Company Name: Lowe's Cos., Inc.
Public Availability Date: February 1, 2008Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 24, 2008
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of the Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Lowe's Companies, Inc. Exclusion of Shareholder Proposal Regarding Sale of
Glue Traps
Dear Ladies and Gentlemen:
Lowe's Companies, Inc. (the "Company") hereby requests that the staff of the
Division of Corporation Finance advise the Company that it will not recommend
any enforcement action to the Securities and Exchange Commission (the
"Commission") if the Company excludes the shareholder proposal described below
(the "Proposal") from its proxy materials for its 2008 annual shareholders
meeting. The Proposal was submitted to the Company by Trillium Asset Management
Corporation on behalf of Jamie Moran (the "Proponent"). As described more fully
below, the Proposal is excludable pursuant to Rule 14a-8(i)(7) because it
relates to ordinary business matters.
A copy of this letter has been provided to the Proponent and emailed to
afletters@sec.gov in compliance with the instructions found on the Commission's
website and in lieu of our providing six additional copies of this letter
pursuant to Rule 14a-8(j)(2).
The Proposal
The Proposal calls for the adoption by the Company's shareholders of the
following resolution.
"RESOLVED: As a matter of social and public policy, the shareholder encourages
Lowe's to end its sale of these devices which are cruel and inhumane to the
target animals and pose a danger to companion animals and wildlife."
A copy of the complete Proposal is attached hereto as Exhibit A.
Discussion
Rule 14a-8 generally requires an issuer to include in its proxy materials
proposals submitted by shareholders that meet prescribed eligibility
requirements and procedures. Rule 14a-8 also provides that an issuer may exclude
shareholder proposals that fail to comply with applicable eligibility and
procedural requirements or that fall within one or more of the thirteen
substantive reasons for exclusion set forth in Rule 14a-8(i).
Rule 14a-8(i)(7) permits an issuer to exclude a shareholder proposal if it
relates to the company's ordinary business operations. As discussed below, the
Commission's staff has consistently taken the position that a company's
determination as to whether to sell a particular product, whether considered
controversial or not, is a matter of ordinary business operations. The Proposal
is excludible because it requests that the Company end its sale of glue traps.
The Proposal is excludible because it deals with matters relating to the
Company's ordinary business operations, namely sale of a particular product.
Under Rule 14a-8(i)(7), a proposal dealing with a matter relating to the
company's ordinary business operations may be excluded from the company's proxy
materials. According to Release No. 34-40018 (May 21, 1998) (the "Release")
accompanying the 1998 amendments to Rule 14a-8, the underlying policy of the
ordinary business exclusion is "to confine the resolution of ordinary business
problems to management and the board of directors, since it is impracticable for
shareholders to decide how to solve such problems at an annual meeting." In the
Release, the Commission noted that the "policy underlying the ordinary business
exclusion rests on two central considerations." Id. The first relates to the
subject matter of the proposal. According to the Release, "certain tasks are so
fundamental to management's ability to run a company on a day-to-day basis that
they could not, as a practical matter, be subject to direct shareholder
oversight." Id. The second consideration stated in the Release "relates to the
degree to which the proposal seeks to `micromanage' the company by probing too
deeply into matters of a complex nature upon which shareholders, as a group,
would not be in a position to make an informed judgment." Id.
In seeking to dictate to the Company the types of products that it may sell in
its stores, the Proposal implicates both of the above-described policy
considerations of the "ordinary business" exclusion. Tasks that are fundamental
to management's ability to run the Company, such as the sale of a particular
product, fall into the category of ordinary course matters. The Company is the
world's second-largest home improvement retailer, selling thousands of different
products to a huge and heterogeneous customer base. An integral part of its
business is selecting the types of products to be offered at its retail stores.
Decisions concerning the selection of products to be sold in the Company's
stores are inherently based on complex business considerations that are outside
the knowledge and expertise of shareholders. Furthermore, the ability to make
such business decisions is fundamental to management's ability to control the
day-to-day operations of the Company. This function is delegated to the
Company's management by the laws of the State of North Carolina, the Company's
state of incorporation, and is not appropriately delegated to, or micro-managed
by, the Company's shareholders. See Section 55-8-01 of the North Carolina
Business Corporation Act ("All corporate powers shall be exercised by or under
the authority of, and the business and affairs of the corporation managed by or
under the direction of, its board of directors...").
