Company Name: IMS Health Inc.
Public Availability Date: February 1, 2008Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 26, 2007
By Hand
Securities and Exchange Commission, 100 F Street N.E., Washington, D.C. 20549.
Attention: Chief Counsel, Division of Corporation Finance
Re: IMS Health Incorporated Rule 14a-8 Shareholder Proposal Submitted by Chris
Rossi
Ladies and Gentlemen:
In accordance with Rule 14a-8(j) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on behalf of IMS Health Incorporated (the
"Company"), we hereby request your concurrence that the Company may exclude from
its proxy statement (the "Proxy Statement") for its 2008 annual meeting of
shareholders (the "Annual Meeting") the shareholder proposal (the "Proposal")
and the statement supporting the Proposal (the "Supporting Statement") submitted
by Nick Rossi (the "Proponent"), which relate to declassifying the Company's
Board of Directors (the "Board"). For your convenience, copies of the Proposal
and Supporting Statement are attached as Annex A.
Pursuant to Rule 14a-8(j), we enclose five copies of this letter, together with
the annexed Proposal and Supporting Statement. The Annual Meeting will be held
on May 2, 2008, and the Company expects to file and mail its definitive Proxy
Statement on or after March 21, 2008.
For the reasons discussed below, we believe that the Proposal may be excluded
from the Proxy Statement pursuant to Rule 14a-8(i)(10) under the Exchange Act.
I. Background
The Proposal requests that the Board take the necessary steps to adopt and
implement annual election of each director.
The Company has advised us that, on December 18, 2007, the Board determined that
an amendment to the Company's certificate of incorporation to implement annual
election of directors (the "Amendment") be submitted to the Company's
shareholders at the Annual Meeting. If approved by the Company's shareholders,
the Amendment would implement annual elections of directors over a three year
period, so that directors who had been elected previously for three-year terms
would continue to serve out those terms, and would stand for election to a
one-year term when their current three-year terms expire. Accordingly, one-third
of the directors would be elected to one-year terms in 2009, two-thirds of the
directors would be elected to one-year terms in 2010 and all of the directors
would be elected to one-year terms beginning in 2011.
II. Analysis
Rule 14a-8(i)(10) permits the omission of a shareholder proposal if "the company
has already substantially implemented the proposal." As is clear from the
language of the rule, and consistent with Securities and Exchange Commission
staff (the "Staff") interpretations of the predecessor "mootness" rule, a
proposal need not be fully effected to be excluded pursuant to Rule
14a-8(i)(10), so long as it was substantially implemented. Allowing subject
companies to exclude shareholder proposals under Rule 14a-8(i)(10) means that
shareholders will not need to consider matters that have been favorably acted
upon by the company's management or board of directors, and allows the company
to prevent confusing shareholders or wasting corporate resources on a matter
that is moot.
If approved, the Amendment clearly would implement the goal of the Proposal - to
require that the Company's directors be elected annually to one-year terms.
Because the Company will submit the Amendment for shareholder consideration at
the Annual Meeting, including the Proposal in the Proxy Statement would be
duplicitous and potentially confusing to the Company's shareholders.
While the Proponent may argue that submitting the Amendment for shareholder
approval does not substantially implement the intent of the Proposal because the
Amendment would phase-in annual elections of directors over a three-year period
following its approval, as compared to the Proposal, which requests occur "in a
manner so that each director will have a term of equal length from the date of
implementation to the greatest extent possible," that the Company's
implementation mechanism differs from the Proponent's does not change the fact
that submission of the Amendment to the Company's shareholders and the Proposal
both seek the same result. Exclusion pursuant to Rule 14a-8(i)(10) does not
require exact correspondence between the actions sought by a shareholder
proponent and the subject company's actions. Differences between a company's
actions and the proposal are permitted so long as the company's actions
sufficiently address the underlying concerns of the proposal. See, e.g, Praxair,
Inc. (February 2, 2006), Electronic Data Systems Corp. (January 24, 2005); Masco
Corporation (March 29, 1999); Columbia/HCA Healthcare Corp. (February 18,
1998).1
That the Board may either recommend that the Company's shareholders vote against
approval of the Amendment or not make a recommendation as to how the Company's
shareholders should vote with respect to the Amendment does not affect whether
submitting the Amendment to the Company's shareholders substantially implements
the Proposal. Regardless of the Board's recommendation, the Proposal will be
substantially implemented when the Company submits the Amendment for shareholder
approval. In comparable situations, the Staff concurred with the company's
exclusion of a shareholder proposal to declassify the board of directors, based
on Rule 14a-8(i)(10), where the company submitted a charter amendment to its
shareholders for the same purpose and its management recommended against
approval of the charter amendment or make no recommendation regarding the
approval of the charter amendment. See Praxair, Inc. (February 2, 2006); KeyCorp
(March 13, 2002).
