|
Company Name: Johnson & Johnson
Public Availability Date: January 29, 2008
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 21, 2007
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Shareholder Proposal of TIAA-CREF Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that our client, Johnson & Johnson (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
TIAA-CREF (the "Proponent").
Pursuant to Rule 14a-8(j), we have:
enelosed 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 copiess 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 Company's Board of Directors "adopt a policy
requiring that the proxy statement for each annual meeting contain a proposal,
submitted by and supported by Company management, seeking an advisory vote of
shareholders to ratify and approve the board Compensation Committee Report and
the executive compensation policies and practices set forth in the Company's
Compensation Discussion and Analysis." The Proponent submitted the Proposal on
November 12, 2007. A copy of the Proposal, as well as related correspondence
with the Proponent, is attached to this letter as Exhibit A.
BASIS 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)(11) because it is substantially duplicative of a shareholder proposal
received on October 18, 2007 from Mr. William Steiner (the "Prior Proposal").
The Prior Proposal requests that the Company's Board of Directors "adopt a
policy that provides shareholders the opportunity at each annual meeting to vote
on an advisory resolution, proposed by management, to ratify the compensation of
the named executive officers ... set forth in the proxy statement's Summary
Compensation Table (the "SCT") and the accompanying narrative disclosure of
material factors provided to understand the SCT (but not the Compensation
Discussion and Analysis." A copy of the Prior Proposal is attached to this
letter as Exhibit B.
ANALYSIS
The Proposal May Be Excluded under Rule 14a-8(i)(11) Because It Is Substantially
Duplicative of a Previously Submitted Proposal.
Rule 14a-8(i)(11) provides that a shareholder proposal may be excluded if it
"substantially duplicates another proposal previously submitted to the company
by another proponent that will be included in the company's proxy materials for
the same meeting." The Commission has stated that "the purpose of [Rule
14a-8(i)(11)] is to eliminate the possibility of shareholders having to consider
two or more substantially identical proposals submitted to an issuer by
proponents acting independently of each other." Exchange Act Release No. 12999
(Nov. 22, 1976).
When two substantially duplicative proposals are received by a company, the
Staff has indicated that the company must include the first of the proposals in
its proxy materials, unless the proposal may otherwise be excluded. See, e.g.,
Great Lakes Chemical Corp. (avail. Mar. 2, 1998); Pacific Gas and Electric Co.
(avail. Jan. 6, 1994); Atlantic Richfield Co. (avail. Jan. 11, 1982). The
Company received the Prior Proposal almost one month before receiving the
Proposal, and the Company anticipates including the Prior Proposal in the 2008
Proxy Materials. Consequently, the Proposal may be properly omitted as
substantially duplicative of the Prior Proposal.
Pursuant to Staff precedent, the standard applied in determining whether
proposals are substantially duplicative is whether the proposals present the
same "principal thrust" or "principal focus," not whether the proposals are
identical. See, e.g., Qwest Communications Int'l, Inc. (avail. Mar. 8, 2006);
The Home Depot, Inc. (avail. Feb. 28, 2005); Bank of America Corp. (avail. Feb.
25, 2005); Pacific Gas & Electric Co. (avail. Feb. 1, 1993). The Proposal and
the Prior Proposal have the same principal thrust and focus because both seek to
give shareholders an advisory vote on executive compensation based on the
expanded disclosure requirements of the Commission's new compensation disclosure
rules. The supporting statements of both the Proponent and Mr. Steiner express
the desire that shareholders have a vehicle for expressing their concern about
or support for the Company's executive compensation in light of required
compensation disclosures. Specifically, each of the supporting statements
indicates an intent to see that executive compensation is "in the best interest
of shareholders" (Proposal) or, in other words, "aligned with the creation of
shareholder value" (Prior Proposal).