The Commission's staff has consistently agreed with this assessment and taken
the position that decisions regarding the sale of a particular product, whether
considered controversial or not, are part of a company's ordinary business
operations and thus may be excluded under Rule 14a-8(i)(7). See, e.g., Marriott
International, Inc. (February 13, 2004) (proposal prohibiting the sale of
sexually explicit material at Marriott owned and managed properties); Johnson &
Johnson (February 7, 2003) (proposal regarding the sale and advertising of
particular products); Wal-Mart Stores, Inc. (March 9, 2001) (proposal
prohibiting the sale of handguns and their accompanying ammunition);
Albertson's, Inc. (March 18, 1999) (proposal prohibiting the sale and promotion
of tobacco products); General Electric Co. (February 4, 1999) (proposal
regarding the sale of long-term health insurance policies); J.C. Penney Co.
(March 2, 1998) (proposal prohibiting the sale of cigarettes); Walgreen Co.
(September 29, 1997) (proposal prohibiting the sale of cigarettes); Alliant
Techsystems (May 7, 1996) (proposal prohibiting the sale of antipersonnel
mines); Wal-Mart Stores, Inc. (March 12, 1996) (proposal that would discontinue
the sale of cigarettes); K-Mart Corporation (March 13, 1992) (proposal
requesting that the company cease selling periodicals containing certain
explicit photos); Wal-Mart Store, Inc. (April 10, 1991) (proposal regarding the
sale of war toys); and McDonald's Corporation (March 9, 1990) (proposal to
"introduce a vegetarian entree whose means of production neither degrades the
environment nor exploits other species").
Consistent with the above-cited precedents, the Commission's staff has also
determined in several instances that proposals relating to the sale of a
particular product that also raise the issue of the alleged cruel and inhumane
treatment of animals are excludible under Rule 14a-8(i)(7) as dealing with
matters of ordinary business operations. For example, in a letter to American
Express Company (January 25, 1990), the Commission's staff expressed the view
that a shareholder proposal requesting that the company discontinue all fur
promotions, by ceasing to distribute catalogs selling fur, dealt with a matter
of ordinary business operations (i.e., the promotion and sale of a particular
product) and therefore could be omitted from the company's proxy materials
pursuant to the predecessor to Rule 14a-8(i)(7). Like the Proposal, the American
Express proposal also raised concerns over the alleged pain and suffering
endured by animals caught in traps.
More recently, in a letter to PetSmart, Inc. (April 14, 2006), the Commission's
staff concurred in the view that a proposal prohibiting the sale of large birds
in its stores was excludable under Rule 14a-8(i)(7) as relating to ordinary
business operations (i.e., sale of particular goods) despite the proponent's
argument that the proposal raised significant social policy concerns.
Specifically, the proponent described how the abuse and mistreatment of birds is
rampant throughout the entire pet bird trade and constitutes a major animal
welfare issue.
The Company believes that the well-established precedents set forth above
supports its conclusion that the Proposal addresses ordinary business matters
and therefore is excludible under Rule 14a-8(i)(7). The Company is aware that
the Commission's staff has previously denied no-action requests for shareholder
proposals seeking reports on the implementation of new procedures involving the
alleged inhumane killing of animals. See Denny's Corporation (March 22, 2007);
Outback Steakhouse, Inc. (March 6, 2006); Hormel Foods Corp. (November 10,
2005); and Wendy's International, Inc. (February 8, 2005) (all denying no-action
requests regarding proposals seeking reports on the implementation of
controlled-atmosphere killing ("CAK") by poultry suppliers) (collectively, the "CAK
Proposals").
The Company believes that the CAK Proposals are clearly distinguishable from the
Proposal. First, although both the Proposal and the CAK Proposals relate to the
issue of the alleged inhumane killing of animals, the action requested in the
CAK Proposals differs from that called for in the Proposal. As noted above, the
resolutions in each of the CAK Proposals request that the board issue a report
concerning the implementation of controlled-atmosphere killing by poultry
suppliers. In contrast, the Proposal does not request a report, but rather calls
for the banning of the sale of a particular product, i.e., glue traps. As
evidenced by the abovecited precedents, the Commission's staff has consistently
taken the position that decisions regarding the sale of a particular product,
whether considered controversial or not, are part of a company's ordinary
business operations and thus may be excluded under Rule 14a-8(i)(7).