* * *
In accordance with Rule 14a-8(j), the Company is contemporaneously notifying the
Proponent, by copy of this letter, of its intention to omit the Proposal and
Supporting Statement from the Proxy Statement.
We hereby respectfully request that the Staff express its intention not to
recommend enforcement action if the Proposal and Supporting Statement are
excluded from the Company's Proxy Statement for the reasons set forth above. If
the staff disagrees with our conclusions regarding the exclusion of the Proposal
and Supporting Statement, or if any additional submissions are desired in
support of the position set forth in this letter, we would appreciate an
opportunity to speak with you by telephone prior to the issuance of a written
response. If you have any questions regarding this request, or need any
additional information, please call the undersigned at (212) 558-4397.
Very truly yours,
/s/
Keith A. Pagnani
(Enclosures)
cc: Robert Steinfeld (IMS Health Incorporated)
Daniel L. Serota Angel D. Fernandez (Sullivan & Cromwell LLP)
-----FOOTNOTES-----
1 If the Proposal were to be approved at the Annual Meeting, a subsequent
proposal to amend the Company's certificate of incorporation to provide for
annual elections of directors (which would be necessary to implement the
proposal) would not be submitted to the Company's shareholders until its 2009
annual meeting. The quickest a declassified Board would be implemented if the
Proposal were approved, therefore, is at the Company's 2010 annual meeting.
[INQUIRY LETTER]
/s/
P.O Box 249
Boonville, CA 95415-0249
Mr. David R. Carlucci
Chairman
IMS Health Incorporated (RX)
Robert H. Steinfeld, Corporate Secretary
901 Main Ave
Norwalk CT 06851
Phone: 203 845-5200
Fax: 203 845-5299
Rule 14a-8 Proposal
Dear Mr. Carlucci,
This Rule 14a-8 proposal is respectfully submitted in support of the long-term
performance of our company. This proposal is submitted for the next annual
shareholder meeting. Rule 14a-8 requirements are intended to be met including
the continuous ownership of the required stock value until after the date of the
respective shareholder meeting and the presentation of this proposal at the
annual meeting. This submitted format, with the shareholder-supplied emphasis,
is intended to be used for definitive proxy publication. This is the proxy for
John Chevedden and/or his designee to act on my behalf regarding this Rule 14a-8
proposal for the forthcoming shareholder meeting before, during and after the
forthcoming shareholder meeting. Please direct all future communication to John
Chevedden at:
olmsted7p (at) earthlink.net
(In the interest of company efficiency and cost savings please communicate via
email.)
PH: 310-371-7872
2215 Nelson Ave., No. 205
Redondo Beach, CA 90278
Your consideration and the consideration of the Board of Directors is
appreciated in support of the long-term performance of our company. Please
acknowledge receipt of this proposal by email.
Sincerely,
/s/
10/5/07
cc: Robert H. Steinfeld<RSteinfeld@imshealth.com>
Corporate Secretary
PH: 203 845-5245
FX: 203 845-5302
PH: 203-319-4584
FX: 203-319-4552
FX: 203-319-4701
FX: 203-319-4768
[APPENDIX]
[RX: Rule 14a-8 Proposal, October 22, 2007] 3 - Elect Each Director Annually
RESOLVED: Shareholders request that our Directors take the steps necessary to
adopt annual election of each director in the most expeditious manner possible,
in compliance with applicable law and in a manner so that each director shall
have a term of equal length from the date of implementation to the greatest
extent possible.
This includes using all means in our Board's power such as corresponding special
company solicitations and one-on-one management contacts with major shareholders
to obtain the vote required for formal adoption of this proposal topic. Also for
such transition solely through direct action of our board if such transition is
in compliance with applicable law.
This topic won our 76%-support at our 2004 annual meeting and our 75%-support at
our 2007 annual meeting. This topic also won a 69% yes-vote average at 44 major
companies in 2007.
The Council of Institutional Investors www.cii.org recommends adoption of annual
election of each director and the adoption of shareholder proposals upon
receiving their first majority vote. One proxy advisory service recommend
no-votes for directors who do not adopt a shareholder proposal after winning its
first majority vote.