The Staff consistently has taken the position that proposals may differ in their
terms or scope and still be deemed substantially duplicative for the purposes of
Rule 14a-8(i)(11), as long as the proposals have the same principal thrust or
focus. For example, in Comcast Corp. (avail. Mar. 2, 2006), the Staff concurred
with the company's view that a proposal seeking shareholder approval of future
executive severance agreements providing benefits in excess of 2.99 times base
salary plus bonus was substantially duplicative of an earlier proposal asking
the board to eliminate all compensation, including severance pay and retirement
benefits, that would cause the compensation of any individual executive to
exceed $500,000 a year. Although not identical, the proposals both sought to
limit the value of severance benefits for executives, and therefore, the
principal thrust and focus of the proposals was the same. Similarly, in Merck &
Co., Inc. (avail. Jan. 10, 2006), the Staff concurred with the company's view
that a proposal seeking adoption of a policy making a significant portion of
future stock option grants to senior executives performance-based was
substantially duplicative of an earlier proposal asking that the board take the
steps needed to see that the company did not award any new stock options or
reprice or renew current stock options. Although not identical, both proposals
sought future limitations on grants of stock options, and therefore, the
principal thrust and focus of the proposals was the same. Likewise, in Centerior
Energy Corp. (avail. Feb. 27, 1995), the Staff concurred that the company could
omit three executive compensation-related proposals from its proxy statement
because they were substantially duplicative of a proposal asking the company to
place ceilings on executives' compensation, tie compensation to the company's
performance, and stop awarding bonuses and stock options. The three proposals
requested, respectively, that the company: (1) freeze executive compensation;
(2) reduce management size and executive compensation, and eliminate bonuses;
and (3) freeze annual salaries and eliminate bonuses. Although not identical,
all of the proposals had as their principal thrust and focus the limitation of
compensation, and directly or indirectly linking limits on compensation to
performance standards. See also Pacific Gas & Electric Co. (avail. Feb. 1, 1993)
(concurring with company's view that a proposal asking the company to link the
chief executive officer's total compensation to company performance was
substantially duplicative of two other proposals asking the company to: (1) tie
all executive compensation other than salary to performance indicators; and (2)
impose ceilings on future total compensation of officers and directors in order
to reduce their compensation).
The instant proposals have the same principal thrust and focusa shareholder
advisory vote on executive compensation. The Prior Proposal seeks an advisory
vote on the information contained in the Summary Compensation Table, and the
Proposal seeks an advisory vote on the information contained in the Compensation
Committee Report and the Compensation Discussion and Analysis ("CD&A"). The
Summary Compensation Table and the CD&A are integrally related and together,
they make up a company's compensation disclosure package. As the Commission has
stated, both the Summary Compensation Table and the CD&A are intended "to
provide investors with a clearer and more complete picture" of the compensation
paid to a company's principal executive officer, principal financial officer,
and the other highest paid executive officers. See Exchange Act Release No.
54302A (Aug. 29, 2006) at 1, 9, 199, 227. Item 402(b)(1) of Regulation S-K
provides for the CD&A to "[d]iscuss the compensation awarded to, earned by, or
paid to the named executive officers," while Item 402(c)(l) requires the Summary
Compensation Table to provide, in a "tabular format," specific compensation
information "concerning the compensation of the named executive officers." As
the Commission has recognized, the CD&A functions as "an overview providing
narrative disclosure that puts into context the compensation disclosure provided
elsewhere." Id. at 27-28. The Staff has similarly described the CD&A as "a
narrative overview at the beginning of the compensation disclosure, putting into
perspective the numbers in the tables that follow it." Staff Observations in the
Review of Executive Cornpensation Disclosure (Oct. 9, 2007). Thus, in seeking a
shareholder advisory vote on the CD&A and the Summary Compensation Table,
respectively, the Proposal and the Prior Proposal have the same principal thrust
and focus and therefore are substantially duplicative for purposes of Rule
14a-8(i)(11).
A primary rationale behind the "principal thrust/principal focus" concept is
that the inclusion in a single proxy statement of multiple proposals addressing
the same issue in different terms may confuse shareholders and place a company
and its board of directors in a position where they are unable to determine the
shareholders' will. If the Company were to include both the Proposal and the
Prior Proposal in its 2008 Proxy Materials, this would create confusion for
shareholders because both proposals ask them to vote on the same subject
matterwhether to implement an advisory vote on executive compensation. This is
especially true because the Proposal specifically requests an advisory vote on
the CD&A, while the Prior Proposal expressly excludes the CD&A from the advisory
vote. Moreover, if both proposals were approved by shareholders, the Company
could face alternative and inconsistent obligations in order to comply with the
terms of each proposalan advisory vote on the CD&A and an advisory vote
excluding the CD&A. The Company would have difficulty determining which advisory
vote the shareholders preferred and would be unable to implement both proposals
fully.
The Company anticipates including the Prior Proposal in its 2008 Proxy
Materials. The Proposal was received almost one month later and addresses the
same subject matter as the Prior Proposal. Consistent with the Staff's previous
interpretations of Rule 14a-8(i)(11), the Company believes that the Proposal may
be excluded as substantially duplicative of the Prior Proposal.
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) 955-8287, my colleague Amy L. Goodman at (202) 955-8653 or
Steven M. Rosenberg, the Company's Corporate Secretary and Assistant General
Counsel, at (732) 524-2452.
