Company Name: Johnson & Johnson
Public Availability Date: February 19, 2008
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 21, 2007
Direct Dial (202) 955-8653
Client No. C 45016-01913
Fax No. (202) 530-9677
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Shareholder Proposal of The Great Neck Capital Appreciation LTD Partnership
Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that our client, Johnson & Johnson, a New Jersey
corporation (the "Company"), intends to omit from its proxy statement and form
of proxy for its 2008 Annual Meeting of Shareholders (collectively, the "2008
Proxy Materials") a shareholder proposal and statements in support thereof (the
"Proposal") received from The Great Neck Capital Appreciation LTD Partnership,
which has appointed John Chevedden to act on its behalf (the "Proponent").
Pursuant to Rule 14a-8(j), we have:
enclosed herewith six (6) copies of this letter and its attachments;
filed this letter with the Securities and Exchange Commission (the
"Commission") no later than eighty (80) calendar days before the Company intends
to file its definitive 2008 Proxy Materials with the Commission; and
concurrently sent copies of this correspondence to the Proponent.
Rule 14a-8(k) provides that shareholder proponents are required to send
companies a copy of any correspondence that the proponents elect to submit to
the Commission or the staff of the Division of Corporation Finance (the
"Staff"). Accordingly, we are taking this opportunity to inform the Proponent
that if the Proponent elects to submit additional correspondence to the
Commission or the Staff with respect to the 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 is captioned "3Special Shareholder Meetings" and states:
"RESOLVED, Shareholders ask our board to amend our bylaws and any other
appropriate governing documents to give holders of a reasonable percentage of
our outstanding common stock the power to call a special shareholder meeting, in
compliance with applicable law. This proposal favors 10% of our outstanding
common stock to call a special shareholder meeting." 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)(10) because: (1) the Company's Board of Directors (the "Board") will in
the near future consider adoption of an amendment to the Company's By-Laws (the
"Current By-Laws") that substantially implements the Proposal (the "Proposed
By-Law Amendment"); and (2) the Company's shareholders already have the power to
call a special meeting of shareholders under the New Jersey Business Corporation
Act, which substantially implements the Proposal. Accordingly, we request that
the Staff concur with our view that the Proposed By-Law Amendment and the New
Jersey Business Corporation Act each substantially implements the Proposal and,
thus, that the Proposal may be excluded from the 2008 Proxy Materials pursuant
to Rule 14a-8(i)(10).
ANALYSIS
The Proposal May Be Excluded under Rule 14a-8(i)(10) Because It Has Been
Substantially Implemented.
A. Rule 14a-8(i)(10) Background.
Rule 14a-8(i)(10) permits a company to exclude a shareholder proposal from its
proxy materials if the company has substantially implemented the proposal. The
Commission stated in 1976 that the predecessor to Rule 14a-8(i)(10) was
"designed to avoid the possibility of shareholders having to consider matters
which have already been favorably acted upon by the management." Exchange Act
Release No. 12598 (July 7, 1976). When a company can demonstrate that it already
has taken actions to address each element of a shareholder proposal, the Staff
has concurred that the proposal has been "substantially implemented" and may be
excluded as moot. See, e.g., Exxon Mobil Corp. (avail. Jan. 24, 2001); The Gap,
Inc. (avail. Mar. 8, 1996); Nordstrom, Inc. (avail. Feb. 8, 1995). Moreover, a
proposal need not be "fully effected" by the company in order to be excluded as
substantially implemented. See Exchange Act Release No. 40018 at n.30 and
accompanying text (May 21, 1998); Exchange Act Release No. 20091 at II.E.6.
(Aug. 16, 1983). The Staff has noted that "a determination that the [c]ompany
has substantially implemented the proposal depends upon whether [the company's]
particular policies, practices and procedures compare favorably with the
guidelines of the proposal." Texaco, Inc. (avail. Mar. 28, 1991). In other
words, substantial implementation under Rule 14a-8(i)(10) requires that a
company's actions satisfactorily address the underlying concerns of the proposal
and that the "essential objective" of the proposal have been addressed. See,
e.g., Anheuser-Busch Cos., Inc. (avail. Jan. 17, 2007); ConAgra Foods, Inc.
(avail. Jul. 3, 2006); Johnson & Johnson (avail. Feb. 17, 2006); The Talbots,
Inc. (avail. Apr. 5, 2002); Masco Corp. (avail. Mar. 29, 1999).