Sadly our company seems to be headed for the same category as FirstEnergy (FE),
a serial ignorer of majority shareholder votes. As a result each FirstEnergy
director candidate received 27% to 39% in opposing votes at the 2007 FirstEnergy
annual meeting.
Arthur Levitt, Chairman of the Securities and Exchange Commission, 1993-2001
said: In my view it's best for the investor if the entire board is elected once
a year. Without annual election of each director shareholders have far less
control over who represents them. Source: "Take on the Street" by Arthur Levitt.
Nick Rossi, Boonville, Calif., who submitted a number of proposals on this
topic, said the merits of adopting this proposal should also be considered in
the context of our company's overall corporate governance structure and
individual director performance. For instance in 2007 the following structure
and performance issues were reported (and certain concerns are noted):
We were allowed to vote on individual directors only once in 3-years -
Accountability concern.
Plus these directors can still remain on our Board even if 90% of shares vote
against each of them.
We had to marshal an awesome 80% shareholder vote to make certain key
governance improvements - Entrenchment concern.
No shareholder right to:
1) Cumulative voting.
2) To act by written consent.
3) To call a special meeting.
We had no Independent Chairman.
Two directors served on boards rated D by The Corporate Library
http://www.thecorporatelibrary.com, an independent investment research firm:
1) Mr. Carlucci (our CEO) MasterCard (MA) D-rated
2) Mr. Pluckett Openwave Systems (OPWV) D-rated
The above concerns shows there is room for improvement and reinforces the reason
to encourage our directors to respond positively to our 76% and 75% supporting
votes and vote yes again:
Notes:
Nick Rossi. Custodian for Katrina Wubbolding, P.O. Box 249, Boonville, Calif.
95415 sponsors this proposal.
The above format is requested for publication without re-editing or
re-formatting.
The company is requested to assign a proposal number (represented by "3" above)
based on the chronological order in which proposals are submitted. The requested
designation of "3" or higher number allows for ratification of auditors to be
item 2.
This proposal is believed to conform with Staff Legal Bulletin No. 14B (CF),
September 15, 2004 including:
Accordingly, going forward, we believe that it would not be appropriate for
companies to exclude supporting statement language and/or an entire proposal in
reliance on rule 14a-8(i)(3) in the following circumstances:
the company objects to factual assertions because they are not supported;
the company objects to factual assertions that, while not materially false or
misleading, may be disputed or countered;
the company objects to factual assertions because those assertions may be
interpreted by shareholders in a manner that is unfavorable to the company, its
directors, or its officers; and/or
the company objects to statements because they represent the opinion of the
shareholder proponent or a referenced source, but the statements are not
identified specifically as such.
See also: Sun Microsystems, Inc. (July 21, 2005).
Please note that the title of the proposal is part of the argument in favor of
the proposal. In the interest of clarity and to avoid confusion the title of
this and each other ballot item is requested to be consistent throughout all the
proxy materials.
Please advise if there is any typographical question.
Stock will be held until after the annual meeting and the proposal will be
presented at the annual meeting.
Please acknowledge this proposal promptly by email and advise the most
convenient fax number and email address to forward a broker letter, if needed,
to the Corporate Secretary's office.
[INQUIRY LETTER]
January 9, 2008
By Hand
Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C 20549
Attention: Chief Counsel, Division of Corporation Finance
Re: IMS Health Incorporated Rule 14a-8 Shareholder Proposal Submitted by Nick
Rossi
Ladies and Gentlemen:
Reference is made to the letter, dated December 26, 2007, from Keith A. Pagnani
to the Office of Chief Counsel, re: IMS Health Incorporated - Rule 14a-8
Shareholder Proposal Submitted by Chris Rossi (the "No-Action Request Letter")
and to the letter, dated December 26, 2007, from John Chevedden to the Office of
Chief Counsel, re: #1 IMS Health Incorporated (RX) - Shareholder Position on
Company No-Action Request Rule 14a-8 Proposal: Elect Each Director AnnuallyThe
Great Neck Capital Appreciation LTD Partnership (the "Chevedden Response").
