Company Name:Kellogg Co.
Public Availability Date: January 16, 2008
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER
[INQUIRY LETTER]
January 15, 2008
VIA EMAIL AND FEDERAL EXPRESS
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
the General Board of Pension and Health Benefits of the United Methodist Church
Dear Ladies and Gentlemen:
In a letter dated December 12, 2007, we requested that the staff of the Division
of Corporation Finance concur that Kellogg Company ("Kellogg") could properly
exclude from its proxy materials for its 2008 Annual Shareowners Meeting a
shareholder proposal ("the 2008 Proposal") received from the General Board of
Pension and Health Benefits of the United Methodist Church (the "Proponent").
Enclosed is a letter from Vidette Bullock Mixon, the Proponent's representative,
to Kellogg dated January 14, 2008, stating that the Proponent willingly
withdraws the 2008 Proposal. See Exhibit A. In reliance on this letter, we
hereby withdraw the December 12, 2007, no-action request relating to Kellogg's
ability to exclude the 2008 Proposal pursuant to Rule 14a-8(i)(12)(ii) under the
Securities Exchange Act of 1934. Please do not hesitate to call me at (269)
961-2190 with any questions in this matter.
Sincerely,
/s/
Gary H. Pilnick
Senior Vice President, General Counsel, Corporate Development and Secretary
Enclosures
cc: Vidette Bullock Mixon
Keith S. Crow, P.C. and Robert M. Hayward
[INQUIRY LETTER]
December 12, 2007
VIA EMAIL AND FEDERAL EXPRESS
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 General Board of Pension and Health Benefits of
the United Methodist Church Exchange Act of 1934-Rule 14a-8(i)(12)(ii)
Dear Ladies and Gentlemen:
This letter is to inform you that Kellogg Company ("Kellogg" or the "Company")
intends to omit from its proxy statement and form of proxy for its 2008 Annual
Shareowners Meeting (collectively, the "2008 Proxy Materials") a sharcholder
proposal and statements in support thereof (the "2008 Proposal") received from
the General Board of Pension and Health Benefits of the United Methodist Church
(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 Kellogg expects 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 2008 Proposal, a copy of that
correspondence should concurrently be furnished to the undersigned on behalf of
Kellogg pursuant to Rule 14a-8(k).
BASES FOR EXCLUSION
We hereby respectfully request that the Staff concur in our view that the 2008
Proposal may be excluded from the 2008 Proxy Materials pursuant to Rule
14a-8(i)(12)(ii) because the 2008 Proposal deals with substantially the same
subject matter as shareholders' proposals that were included in Kellogg's 2006
and 2007 proxy materials (together, the "Previous Proposals").
THE 2008 PROPOSAL
The 2008 Proposal requires Kellogg's Board of Directors to "report to
shareholders by December, 2008 on measures taken to ensure long-term
sustainability and security of our company's product supply chain." The 2008
Proposal states that the report should include:
"Strategies to significantly reduce waste, energy and water use throughout the
supply chain;
Resource conservation programs and pollution prevention measures for the full
product life-cycle;
Labeling products for country of origin and presence of genetically modified
ingredients; and
Safety testing and systems to ensure identity preservation and traceability
`from farm to fork.'"
A copy of the 2008 Proposal and all related correspondence from the Proponent is
attached to this letter as Exhibit A.
ANALYSIS
The 2008 Proposal May Be Excluded Under Rule 14a-8(i)(12)(ii) Because It Deals
With Substantially the Same Subject Matter as the Previous Proposals
Rule 14a-8(i)(12)(ii) provides that if a proposal deals with substantially the
same subject matter as other proposals that have been previously included in a
company's proxy materials at least two times within the preceding five calendar
years, then the company may exclude the proposal from its proxy materials for
any meeting held within three calendar years of its last submission to
shareholders if the proposal received less than 6% of the vote at that time.
This rule is intended to prohibit efforts made by shareholders to present
essentially the same proposal to a company's shareholders year after year, even
though the proposal has not attracted the support required by the rule. As
described above, the 2008 Proposal requests Kellogg's Board of Directors to
report on the Company's strategies and programs that ensure the long term
sustainability and security of the Company's product supply chain. This 2008
Proposal deals with substantially the same subject matter as the Previous
Proposals.