Second, the issue of the alleged inhumane killing of animals arises under very
different contexts in the CAK Proposals and the Proposal. In the Proposal, the
Proponent is raising the issue of alleged inhumane killing of animals in the
context of a safe, alternative form of animal control for rats, mice and other
potentially dangerous rodents. In contrast, in the CAK Proposals, the issue
relates to the killing of animals raised for human consumption and, as such, is
intertwined with the additional significant social policy issues of food safety
and quality. In addition, unlike the Proposal, the CAK Proposals also involve a
number of other significant social policy and economic considerations, such as
improving working conditions, reducing the potential for injury to workers, and
eliminating the number of workers needed in slaughterhouses.
In addition, the Commission's staff has consistently drawn a distinction between
the manufacturer and the vendor of products with respect to proposals dealing
with tobacco, firearms and other products that may be deemed to raise
significant policy issues and time after time has taken the position that
proposals regarding the selection of products for sale relate to a company's
ordinary business operations and thus are excludible from the company's proxy
materials pursuant to Rule 14a-8(i)(7). For example, compare Wal-Mart Stores,
Inc. (March 9, 2001) (proposal requesting that the retailer stop selling
handguns and their accompanying ammunition was excludible) with Sturm, Ruger &
Co. (March 5, 2001) (proposal seeking a report on company policies aimed at
"stemming the incidence of gun violence in the United States" where the
company's "principal business continues to be the manufacture and sale of
firearms" was not excludible). As the Company is not a manufacturer of glue
traps, but instead offers customers the opportunity to purchase such traps to
control rats, mice and other potentially dangerous rodents as merely one of a
multitude of products and services available through its retail stores, the
Company believes the Proposal may be omitted from its proxy materials pursuant
to Rule 14a-8(i)(7).
Deciding which products to sell in the Company's retail stores is fundamental to
management's day-to-day functions. Because it deals with matters relating to the
Company's ordinary business operations, the Proposal is excludible under Rule
14a-8(i)(7) notwithstanding its relation to the social policy issue of the cruel
and inhumane treatment of animals.
Conclusion
We respectfully request your confirmation that the Division of Corporation
Finance will not recommend any enforcement action to the Commission if the
Proposal is omitted from the Company's proxy statement for the reasons stated
above.
Please feel free to call me at (704) 331-3519, or my colleague, Dumont Clarke,
at (704) 331-1051 if you have any questions or comments.
Very truly yours,
Moore & Van Allen PLLC
/s/
Ernest S. DeLaney III
ESD/krh
Enclosures
[APPENDIX 1]
December 13, 2007
Gaither M. Keener, Jr.
Senior Vice President
General Counsel, Secretary,
Chief Compliance Officer
Lowe's Companies, Inc.
1000 Lowe's Blvd.
Mooresville, NC 28117
Via fax (336) 658-4766 and certifled mail
Dear Mr. Keener:
TRILLIUM ASSET MANAGEMENT CORPORATION ("Trillium") is an investment firm based
in Boston specializing in socially responsible asset management. We manage over
$1 billion for Individual and Institutional shareholders.
In support of this work we are submitting the enclosed shareholder proposal for
inclusion in the next proxy statement in accordance with Rule 14a-8 of the
General Rules and Regulations of the Sacurities Act of 1934. Trillium Asset
Management Corporation is filing this proposal on behalf of our client, Jamie
Moran, who has held over $2,000 worth of Lowe's Companies common stock for
longer than one year prior to today, and who will continue to hold this position
through the date of the 2008 stockholder meeting. Verification of the ownership
position is being processed and will arrive separately. A representative of the
filer will attend the stockholders' meeting to move the resolution as required
by the SEC rules.
We strongly believe the attached proposal is in the best interest of Lowe's and
its shareholders and welcome the opportunity to discuss the issues raised by the
proposal with you or other members of Lowe's Companies executive management
team. I will be serving as primary contact on all matters pertaining to this
resolution and can be reached at (617) 292-8026, x 252 or sbakermartin@trilliuminvast.com.
Stephanie Downs at PETA stephanieD@pata.org will act as the subject expert and
we ask that she be copied on any documentation related to this resolution. We
look forward to your response.
Sincerely,
/s/
Susan Baker Martin
Social Research Analyst
cc: Jamie Moran
Stephanie Downs, PETA Corporate Affairs
Susan L. Hall, Esq, PETA
Robert A. Niblock, Chief Executive Officer
[APPENDIX 2]
Exhibit A
Shareholder Resolution Regarding the Sale of Glue Traps
2008 - Lowe's Companies, Inc.
Resolution text:
This proposal is submitted by Trillium Asset Management Corporation on behalf of
and with proxy authority for Lowe's shareholder Jamie Moran.