In response to certain items raised in the Chevedden Response, this letter
supplements the No-Action Request Letter. IMS Health Incorporated (the
"Company") has informed us that its Board of Directors' (the "Board")
determination that an amendment to the Company's certificate of incorporation to
implement annual election of directors (the "Amendment") should be submitted at
its 2008 Annual Meeting (the "Annual Meeting") was effected by way of a
resolution of the Board. The resolution declared that the Board deemed it in the
best interest of the Company that the directors of the Company be elected to
annual terms of office and directed the officers of the Company to prepare the
text of the Amendment to effect such change over a three-year period, as
described in the No-Action Request Letter, to be finalized by the Board and then
submitted to the Company's Shareholders at the Annual Meeting. We believe that
the Board's actions as described above and in the No-Action Request Letter
should more than satisfy Mr. Chevedden's implied concern that the Board may not
have committed to amending the Charter as set forth in the No-Action Request
Letter.
Furthermore, while in comparable situations, no action relief has been granted
notwithstanding the issuer retaining the right to recommend against approval of
the charter amendment or make no recommendation regarding the approval of the
charter amendment (see Praxair, Inc. (February 2, 2006); KeyCorp (March 13,
2002), the Company has informed us that the Board intends to urge the Company's
shareholders to vote in favor of the Amendment and is not reserving any right to
recommend voting against the Amendment or to refrain from making a
recommendation with respect to the adoption of the Amendment. As such, Mr.
Chevedden's concern that the Company may attempt to "scuttle this key issue"
should be dismissed.
Finally, as set forth in the No-Action Request Letter, it is clear from the
language of the rule, and consistent with Securities and Exchange Commission
staff (the "Staff") interpretations of the predecessor "mootness" rule, a
proposal need not be fully effected to be excluded pursuant to Rule
14a-8(i)(10), so long as it was substantially implemented. While Mr. Chevedden
objects to the implementation of annual elections over a three-year period, the
Amendment substantially implements the goals of the Proposal - shifting the
elections of directors from a three-tier classified system to annual elections
of directors. Furthermore, as noted in the No-Action Request Letter, even if the
Proposal were submitted to and approved by the Company's shareholders at the
Annual Meeting, a subsequent proposal to amend the Company's certificate of
incorporation to provide for annual elections of directors (which would be
necessary to implement the proposal) would not be submitted to the Company's
shareholders until its 2009 annual meeting. The quickest a declassified Board
would be implemented if the Proposal were approved, therefore, is at the
Company's 2010 annual meeting.
* * *
In accordance with Rule 14a-8(j), the Company is contemporaneously notifying the
Proponent with a copy of this letter.
For the reasons set forth the No-Action Request Letter as supplemented above, we
hereby respectfully request that the Staff express its intention not to
recommend enforcement action if the shareholder proposal (the "Proposal") and
the statement supporting the Proposal (the "Supporting Statement") submitted by
Nick Rossi (the "Proponent"), which relate to declassifying the Board are
excluded from the Company's proxy statement (the "Proxy Statement") for the
Annual Meeting. If the staff disagrees with our conclusions regarding the
exclusion of the Proposal and Supporting Statement, or if any additional
submissions are desired in support of the position set forth in this letter, we
would appreciate an opportunity to speak with you by telephone prior to the
issuance of a written response. If you have any questions regarding this
request, or need any additional information, please call the undersigned at
(212) 558-4397.
Very truly yours,
/s/
Keith A. Pagnani
(Enclosures)
cc: Robert Steinfeld (IMS Health Incorporated)
Daniel L. Serota Angel D. Fernandez (Sullivan & Cromwell LLP)
John Chevedden
[INQUIRY LETTER]
December 26, 2007
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
# 1 IMS Health Incorporated (RX)
Shareholder Position on Company No-Action Request
Rule 14a-8 Proposal: Elect Each Director Annually
The Great Neck Capital Appreciation LTD Partnership
Ladies and Gentlemen:
The overly vague company December 21, 2007 no action request is inadequate in
omitting any formal text whatsoever on what the board "determined" to do. Did
the board pass a resolution? - this key information is omitted. Is any formal
board meeting text provided? - No!
The text of the rule 14a-8 proposal states (bold added):
3 - Elect Each Director Annually
RESOLVED: Shareholders request that our Directors take the steps necessary to
adopt annual election of each director in the most expeditious manner possible,
in compliance with applicable law and in a manner so that each director shall
have a term of equal length from the date of implementation to the greatest
extent possible.
This includes using all means in our Board's power such as corresponding special
company solicitations and one-on-one management contacts with major shareholders
to obtain the vote required for formal adoption of this proposal topic. Also for
such transition solely through direct action of our board if such transition is
in compliance with applicable law.
The above text clearly calls for declassification of the board in a manner so
that each director shall have a term of equal length from the date of first
implementation. To the contrary the company alluded-to proposal clearly calls
for directors to have unequal terms for 3-years.