B. The Proposed By-Law Amendment Substantially Implements the Proposal.
1. Description of Proposed By-Law Amendment.
The Proposal requests that the holders of a "reasonable percentage" of the
Company's outstanding Common Stock have the power to call a special meeting of
shareholders, which they are not empowered to do under the Current By-Laws.
Rather, under Article I, Section 2 of the Current By-Laws, a special meeting of
shareholders may be called only by the Chairman of the Board, a Vice-Chairman of
the Board, the Chairman of the Executive Committee, a Vice-Chairman of the
Executive Committee, the President or a majority of the Board. Section 14A:5-3
of the New Jersey Business Corporation Act states that a special meeting of
shareholders may be called by "the president or the board or by such other
officers, directors or shareholders as may be provided in the by-laws."
At the recommendation of management, the Board is expected to act in January
2008 on a proposed amendment to the Current By-Laws to permit shareholders to
call a special meeting of shareholders (the "Proposed By-Law Amendment"). The
Proposed By-Law Amendment would permit shareholders holding, individually or as
a group, at least 25% of the Company's outstanding Common Stock to call a
special meeting. Under the Proposed By-Law Amendment, shareholders seeking a
special meeting would submit a request to the Company, together with specified
information, including a written description of the business to be conducted at
the meeting. The Proposed By-Law Amendment would require the Company to hold a
special meeting within ninety (90) days of receiving the request, unless the
Board determines that the same business described in the request will be
included in an upcoming annual meeting within such ninety (90) days or some
shareholders revoke their request and the revocation brings the ownership of the
remaining requesting shareholders below 25%. We will supplementally notify the
Staff after the Board's consideration of the Proposed By-Law Amendment.
2. Substantial Implementation.
The Proposed By-Law Amendment substantially implements the Proposal and,
accordingly, the Proposal may be excluded from the 2008 Proxy Materials in
reliance on Rule 14a-8(i)(10). Specifically, because the Proposed By-Law
Amendment would allow shareholders holding at least 25% of the Company's
outstanding Common Stock to call a special meeting of shareholders, it
substantially implements the Proposal's request for a bylaw amendment giving a
"reasonable percentage" of shareholders the power to call a special meeting.
As noted above, Commission statements and Staff precedent with respect to Rule
14a-8(i)(10) confirm that the standard for exclusion is that a shareholder
proposal be substantially implemented, not fully effected. In other words, Rule
14a-8(i)(10) permits exclusion of a shareholder proposal when a company has
implemented the essential objective of the proposal, even when the manner by
which a company implements the proposal does not correspond precisely to the
actions sought by the shareholder proponent. See Exchange Act Release No. 20091
(Aug. 16, 1983). See also Honeywell International Inc. (avail. Jan. 31, 2007);
Sun Microsystems, Inc. (avail. Sept. 12, 2006); General Motors Corp. (avail.
Apr. 5, 2006); Tiffany & Co. (avail. Mar. 14, 2006); The Boeing Co. (avail. Mar.
9, 2005); The Home Depot, Inc. (avail. Mar. 7, 2005) (each allowing exclusion
under Rule 14a-8(i)(10) of a shareholder proposal requesting that any future
poison pill be put to a shareholder vote "as soon as possible" or "within
4-months" where the company had a poison pill policy in place that required a
shareholder vote on any future poison pill within one year). See also
Schering-Plough Corp. (avail. Feb. 2, 2006); Northrop Grumman Corp. (avail. Mar.
22, 2005); Southwest Airlines Co. (avail. Feb. 10, 2005) (each permitting
exclusion of a shareholder proposal seeking declassification of the company's
board of directors "in the most expeditious manner possible" when the company
planned to phase in declassification of the board of directors such that the
directors were elected to one-year terms as their current terms expired).
In the instant case, the Proposal requests that the Board amend the "bylaws and
any other appropriate governing documents" to give holders of a "reasonable
percentage" of the Company's outstanding Common Stock the power to call a
special meeting of shareholders. Although the Proposal states that it "favors"
10% of the Company's outstanding Common Stock, the Proposal does not ask the
Board to adopt this or any other specific percentage. The Proposal asks only for
a percentage that is "reasonable." Thus, the "essential objective" of the
Proposal is to vest in a reasonable proportion of the Company's shareholders the
power to convene a special meeting.