WHEREAS: Glue traps sold by Lowe's ensnare animals by trapping any who walk
across them by using a strong adhesive material. Animals captured in these traps
are physically glued to the base of the trap and essentially immobilized. Death
usually occurs because of starvation or dehydrationbut not before days of pain
and suffering. Glue traps rip patches of skin and fur off the animals' bodies as
they struggle to escape. As noted by one New York City Pest Control Manager,
some trapped animals even chew off their own limbs in order to free themselves.
(N.R. Kleinfield, "City Seeks Ways to Cut Population of a Shrowd, Adaptable
Opponent," The New York Times 12 July 2000).
A regulatory impact statement released by the Australian government cited a
study that concluded glue traps should be banned "because of the enormous
distress that these traps canse, even if the trapped animals are found after
just a few hours and then humanely dispatched". (State of Victoria, Department
of Primary Industries, Draft Prevention of Cruelty-to-Animals (Prohibition of
Glue Trapping) Regulations (2005)
http://www.ycac.gov.au/CA256EAF001CZB21/WebObj/PreventionofCrueitytoAnimals(ProhibitionofGlueTrapping)R
egulations2005RIS/$File/Prevention%20of%20Cruelty%20to%20Animals%20(Prohibition%20of%20Glue%20Trappin
g)%20Regulations%202005%20RIS.pdf
Not only are glue traps cruel, they are also indiscriminate and catch non-target
animals. Birds, squirrels, kittens, and other small animals may be crippled or
killed by traps placed in public areas and private residences.
The sale of glue trapsand the abusive method by which they killhas been the
subject of public debate and controversy in recent years. As a result, many
prominent retailersincluding Walgreens, CVS, Rite Aid, and Safewayhave banned
the sale of these cruel traps.
As a matter of social and public policy, Lowe's should follow suit and be a
corporate leader in ending the sale of this cruel and inhumane form of animal
control.
Lowe's has demonstrated leadership on corporate social responsibility issues. We
ask the company to expand on that leadership.
RESOLVED: As a matter of social and public policy, the shareholder encourages
Lowe's to end its sale of these devices which are cruel and inhumane to the
target animals and pose a danger to companion animals and wildlife.
[INQUIRY LETTER]
January 28, 2008
BY REGULAR & ELECTRONIC MAIL: aftetters@seo.gov
Office of the Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal of Trillium Asset Management on behalf of Lowe's
Shareholder Jamie Moran for Inclusion in the 2008 Proxy Statement of Lowe's
Companies, Inc.
Ladies and Gentlemen:
This letter is filed in response to a letter dated January 24, 2008 submitted to
the SEC by Lowe's Companies, Inc. ("Lowe's" or "the Company"). The Company seeks
to exclude a shareholder proposal submitted by Trillium Asset Management on
behalf of Jamie Moran, based on Rule 14a-8(i)(7), asserting that that the
proposal relates to ordinary business operations.
The resolution at issue reads as follows:
RESOLVED: As a matter of social and public policy, the shareholder encourages
Lowe's to end its sale of these devices [glue traps] because they are cruel and
inhumane to the target animals and pose a danger to companion animals and
wildlife.
For the reasons that follow, the shareholder proponent respectfully disagrees
with the Company's position that the proposal should be omitted and urges the
Staff to rule accordingly.
The Proposal Is Not Excludable Under Rule 14a-8(i)(7).
Lowe's argues that the proposal involves the conduct of its "ordinary business
operations" and seeks to "micro-manage the company by probing too deeply into
matters of a complex nature upon which shareholders, as a group, would not be in
a position to make an informed judgment." (No action letter p. 2.)
The proponent has four responses to Lowe's arguments:
1. The proposal does not seek to compel the Company to do anything. Rather, it
is crafted so that "the shareholder encourages" the Company to discontinue the
sale of an indisputably cruel and inhumane device. The emphasis here is on the
word "encourages." Shareholders should be given an opportunity to vote on this
resolution so that the Board can ascertain the level of support for it. The
Staff positions cited in Lowe's no action letter relate largely to proposals
seeking to require the Board to halt the sale of tobacco products and firearms,
not to encourage positive conduct.
