials. Please feel free to contact me should you have any
questions or require further information. I may be reached directly at
SusanH@peta.org or (202) 641-0999.
Very truly yours,
/s/
Susan L. Hall
Counsel
SLH/pc
cc: Jonathan M. Gottsegen (via fax)
[INQUIRY LETTER]
January 4, 2008
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 People for the Ethical Treatment of Animals
Ladies and Gentlemen:
On December 17, 2007, The Home Depot, Inc. (the "Company") submitted a letter to
the staff at the Division of Corporation Finance (the "Staff") requesting that
the Staff confirm that no enforcement action will be recommended against the
Company if the Company excludes a shareholder proposal from the Company's proxy
materials for its 2008 Annual Meeting of Shareholders (the "2008 Proxy
Materials") (the "No-Action Request"). The People for the Ethical Treatment of
Animals (the "Proponent") submitted the proposal (the "Proposal"). The Proposal
requests that the Company end the sale of glue traps.
On January 3, 2008, the Proponent submitted a letter to the Staff (the "January
3 Letter"). In the January 3 Letter, the Proponent alleges that the Proposal
involves broad and significant social and public policy considerations and is
significantly related to business matters.
The purpose of this letter is to respond to the January 3 Letter. First,
contrary to the Proponent's assertions in the January 3 Letter, the precatory
nature of the Proposal does not render it immune from exclusion. On numerous
prior occasions, the Staff has, as outlined in the No-Action Request, concurred
that a precatory proposal could be excluded on the basis that it relates to
ordinary business operations.
Second, the Proposal fails to transcend day-to-day business matters and does not
involve broad and significant social and public policy considerations that would
be appropriate for a shareholder vote. Rather, the Proposal relates to the
Company's ordinary business operations as the Proposal seeks to prohibit the
sale of a particular product in Company stores. The Staff has consistently held
that proposals relating to the sale of a particular product or service, whether
considered controversial or not, falls within the ambit of exclusion pursuant to
Rule 14a-8(i)(7). See e.g., Marriott International, Inc. (Feb. 13, 2004).
Finally, the sale of glue traps does not raise the type of economic, social,
environmental or other broadly sensitive issue of the type that the Staff has
found to be "significantly related to the company's business" as a whole under
Rule 14a-8(i)(5). Even where a proposal raises a policy issue, that issue must
be more than ethically or socially significant in the abstract and must have a
meaningful relationship to the business of the company to be considered
significantly related to a company's business. The Company is the world's
largest home improvement retailer and glue traps are among tens of thousands of
products offered for sale. The sale of glue traps is incidental to and has a
minimal impact on the Company's core home improvement business and is not
significantly related to the Company's business as a whole. As such, as the sale
of glue traps account for less than five percent of Company assets (as of the
end of its most recent fiscal year) and for less than five percent of its net
earnings and gross sales and is not otherwise significantly related to the
Company's business, the Proposal is excludable under Rule 14a-8(i)(5).
In sum, the Company believes that it may omit the Proposal from the 2008 Proxy
Materials under Rule 14a-8.
Pursuant to Rule 14a-8(j), enclosed are six copies of this letter. A copy of
this letter is being mailed on this date to the Proponent, in accordance with
Rule 14a-8(j), informing the Proponent of the Company's response to the January
3 Letter.
Kindly acknowledge receipt of this letter by stamping and returning the enclosed
copy of the first page and returning it in the enclosed envelope. If you have
any questions with respect to this matter, please telephone me at (770)
384-2858. I may also be reached by fax at (770) 384-5842.
Very truly yours,
/s/
Jonathan M. Gottsegen, Director
Corporate and Securities Practice Group
[STAFF REPLY LETTER]
January 24, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: The Home Depot, Inc. Incoming letter dated December 17, 2007
The proposal encourages Home Depot to end the sale of glue traps.
There appears to be some basis for your view that Home Depot may exclude the
proposal under rule 14a-8(i)(7), as relating to Home Depot's ordinary business
operations (i.e., the sale of a particular product). Accordingly, we will not
recommend enforcement action to the Commission if Home Depot 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 Home Depot relies.
Sincerely,
/s/
Song Brandon
Attorney-Adviser
|