As noted above, in January 2008, the Board is expected to act on the Proposed
By-Law Amendment. As also noted above, the Proposed By-Law Amendment would
permit shareholders holding, individually or as a group, at least 25% of the
Company's outstanding Common Stock to call a special meeting. The only
circumstances in which the special meeting would not occur are if: (1) the Board
determines that the same business proposed for consideration at the special
meeting will be included in an upcoming annual meeting within ninety (90) days;
or (2) some shareholders seeking to hold the special meeting revoke their
request for a meeting and the revocation brings the ownership of the remaining
requesting shareholders below 25%.
The Proposed By-Law Amendment would set a different percentage (25% of the
Company's outstanding Common Stock) than the 10% that the Proposal cites as an
example of what is "reasonable." However, a 25% threshold falls well within the
boundaries of the "reasonable percentage" that the Proposal seeks. Among the
approximately 200 companies in the S&P 500 that allow shareholders to call
special meetings, nearly 140 use a 25% or greater threshold, while only about 45
use a 10% threshold. Accordingly, the Proposed By-Law Amendment is consistent
with practice at the majority of other large companies. Moreover, the Staff
previously has granted no-action relief on substantial implementation grounds in
circumstances where company boards of directors exercised discretion in
determining how to implement the subject matter of a shareholder proposal. See,
e.g., The Boeing Co. (avail. Mar. 15, 2006); Borders Group, Inc. (avail. Mar. 9,
2006); Bristol-Myers Squibb Co. (avail. Mar. 9, 2006); Electronic Data Systems
Corp. (avail. Mar. 9, 2006); The Home Depot, Inc. (avail. Mar. 9, 2006);
Honeywell International, Inc. (avail. Mar. 8, 2006) (each permitting exclusion
of a shareholder proposal asking the board to redeem poison pills not submitted
to a shareholder vote, through a charter or bylaw amendment "if practicable,"
where the board determined that the best means to implement the proposal was by
adopting a policy rather than amending the charter or bylaws). In this regard,
the Proposed By-Law Amendment, if approved by the Board, would reflect the
Board's conclusion, based on the exercise of its discretion and the application
of its business judgment, that 25% of the Company's outstanding Common Stock
represents "a reasonable percentage" of the Company's shareholders for purposes
of calling a special meeting.
Thus, the Proposed By-Law Amendment implements the essential objective of the
Proposal by allowing the holders of a reasonable percentage of the Company's
outstanding Common Stock to call a special meeting of shareholders, which the
Current By-Laws do not empower shareholders to do. Accordingly, for the reasons
set forth above the Company believes that the Proposed By-Law Amendment
substantially implements the Proposal and that the Proposal may therefore be
excluded from the Company's 2008 Proxy Materials under Rule 14a-8(i)(10).
C. The New Jersey Business Corporation Act Substantially Implements the
Proposal.
The Proposal may also be excluded from the 2008 Proxy Materials in reliance on
Rule 14a-8(i)(10) because the New Jersey Business Corporation Act substantially
implements the Proposal. Commission statements with respect to Rule 14a-8(i)(10)
confirm that the standard for determining whether a proposal has been
"substantially implemented" is not dependent on the means by which
implementation is achieved. For example, when it initially adopted the
predecessor of Rule 14a-8(i)(10), the Commission specifically determined not to
require that a proposal be implemented "by action of management," observing that
"mootness can be caused for reasons other than the actions of management, such
as statutory enactments, court decisions, business changes and supervening
corporate events." Exchange Act Release No. 12999 (Nov. 22, 1976).
Staff precedent also supports that a shareholder proposal may be implemented by
actions beyond those of management. For example, in Intel Corp. (avail. Feb. 14,
2005), the company had received a proposal asking that it "establish a policy"
of expensing all future stock options. The company argued that the proposal had
been substantially implemented through the Financial Accounting Standards
Board's adoption of Statement No. 123(R), requiring the expensing of stock
options. Although the proponent asserted that adoption of the accounting
standard was different than company adoption of a policy as requested under the
proposal, the Staff concurred that the new accounting standard had substantially
implemented the proposal and permitted exclusion of the proposal.
In the instant case, Section 14A:5-3 of the New Jersey Business Corporation Act
allows shareholders to call a special meeting. Specifically, Section 14A:5-3
provides that, notwithstanding any by-law provision addressing who may call a
special meeting:
upon the application of the holder or holders of not less than 10% of all the
shares entitled to vote at a meeting, the Superior Court, in an action in which
the court may proceed in a summary manner, for good cause shown, may order a
special meeting of the shareholders to be called and held at such time and
place, upon such notice and for the transaction of such business as may be
designated in such order.