The Previons Proposals requested that Kellogg's Board of Directors report on the
Company's "policies, practices, and indicators related to measuring long-term
social and environmental sustainability." The supporting statements to the
Previous Proposals recommend that the Company use the Global Reporting
Initiative's Sustainability Reporting Guidelines (the "Guidelines") to prepare
the report. The Guidelines provide guidance on report content, including
performance in six categories (environmental, product responsibility, direct
economic impacts, labor practices and decent working conditions, human rights,
and society). A copy of the Guidelines is attached hereto as Exhibit B. A copy
of the Previous Proposals as they appeared in Kellogg's 2006 and 2007 proxy
statements are attached hereto as Exhibit C.
The 2008 Proposal and the Previous Proposals are substantially similar for
purposes of Rule 14a-8(i)(12)(ii) because the primary subject matter of both
proposals is a sustainability report. The 2008 Proposal is only a slight
reformulation of the Previous Proposals. Both the 2008 Proposal and the Previous
Proposals focus primarily on environmental conservation and product
responsibility. For example:
The 2008 Proposal requests that the report include the Company's "strategies
to significantly reduce waste, energy and water use" and "resource conservation
programs and pollution prevention measures." The Previous Proposals, in reliance
on the guidance set forth in the Guidelines, request that the report include
management's approach to "the following Environmental Aspects: Materials;
Energy; Water...Ernissions, Effluents, and Waste."
The 2008 Proposal requests that the report include the Company's policies on
"[l]abeling products for country of origin and presence of genetically modified
ingredients" and "[s]afety testing and systems to ensure identity preservation
and traceability." The Previous Proposals, in reliance on the guidance set forth
in the Guidelines, request that the report include management's approach to
"Customer Health and Safety; Product and Service Labeling."
Despite the differences in the language and presentation of the 2008 Proposal
and the Previous Proposals, these proposals deal with the same substantive
concerns and thus substantially the same subject matter for purposes of Rule
14a-8(i)(12)(ii). "Substantially the same subject matter," as that phrase is
used in Rule 14a-8(i)(12), does not mean that the 2008 Proposal and the Previous
Proposal must be exactly the same. Although the predecessor to Rule 14a-8(i)(12)
required a proposal to be "substantially the same proposal" as prior proposals,
the Commission amended the rule in 1983. In SEC Release No. 34-20091 (August 16,
1983), the Commission explained the reason for and meaning of the revision,
stating:
The Commission believes that this change is necessary to signal a clean break
from the strict interpretive position applied to the existing provision. The
Commission is aware that the interpretation of the new provision will continue
to involve difficult subjective judgments, but anticipates that those judgments
will be based upon a consideration of the substantive concerns raised by a
proposal rather than the specific language or actions proposed to deal with
those concerns.
Through no-action letters, the Staff has made it clear that Rule 14a-8(i)(12)
does not require that the proposals, or their subject matters, be identical in
order for a company to exclude the later-submitted proposal. When considering
whether a proposal deals with substantially the same subject matter, the Staff
has increasingly focused on the "substantive concerns" raised by the proposal as
the essential consideration, rather than the specific language or corporate
action proposed to be taken. The Staff has thus concurred with the exclusion of
proposals under Rule 14a-8(i)(12) when the proposal in question shares similar
underlying social or policy issues with a prior proposal. See, e.g.,
Bristol-Myers Squibb Co. (February 6, 1996) (the Staff permitted exclusion of a
proposal recommending that the board of directors form a committee to formulate
an educational plan to inform patients of identified possible effects of the
company's products because it dealt with substantially the same subject matter
as prior proposals asking the company to refrain from giving charitable
contributions to organizations that perform identified medical procedures).
In Ford Motor Co. (February 28, 2007), the Staff permitted the omission of a
proposal requesting that the company institute a new policy that tied executive
compensation to improvements in the fuel economy of the company's new light
trucks and passenger vehicles to combat rising oil prices. Reports on the
strategies implemented and the improvements in fuel economy were to be given to
shareholders. In a prior proposal, shareholders requested that Ford's Board of
Directors institute an executive compensation review with a view to linking a
significant portion of senior executive compensation to progress in reducing
lifetime product greenhouse gas emissions from the company's new passenger
vehicles and that a report on the review be made available to shareholders.