Sincerely,
/s/
Elizabeth A. Ising
EAI/lms
Enclosures
cc: Steven M. Rosenberg, Johnson & Johnson
John C. Wilcox, TIAA-CREF
Hye-Won Choi, TIAA-CREF
[APPENDIX 1]
November 12, 2007
Mr. Steven Rosenberg
Corporate Secretary
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Dear Mr. Rosenberg:
On behalf of the Boards of Trustees of TIAA-CREF, we are writing to ask that
your Board consider voluntarily adopting a shareholder advisory vote on
executive compensation. In 2007 TIAA-CREF became the first U.S. entity to adopt
and implement the advisory vote. Our trustees strongly support its
implementation at portfolio companies. We would prefer to see action taken
voluntarily rather than in response to regulation or legislation. For this
reason, we are submitting the attached shareholder resolution that calls for you
to adopt an advisory vote in the form of a management proposal supported and
recommended by your board.
We are mindful that compensation decisions must be made by boards of directors,
not shareholders. It is not our intention to micromanage or substitute our
judgment on these important and sensitive decisions. However, as a matter of
good governance, we believe directors should be held to a high standard of
accountability in explaining and justifying their compensation policies and
decisions in terms of a company's business strategy and performance. This is the
goal of the new SEC disclosure rules, and we believe a shareholder referendum on
the content and quality of executive compensation disclosure is the best means
to ensure that this goal is achieved.
We hope you will join us in taking a leadership position on this important
governance principle. We are willing to consider alternatives to our shareholder
proposal, which is intended as a starting point for your board and management to
implement an advisory vote in a form best suited to your company and
circumstances.
We look forward to your response.
Sincerely,
/s/
[APPENDIX 2]
Proposal Text
RESOLVED, that the shareholders of Johnson & Johnson (the "Company") recommend
that the board of directors adopt a policy requiring that the proxy statement
for each annual meeting contain a proposal, submitted by ard supported by
Company management, seeking an advisory vote of shareholders to ratify and
approve the board Compensation Committee Report and the executive compensation
policies and practices set forth in the Company's Compensation Discussion and
Analysis.
Supporting Statement
The recent amendments to the Securities and Exchange Commission's rules
governing the disclosure of executive compensation are intended to provide
shareholders with clearer and more complete information about the Company's
compensation policies, goals, metrics, rationale and cost. The new rules should
enable shareholders to make an informed judgment about the appropriateness of
the company's compensation program. We believe that a non-binding, advisory vote
is an effective way for shareholders to advise the company's board and
management whether the company's policies and decisions on compensation have
been adequately explained and whether they are in the best interest of
shareholders.
An advisory vote would inform management and the board of shareholder views
without involving shareholders in compensation decisions. We believe that the
results of an advisory vote would encourage independent thinking by the board,
stimulate healthy debate within the Company and promote substantive dialogue
about compensation practices between the Company and its investors.
We urge you to vote "FOR" this proposal.
[INQUIRY LETTER]
January 29, 2008
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: Withdrawal of No-Action Letter Request Regarding the Shareholder Proposal of
TIAA-CREF Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
In a letter dated December 21, 2007 (the "No-Action Request"), we requested that
the staff of the Division of Corporation Finance of the Securities and Exchange
Commission concur that our client, Johnson & Johnson (the "Company"), could
properly exclude from the proxy materials for its 2008 Annual Meeting of
Shareholders a shareholder proposal and statements in support thereof (the
"Proposal") received from TIAA-CREF.
Following submission of the No-Action Request, the Company subsequently has
determined to include the Proposal in the proxy materials for its 2008 Annual
Meeting of Shareholders. Based on this determination, the undersigned on behalf
of the Company hereby withdraws the No-Action Request relating to the Company's
ability to exclude the Proposal pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934.
If we can be of any further assistance in this matter, please do not hesitate to
call me at (202) 955-8287 or Steven M. Rosenberg, the Company's Comporate
Secretary and Assistant General Counsel, at (732) 524-2452.
Sincerely,
/s/
Elizabeth A. Ising
EAI/jlk
cc: Steven M. Rosenberg, Johnson & Johnson
John C. Wilcox, TIAA-CREF
Hye-Won Choi, TIAA-CREF
[STAFF REPLY LETTER]
January 29, 2008
Elizabeth A. Ising
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5306
Re: Johnson & Johnson
Dear Ms. Ising:
This is in regard to your letter dated January 29,
2008 concerning the shareholder proposal submitted by TIAA-CREF for inclusion in
Johnson & Johnson's proxy materials for its upcoming annual meeting of security
holders. Your letter indicates that Johnson & Johnson will include the proposal
in its proxy materials, and that Johnson & Johnson therefore withdraws Its
December 21, 2007 request for a no-action letter from the Division. Because the
matter is now moot, we will have no further comment.
Sincerely,
/s/
William A. Hines
Special Counsel
cc: John C. Wilcox
Senior Vice President,
Head of Corporate Governance
TIAA-CREF
730 Third Avenue
New York, NY 10017
|