The Staff previously declined to concur that Exxon Mobil Corporation could
exclude a similar proposal under Rule 14a-8(i)(10) based on an argument that it
had been substantially implemented by Section 14A:5-3. See Exxon Mobil Corp.
(avail. March 19, 2007). However, unlike in Exxon Mobil Corp., the Company is
relying upon a legal opinion from New Jersey counsel. The opinion, from Riker,
Danzig, Scherer, Hyland & Peretti LLP (the "Opinion"), is attached to this
letter as Exhibit B. As stated in the Opinion, Section 14A:5-3 grants holders of
10% or more of the Company's Common Stock the right to call a special meeting of
shareholders. Although Section 14A:5-3 requires application to a court, as noted
in the Opinion, the intent of this requirement is "not to prevent or materially
impair" the right of shareholders to call a special meeting. Rather, the purpose
of the requirement is to "provide a desirable protection to the corporation
against multiple calls for special meetings by minority shareholders."
Importantly, the Opinion also makes clear that New Jersey courts have not
imposed any additional requirements on shareholders' ability to exercise their
state law right to call a special meeting under Section 14A:5-3. Instead,
"simple compliance with the requirements listed in the statute [is] sufficient."
Accordingly, as requested in the Proposal, "a reasonable percentage" of the
Company's shareholders already have the power to call special meetings under
current New Jersey law.
Thus, for the reasons set forth above the Company believes that the New Jersey
Business Corporation Act substantially implements the Proposal and that the
Proposal may therefore be excluded from the Company's 2008 Proxy Materials under
Rule 14a-8(i)(10).
D. Supplemental Notification Following Board Action.
We submit this no-action request at this time to address the timing requirements
of Rule 14a-8. We will supplementally notify the Staff after Board consideration
of the Proposed By-Law Amendment. The Staff consistently has granted no-action
relief under Rule 14a-8(i)(10) where a company intends to omit a shareholder
proposal on the grounds that the board of directors is expected to take certain
action that will substantially implement the proposal, and then supplements its
request for no-action relief by notifying the Staff after that action has been
taken by the board of directors. See, e.g., The Dow Chemical Co. (avail. Feb.
26, 2007); Johnson & Johnson (avail. Feb. 13, 2006); General Motors Corp.
(avail. Mar. 3, 2004); Intel Corp. (avail Mar. 11, 2003) (each granting
no-action relief where the company notified the Staff of its intention to omit a
shareholder proposal under Rule 14a-8(i)(10) because the board of directors was
expected to take action that would substantially implement the proposal, and the
company supplementally notified the Staff of the board action).
CONCLUSION
Based upon the foregoing analysis, we believe that: (1) the Proposed By-Law
Amendment (assuming adoption) substantially implements the Proposal and
therefore the Proposal is excludable under Rule 14a-8(i)(10); and (2) the
Proposal has been substantially implemented by the New Jersey Business
Corporation Act, and therefore is excludable under Rule 14a-8(i)(10). Thus, we
respectfully request that the Staff concur that it will take no action if the
Company excludes the Proposal from its 2008 Proxy Materials in reliance on Rule
14a-8(i)(10). We would be happy to provide you with any additional information
and answer any questions that you may have regarding this subject. Moreover, the
Company agrees to promptly forward to the Proponent any response from the Staff
to this no-action request that the Staff transmits by facsimile to the Company
only.
If we can be of any further assistance in this matter, please do not hesitate to
call me at (202) 955-8653, my colleague Elizabeth A. Ising at (202) 955-8287 or
Steven M. Rosenberg, the Company's Corporate Secretary and Assistant General
Counsel, at (732) 524-2452.
Sincerely,
/s/
Amy L. Goodman
ALG/cms
Enclosures
cc: Steven M. Rosenberg, Johnson & Johnson
John Chevedden
[APPENDIX 1]
November 5, 2007
Mr. William C. Weldon
Chairman
Johnson & Johnson (JNJ)
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Phone: 732 524-0400
Fax: 732 524-3300
PH: 732 524-2454
NV: 732 214-0332
Rule 14a-8 Proposal
Dear Mr. Wcldon.