Despite the nuanced focus on fuel efficiency to combat rising oil prices in the
later proposal, the Staff found that the proposals had substantially the same
subject matter (fuel economy) and granted no-action relief for the omission of
the later proposal. See also Medtronic Inc. (June 2, 2005) and Bank of America
Corp. (February 25, 2005) (proposals requesting that the companies list all of
their political and charitable contributions on their websites were excludable
as they dealt with substantially the same subject matter as a prior proposal
requesting that the companies cease making charitable contributions); Dow Jones
& Co., Inc. (December 17, 2004) (proposal requesting the company publish in its
proxy materials information relating to its process of donations to a particular
non-profit organization was excludable as it dealt with substantially the same
subject matter as a prior proposal requesting an explanation of the procedures
governing all charitable donations); Saks Inc. (March 1, 2004) (a proposal
requesting the board of directors to implement a code of conduct based on
International Labor Organization standards, establish an independent monitoring
process and annually report on adherence to such code was excludable as it dealt
with substantially the same subject matter as a prior proposal requesting a
report on the company's vendor labor standards and compliance mechanism).
The similarities between the 2008 Proposal and the Previous Proposals are like
the similarities between the proposals in Ford Motor Co. Here, the 2008 Proposal
and the Previous Proposals both primarily concern general environmental
sustainability and product responsibility issues in the Company's product supply
chain. The substantial subject matter overlap between the 2008 Proposal and the
Previous Proposals is like the substantial overlap in subject matter of the
proposals in Ford Motor Co. In Ford Motor Co., both proposals related to tying
executive compensation to increasing the fuel economy of the company's vehicles.
Even though the later proposal requested additional and more specific
information regarding fuel economy for the purpose of reducing dependency on
foreign fuel suppliers, the Staff found the proposals' subject matter
substantially similar. In Ford Motor Co., like with the proposals at issue here,
the later proposal added a nuance to the previous proposal, but a substantial
overlap in subject matter nonetheless existed. Even though the 2008 Proposal
specifically requests information on the Company's protocol for labeling
international products and genetically modified ingredients as well as identity
preservation of the Company's products (subjects we believe are covered in the
Previous Proposals in reliance on the Guidelines), the vast majority of the
requested information in the 2008 Proposal was undoubtedly requested in the
Previous Proposals (such as waste reduction and environmental conservation
strategies, general product labeling protocol and consumer safety precautions).
As a result of the significant overlap between subject matter in the 2008
Proposal and the Previous Proposals, the 2008 Proposal should be excludable.
As reported in Kellogg's 10-Q for the quarter ended March 31, 2007, the relevant
proposal presented at the Company's 2007 Annual Meeting of Shareowners received
17,402,723 votes for and 281,889,100 votes against (see Exhibit D). This
translates into 5.81% of the vote in favor of the proposal. Consequently, this
vote falls short of the 6% required pursuant to Rule 14a-8(i)(12)(ii) for
resubmission of a substantially similar proposal within the subsequent
three-year period. In determining this percentage, the Company disregarded
abstentions and broker non-votes in accordance with the Staff's position on
counting votes for purposes of Rule 14a-8(i)(12). See Staff Legal Bulletin No.
14, Question F.4 (July 13, 2001).
CONCLUSION
Based upon the foregoing analysis, it is respectfully submitted that the 2008
Proposal may be omitted from Kellogg's 2008 Proxy Materials. Your confirmation
that the Staff will not recommend enforcement action if the 2008 Proposal is
omitted from the 2008 Proxy Materials is respectfully requested.
* * *
If you have any questions, require further information, or wish to discuss this
matter, please call me at (269) 961-2190. My facsimile number for future
correspondence is (269) 961-2517.
Please acknowledge receipt of this letter by date-stamping the enclosed
additional copy of this letter and returning to me in the enclosed envelope.
Sincerely,
/s/
Gary H. Pilnick
Senior Vice President, General Counsel, Corporate Development and Secretary
Enclosures
cc: Vidette Bullock Mixon
Director, Corporate Relations Responsible Investing
The United Methodist Church
General Board of Pension and Health Benefits
1201 Davis Street
Evanston, Illinois 60201-4118
Keith S. Crow, P.C. and Robert M. Hayward
Kirkland & Ellis LLP
[INQUIRY LETTER]
VIA FEDEX AND FAX: 269-565-1217
November 19, 2007
Mr. A.D. David Mackay
President and C.E.O.
Kellogg Company
One Kellogg Square
Battle Creek. MI 49017-3534
RE: Shareholder Proposal
Dear Mr. Mackay:
I am writing on behalf of the General Board of Pension and Health Benefits,
beneficial owner of 81,453 shares of Kellogg Company stock. I am filing the
enclosed shareholder proposal for consideration and action at your 2008 Annual
Meeting. In brief, the proposal requests Kellogg to provide a report to
shareholders concerning the sustainability of our company's supply chain. Per
Regulation 14A-12 of the Securities and Exchange Commission (SEC) Guidelines,
please include our proposal in the proxy statement.