Unequal terms could create an imbalance risk on the board with 3-year term
directors feeling less accountable to shareholders than other directors for a
period of three years. And the directors who might feel less accountable could
be the least qualified directors on the board.
None of the purported company precedents address rule 14a-8 proposals that each
director shall have a term of equal length from the date of first
implementation.
Alarmingly the company precedent argument rings the bell that the company may
urge shareholders to oppose its own proposal in order to scuttle this key issue.
This would compound the fact that "This topic won our 76%-support at our 2004
annual meeting and our 75%-support at our 2007 annual meeting" as stated in the
rule 14a-8 proposal supporting text.
For these reasons it is respectfully requested that concurrence not be granted
to the company. It is also respectfully requested that the shareholder have the
last opportunity to submit material in support of including this proposal -
since the company had the first opportunity.
Sincerely,
John Chevedden
cc: Nick Rossi
Robert H. Steinfeld<RSteinfeld@imshealth.com>
[INQUIRY LETTER]
January 10, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
# 2 IMS Health Incorporated (RX)
Shareholder Position on Company No-Action Request
Rule 14a-8 Proposal: Elect Each Director Annually
The Great Neck Capital Appreciation LTD Partnership
Ladies and Gentlemen:
The company January 9, 2008 letter has the hubris to claim, without support,
that it knows the goal of this resolution better than the proponent. There is no
text in the proposal that says the proponent favors declassifying the board
within 3-years.
The company January 9, 2008 letter fails to address the statement: "None of the
purported company precedents address rule 14a-8 proposals that each director
shall have a term of equal length from the date of first implementation."
Returning to the text of the December 26, 2007 shareholder party letter:
The overly vague company December 21, 2007 no action request is inadequate in
omitting any formal text whatsoever on what the board "determined" to do. Did
the board pass a resolution? - this key information is omitted. Is any formal
board meeting text provided? - No!
The text of the rule 14a-8 proposal states (bold added):
3 - Elect Each Director Annually
RESOLVED: Shareholders request that our Directors take the steps necessary to
adopt annual election of each director in the most expeditious manner possible,
in compliance with applicable law and in a manner so that each director shall
have a term of equal length from the date of implementation to the greatest
extent possible.
This includes using all means in our Board's power such as corresponding special
company solicitations and one-on-one management contacts with major shareholders
to obtain the vote required for formal adoption of this proposal topic. Also for
such transition solely through direct action of our board if such transition is
in compliance with applicable law.
The above text clearly calls for declassification of the board in a manner so
that each director shall have a term of equal length from the date of first
implementation. To the contrary the company alluded-to proposal clearly calls
for directors to have unequal terms for 3-years.
Unequal terms could create an imbalance risk on the board with 3-year term
directors feeling less accountable to shareholders than other directors for a
period of three years. And the directors who might feel less accountable could
be the least qualified directors on the board.
None of the purported company precedents address rule 14a-8 proposals that each
director shall have a term of equal length from the date of first
implementation.
Returning to new text:
The company does not disclose the percentage of shares that are needed to adopt
this proposal or the manner in which this percentage is calculated. Thus there
is no way to forecast whether there is substantial risk that the company
resolution will fail to be adopted.
A copy of this letter is forwarded to the company in a non-PDF email. In order
to expedite the rule 14a-8 process it is requested that the company forward any
addition rule 14a-8 response in the same type format to the undersigned.
For these reasons it is requested that the staff find that this resolution
cannot be omitted from the company proxy. It is also respectfully requested that
the shareholder have the last opportunity to submit material in support of
including this proposal - since the company had the first opportunity.
Sincerely,
John Chevedden
cc: Nick Rossi
Robert H. Steinfeld<RSteinfeld@imshealth.com>
[STAFF REPLY LETTER]
February 1, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: IMS Health Incorporated Incoming letter dated December 26, 2007
The proposal requests that the board take the steps necessary to adopt the
annual election of each director in the most expeditious manner possible.
There appears to be some basis for your view that IMS Health may exclude the
proposal under rule 14a-8(i)(10). In this regard, we note your representation
that IMS Health will provide shareholders at IMS Health's 2008 Annual Meeting
with an opportunity to approve an amendment to IMS Health's certificate of
incorporation to provide for the annual election of directors. Accordingly, we
will not recommend enforcement action to the Commission if IMS Health omits the
proposal from its proxy materials in reliance on rule 14a-8(i)(10).
Sincerely,
/s/
Heather L. Maples
Special Counsel
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