This Rule 14a-8 proposal is respectfulls 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 imlil after the date of the
respective sharecholder meeting and the presentation of this proposal at the
annual meeting. This submitted format, with the shatcholder-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 any 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) carthlink.net
On the interest of company cost savings and improving the effieiency of the rule
14a-8 process please communicate via email.)
PH: 310-371-7872
2215 Nelson Ave., No. 205. Redondo Beach. CA 90278
Your consideration and the eonsiderauion of the Board of Directors is
appreelated in support of the long-term performance of our company. Please
acknowledge receipt of this proposal by email.
Sincerely,
/s/
Mark Filiberlo,
General Partner
cc: Steven M. Rosenberg
Corporate Secretary
PH: 732-524-2452
FX: 732-524-2185
[APPENDIX 2]
[JNJ: Rule 14a-8 Proposal, November 5, 2007]
3 - Special Shareholder Meetings
RESOLVED, Shareholders ask our board to amend our bylaws and any other
appropriate governing documents to give holders of a reasonable percentage of
our outstanding common stock the power to call a special shareholder meeting, in
compliance with applicable law. This proposal favors 10% of our outstanding
common stock to call a special shareholder meeting.
Special meetings allow investors to vote on important matters, such as a
takeover offer, that can arise between annual meetings. If shareholders cannot
call special meetings, management may become insulated and investor returns may
suffer.
Shareholders should have the ability to call a special meeting when they think a
matter is sufficiently important to merit expeditious consideration. Shareholder
control over timing is especially important in the context of a major
acquisition or restructuring, when events unfold quickly and issues may become
moot by the next annual meeting.
Fidelity and Vanguard support a shareholder right to call a special meeting. The
proxy voting guidelines of many public employee pension funds, including the New
York City Employees Retirement System, also favor this right. Governance ratings
services, such as The Corporate Library and Governance Metrics International,
take special meeting rights into account when assigning company ratings.
Eighteen (18) proposals on this topic averaged 56%-support in 2007including
74%-support at Honeywell (HON) according to RiskMetrics (formerly Institutional
Shareholder Services).
Please vote yes to encourage our board to take this opportunity for an important
enhancement to our corporate governance:
Notes:
Mark Filiberto, General Partner, The Great Neck Capital Appreciation LTD
Partnership, 1981 Marcus Ave., Suite C114, Lake Success, NY 11042 sponsored this
proposal.
The above format is requested for publication without re-editing, re-formatting
or elimination of text, including beginning and concluding text, unless prior
agreement is reached. It is respectfully requested that this proposal be
proofread before it is published in the definitive proxy to ensure that the
integrity of the submitted format is replicated in the proxy materials. Please
advise if there is any typographical question.
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.
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).
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 15, 2008
Direct Dial (202) 955-8653
Client No. C 45016-01913
Fax No. (202) 530-9677
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Supplemental Letter Regarding Shareholder Proposal of The Great Neck Capital
Appreciation LTD Partnership Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
On December 21, 2007, we submitted a letter (the "No-Action Request") on behalf
of our client, Johnson & Johnson, a New Jersey corporation (the "Company"),
notifying the staff of the Division of Corporation Finance (the "Staff") that
the Company intends to omit from its proxy statement and form of proxy for its
2008 Annual Meeting of Shareholders (collectively, the "2008 Proxy Materials") a
shareholder proposal and statements in support thereof (the "Proposal") received
from The Great Neck Capital Appreciation LTD Partnership, which has appointed
John Chevedden to be its representative for all issues pertaining to the
Proposal (the "Proponent"). The Proposal requests that the Company's Board of
Directors (the "Board") amend the "bylaws and any other appropriate governing
documents to give holders of a reasonable percentage of our outstanding common
stock the power to call a special shareholder meeting, in compliance with
applicable law." A copy of the No-Action Request, including the Proposal text,
is attached hereto as Exhibit A.
BASIS FOR SUPPLEMENTAL LETTER
The No-Action Request indicated our belief that the Proposal may be excluded
from the 2008 Proxy Materials because the Board would be considering an
amendment to the Company's By-Laws that would substantially implement the
Proposal. We write supplementally to confirm that, acting by unanimous written
consent, the Board approved an amendment to Section 2 of Article I of the
Company's By-Laws to allow the holders of at least 25% of the Company's
outstanding shares of stock to cause the Board to call a special meeting of
shareholders (the "By-Law Amendment"). The By-Law Amendment was filed with the
Securities and Exchange Commission (the "Commission") as an exhibit to the
Current Report on Form 8-K on January 15, 2008, a copy of which is attached
hereto as Exhibit B.