In accordance with SEC Regulation 14A-8, the General Board has continuously held
Kellogg shares totaling at least $2,000 in market value for at least one year
prior to the date of this filing. Proof of ownership will be sent under separate
cover. It is the General Board's intent to maintain ownership of Kellogg stock
through the date of the 2008 Annual Meeting.
The General Board believes that in order to achieve long-term success and
sustainability, and to protect consumers, producers, and other stakeholders,
companies need to proactively manage their supply chains for conservation
opportunities, pesticide and other chemical use and identification, and
genetically engineered ingredient tracking and labeling.
The General Board welcomes the opportunity to discuss the issuer raised in this
proposal. If you have any questions or comments, please contact Daniel Nielsen,
Manager of Socially Responsible Investing, at daniel_[text illegible]sen@gbophb.org
or by phone at 847-866-4592.
Thank you in advance for your time and attention.
Sincerely,
/s/
Vidette Bullock Mixon
Director, Corporate Relations
Responsible Investing
Cc: Gary Pilnick
General Counsel
Kellogg Company
[APPENDIX]
FOOD SUPPLY CHAIN SECURITY and SUSTAINABILITY
WHEREAS:
Nearly two-thirds of corporate executives worldwide surveyed by McKinsey &
Company said "their companies [text illegible] a rising level of risk to their
ability to supply customers with goods and services cost effectively." Yet, the
survey found
[f]ew executives are confident that their companies can manage these risks
successfully and businesses are making surprisingly little use of some
well-known analytical tools and simple best practices that could help.
The Mckinsey Quarterly 2007 Number 1, pages 10-12.
The global food production system faces numerous challanges:
Severe droughts and increasting water supply in key agricultural regions
linked to giobal warming;
Rising prices for oil and petroleum-based agricultural inputs; and
Competing use of food crops for bio-fuels.
Several dramtic events have underminded consumer confidence by highlighting
weaknesses in the food safety system:
Closure of Topps Meat Co., the largest U.S. manufacture of frozen hamburger,
following recall of 21.7 million pounds of hamburger contaminated with e-coli.
Nationwide recall of spinach from California, which produces 74% of the U.S.
spinach crop, due to e-coli contamination.
Contamination of the long-grain rice supply in the southern United States with
genetically engineered rice not approved for human consumption, leading Japan to
ban imports of U.S. long-grain rice and the EU to require testing of all U.S.
rice shipments.
Sale of poisened pet food, tainted seafood and other products from China
containing toxic ingredients
According to a Consumer Reports survey, 92% of Amaricans want to know the
country of origin for their food. http://[text illegible]org/products.[text
illegible]food&[text illegible]=food
Pesticide resides on imported fruits and vegetables, which account for about
one-third of U.S. consumption of these products, are "major and growing"
contributors to dictary risk. While U.S. farmers have adopted lower-risk use
patterns, growers outside the U.S. continue using older, higher-risk pesticides.
Impacts of the Food Quality Protection Act on Children's Exposures to
Pesticides, pages 10-11 (2006). http://www.organi[text
illegible]enter.org/reportfiles/7452_[text illegible]_AAAS%20P[text
illegible]cr.pdf
RESOLVED: Shareholders request that the Board of Directors report to
shareholders by December, 2008 on measures taken to ensure the long-term
sustainability and security of our company's product supply [text illegible],
including:
Strategies to significantly reduces waste, energy and water use throughout the
supply chain;
Resource conservation programs and pollution prevention measures for the full
product life-cycle;
Labeling products for country of origin and presence of genetically modified
ingredients; and
Safety testing and systems to ensure identify preservation and [text
illegible]ability "from farm to [text illegible]."
[STAFF REPLY LETTER]
January 16, 2008
Gary H. Pilnick
Senior Vice President, General Counsel,
Corporate Development and Secretary
Kellogg Company
Corporate Headquarters
One Kellogg Square
P.O. Box 3599
Battle Creek, MI 49016-3599
Re: Kellogg Company
Dear Mr. Pilnick:
This is in regard to your letter dated January 15, 2008 concerning the
shareholder proposal submitted by the General Board of Pension and Health
Benefits of the United Methodist Church for inclusion in Kellogg's proxy
materials for its upcoming annual meeting of security holders. Your letter
indicates that the proponent has withdrawn the proposal, and that Kellogg
therefore withdraws its December 12, 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: Vidette Bullock Mixon
Director, Corporation Relations
General Board of Pension and Health
Benefits of the United Methodist Church
1201 Davis Street
Evanston, IL 60201-4118
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