2. The proposal involves broad and significant social and public policy
considerations. Many large chains have acquiesced to public pressure and ceased
selling glue traps because they are so cruel to the target animals, not to
mention that they are indiscriminate in choice of victims. It is universally
recognized that these devices trap, immobilize and kill kittens, gerbils,
hamsters, guinea pigs, and other small "non-target" companion animals. They also
ensnare and kill non-target wildlife such as birds. No less than four nationwide
chains, namely Walgreens, CVS, Rite Aid, and Safeway, have banned the sale of
these appalling contraptions for precisely these reasons.
3. The sale of glue traps supersedes the ordinary business rule because it
implicates issues that are, and continue to be, the subject of public debate and
controversy. As proof, the companies mentioned above would not have ceased
selling glue traps were it not for the fact that they recognized their inherent
cruelty and yielded to the public outcry to end such sales.
Further evidence that this issue is of significant public concern are the
numerous news articles in major media publications about glue traps that
regularly appear. Some examples include:
A January 10, 2006 Chicago Tribune article titled "Be Kind to Your Mice",
which lists "the top five reasons to be humane to any mouse in your house."
Number five states: "Glue is for crafts, not creatures. Gruesome glue traps
cause animals to slowly starve or suffocate to death. Many mice become so
desperate that they chew off their own limbs trying to free themselves."
A January 15, 2006 Philadelphia Inquirer article titled "Getting rid of
rodents intruding in your home" stated: "But others consider [glue traps]
barbaric because the trapped rodents struggle and die slowly. More and more
people are using traps that capture mice alive, which is the method the Humane
Society of the United States recommends."
A March 2, 2006 Associated Press Financial Wire article titled "Investors
still seeks a better mousetrap" stated: "There is little agreement on the best
way to kill a mouse. Some people recoil at the thought of snap traps, which
often work like tiny guillotines. Others are horrified by glue traps, which kill
their prey slowly by starvation or suffocation." [Emphasis added]
A November 6, 2006 Philadelphia Inquirer article titled "House vs. mouse: The
latest ideas in humanely showing our disease-ridden fall visitors the door"
clearly noted that humane rodent control is a public issue: "Mice love us. We
give them warmth. We give them food. We give them shelter. They have followed
humans around the planet for so long that naturalists can't even agree on where
they started. They can be found in every human settlement of any size and, in
this country, in 21 million homes. Now, people are starting to love them back.
Sort of. We're trying to figure out how to get rid of them - even kill them -
without hurting them." [Emphasis added]
4. The Company's continued sale of these products, and the inherent risk to
corporate image and the likelihood of reputation damage, involve shareholders'
economic interests. The trend is that more and more large and small scale
businesses are ending the sale of these products because they are so cruel and
inhumane. Lowe's determination to sell these products, despite the trend to the
contrary, highlights the Company's disregard for the significant animal welfare
issues involved.
The Staff has repeatedly found that proposals "focusing on sufficiently
significant social policy issues ... generally would not be considered to be
excludable, because the proposals would transcend the day-to-day business
matters and raise policy issues so significant that it would be appropriate for
a shareholder vote." Exchange Act Release No. 34-40018 (May 21, 1998).
Similarly, the Staff has refused to uphold the ordinary business operations
exclusion when the proposal falls within a range of issues with "significant
policy, economic or other implications." Exchange Act Release No. 34-12999 (Nov.
22, 1976).
Conclusion:
The Company's position that the resolution is excludable under Rules 14a-8(i)(7)
is insupportable. The proposal embraces a significant social and public policy
issue, and does not involve micro-managing the Company. For the foregoing
reasons, we respectfully request that the SEC advise the Company that it will
take enforcement action if it fails to include the Proposal in its 2008 proxy
materials. Please feel free to contact me should you have any questions or
require further information. I may be reached directly at SusanH@peta.org or
(202) 641-0999.
Very truly yours,
/s/
Susan L. Hall
Counsel
SLH/pc
cc: Ernest S. DeLaney III (via fax: 704-331-1159)
Ms. Susan Baker Martin (via e-mail: sbakermartin@trilliuminvest.com)
Mr. Jamie Moran (via e-mail)
[STAFF REPLY LETTER]
February 1, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Lowe's Companies, Inc. Incoming letter dated January 24, 2008
The proposal encourages Lowe's to end the sale of glue traps.
There appears to be some basis for your view that
Lowe's may exclude the proposal under rule 14a-8(i)(7), as relating to Lowes'
ordinary business operations (i.e., the sale of a particular product).
Accordingly, we will not recommend enforcement action to the Commission if
Lowe's omits the proposal from its proxy materials in reliance on rule
14a-8(i)(7).
Sincerely,
/s/
Heather L. Maples
Special Counsel
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