ANALYSIS
As discussed in more detail in the No-Action Request, Rule 14a-8(i)(10) permits
a company to exclude a shareholder proposal from its proxy materials if the
company has substantially implemented the proposal. Under Rule 14a-8(i)(10),
substantial implementation requires that a company's actions satisfactorily
address the essential objective of the proposal. See, e.g., The Kroger Co.
(avail. Apr. 11, 2007); General Motors Corp. (avail. Apr. 5, 2006); Lowe's Cos.,
Inc. (avail. Mar. 21, 2005).
The By-Law Amendment substantially implements the Proposal and, accordingly, the
Proposal may be excluded from the 2008 Proxy Materials in reliance on Rule
14a-8(i)(10). Specifically, the By-Law Amendment provides that a special meeting
of shareholders shall be called by the Board upon the request of the holders of
at least 25% of the outstanding shares of stock of the Company entitled to vote.
See Exhibit B. The Proposal requests that the Board amend the Company's "bylaws
and any other appropriate governing documents to give holders of a reasonable
percentage" of the Company's outstanding common stock the power to call a
special shareholder meeting. Although the Proposal states that it "favors" 10%
of the Company's outstanding common stock, the Proposal does not ask the Board
to adopt this or any other specific percentage. The Proposal asks only for a
percentage that is "reasonable." Thus, the essential objective of the Proposal
is to vest in a reasonable proportion of the Company's shareholders the power to
cause a special meeting of shareholders to be held. Consequently, the By-Law
Amendment substantially implements the essential objective of the Proposal by
permitting the holders of at least 25% of the Company's outstanding shares of
stock to cause a special meeting of the shareholders to be held. The 25%
threshold falls well within the boundaries of the "reasonable percentage" that
the Proposal seeks.
The By-Law Amendment provides a limited circumstance under which the Board will
not call a special meeting of shareholderswhen the Board in good faith
determines that the specific business requested to be addressed at the proposed
special meeting will be addressed at an upcoming annual meeting to be held
within 90 days of receipt by the Secretary of the request for the special
meeting. This narrow circumstance was included in the By-Law Amendment to avoid
the costs and burdens on the Company and its shareholders associated with
holding a special meeting to consider the same specific business that is about
to be considered (within 90 days) at an annual meeting and to allow the Company
the time necessary to arrange for a special meeting (e.g., preparing and mailing
proxy materials). The Board, in adherence to its fiduciary responsibilities to
the Company's shareholders, is responsible for conserving Company resources and
costs when possible and for seeing that shareholders receive full and fair
disclosure concerning matters to be considered at a shareholders' meeting.
This narrow circumstance also avoids asking shareholders to consider repeatedly
the same specific business within a short span of time (specifically, 90 days).
The Commission, in adopting various substantive bases for the exclusion of
shareholder proposals, has noted similar concerns with shareholders having to
consider the same issues repeatedly. For example, the Commission stated in 1976
that the predecessor to Rule 14a-8(i)(10) was "designed to avoid the possibility
of shareholders having to consider matters which already have been favorably
acted upon by the management...." Exchange Act Release No. 12598 (July 7, 1976)
(the "1976 Release"). The Commission offered a similar reason for adopting Rule
14a-8(i)(11), which allows the exclusion of a proposal that "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." In the 1976 Release, the Commission noted that the purpose of the
exclusion was to "eliminate the possibility of shareholders having to consider
two or more substantially identical proposals...." Similarly, the Company's
Board is seeking to avoid asking shareholders to consider the same specific
business at a special meeting of shareholders that will be addressed at an
upcoming annual meeting within the next 90 days.
CONCLUSION
Based on 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 for the reasons set forth above. While this letter addresses the
Company's basis for excluding the Proposal as substantially implemented by the
By-Law Amendment under Rule 14a-8(i)(10), we also reiterate that we believe that
the Proposal has been substantially implemented by the New Jersey Business
Corporation Act, and therefore is excludable under Rule14a-8(i)(10) for the
reasons discussed in the No-Action Request.
Pursuant to Rule 14a-8(j), enclosed herewith are six (6) copies of this
supplemental letter and its attachments. Also, in accordance with Rule 14a-8(j),
a copy of this supplemental letter and its attachments is being mailed on this
date to the Proponent. The Company hereby agrees to promptly forward to the
Proponent any Staff response to this supplemental letter that the Staff
transmits by facsimile to the Company only.
We would be happy to provide you with any additional information and answer any
questions that you may have regarding this subject. If we can provide any
additional information or be of any further assistance in this matter, please do
not hesitate to call me at (202) 955-8653 or Steven M. Rosenberg, the Company's
Corporate Secretary and Assistant General Counsel, at (732) 524-2452.
Sincerely,
/s/
Amy L. Goodman
ALG/cms
Enclosures
cc: Steven M. Rosenberg, Johnson & Johnson
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 Johnson & Johnson (JNJ) Shareholder Position on Company No-Action Request
Rule 14a-8 Proposal: Special Shareholder Meetings The Great Neck Capital
Appreciation LTD Partnership
Ladies and Gentlemen:
The overly vague company December 21, 2007 no action request is inadequate in
providing only an expectation of a particular month for the next Board of
Directors meeting, an expectation of board action and generalizations on the
text. There is no time-span given after this Board of Directors meeting for a
company report on any action the board may have taken by then.
This company delay-period, with an apparent blackout on any additional
information, could create a deadline burden for the Staff to make a decision on
the eve of the company's proxy publication. And the proponent will also have a
deadline burden in analyzing and responding to any text that the board could add
to incapacitate the functioning of the proposed amendment. Plus the board might
approve an amendment a month or longer after the deadline for submitting a no
action request.
The company seems to misread the text of the proposal. The proposal does not ask
for a bylaw to give shareholders a right to petition a Superior Court for an
order. This company-specified Superior Court then has the ultimate power to
consider such a shareholder petition in no "summary manner" whatsoever.
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: The Great Neck Capital Appreciation LTD Partnership
Steven M. Rosenberg<srosenb@corus.jnj.com>
[INQUIRY LETTER]
January 16, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
#2 Johnson & Johnson (JNJ) Shareholder Position on Company No-Action Request
Rule 14a-8 Proposal: Special Shareholder Meetings The Great Neck Capital
Appreciation LTD Partnership
Ladies and Gentlemen:
Regarding the company January 15, 2008 no action request supplement, the text of
the Rule 14a-8 proposal states:
RESOLVED, Shareholders ask our board to amend our bylaws and any other
appropriate governing documents to give holders of a reasonable percentage of
our outstanding common stock the power to call a special shareholder meeting, in
compliance with applicable law. This proposal favors 10% of our outstanding
common stock to call a special shareholder meeting.
This proposal considers 10% a reasonable percentage, yet the company claims
without any support whosoever, that a threshold 2-1/2 times higher is close
enough to 10%.
This rule 14a-8 proposal does not call for exceptions. Yet the company adds
potentially crippling exceptions. This includes allowing the Board to use its
supposedly good faith to claim the loophole that the same business will be
included in some however vague manner in an upcoming shareholder meeting. No
methodology is given for the board to make such a determination. Plus there is
no guideline given on what would constitute the minimum level for such an item
of business to be considered included in an upcoming shareholder meeting. Does
this mean that it can be satisfied by the Chairman setting aside 3-minutes to
answer questions on an issue?
The company provides no examples of historical abuses to support its adding of
powerful exceptions to the rule 14a-8 proposal.
Plus the company Section 2(B)(4), which conveniently falls outside the
handwritten brackets in the company exhibit, seems to give the chairman of a
special meeting an ad hoc liberty with no limits to declare the purpose of the
special meeting as not properly brought before the meeting and thus moot.
Contrary to the company argument, the powerful company exceptions open the door
for shareholders to need to consider this same proposal topic in 2009 in a form
that calls for the removal of the company exceptions and for adoption of the 10%
threshold.
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: The Great Neck Capital Appreciation LTD Partnership
Steven M. Rosenberg<srosenb@corus.jnj.com>
[STAFF REPLY LETTER]
February 19, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Johnson & Johnson Incoming letter dated December 21, 2007
The proposal asks the board to amend the bylaws and any other appropriate
governing documents to give holders of a reasonable percentage of Johnson &
Johnson's outstanding common stock the power to call a special shareholder
meeting.
There appears to be some basis for your view that Johnson & Johnson may exclude
the proposal under rule 14a-8(i)(10). Accordingly, we will not recommend
enforcement action to the Commission if Johnson & Johnson omits the proposal
from its proxy materials in reliance on rule 14a-8(i)(10).
Sincerely,
/s/
Craig Slivka
Attorney-Adviser |
