Company Name: Lowe's Companies, Inc.
Public Availability Date: February 19, 2008
Document Sections:
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
February 18, 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. Withdrawal of No-Action Letter Request Regarding the
Shareholder Proposal Relating to Land Procurement, Leasing and Store Siting and
Use Policy
Ladies and Gentlemen:
In a letter dated January 24, 2008, we, on behalf of our client, Lowe's
Companies, Inc. (the "Company"), requested that the Division of Corporation
Finance not recommend any enforcement action to the Securities and Exchange
Commission if the Company excluded from its proxy materials for its 2008 annual
shareholders meeting a shareholder proposal submitted by Christian Brothers
Investment Services, Inc. (the "Proponent") related to a request for the
development of a policy for land procurement, leasing and store siting and use
(the "Proposal"). For your reference, a copy of the January 24, 2008 no-action
request is attached hereto as Exhibit A.
On February 15, 2008, the Company received a letter dated February 14, 2008 from
the Proponent informing the Company that the Proponent is withdrawing the
Proposal. A copy of the Proponent's letter is attached hereto as Exhibit B. In
reliance on the Proponent's letter, we hereby withdraw the January 24, 2008
no-action request relating to the Proposal.
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
Enclosure
[APPENDIX]
Exhibit A
SHAREHOLDER PROPOSAL RELATING TO LAND PROCUREMENT, LEASING AND STORE SITING
POLICY
Investors have been concerned to see a substantial number of controversies in
recent years surrounding land acquisition, leasing, and store siting decisions
by retail companies.
The growth of the large scale retail industry has brought with it a growing
number of concerns, ranging from controversies with communities affected by
retail siting decisions to environmental damage. In some locations, concerns
about building on land sacred to Indigenous peoples, traffic, pollution, sprawl,
and the preservation of a community's environment, character, and cultural
history have fueled resistance to retail projects.
These conflicts have in some cases inspired local governments to propose
legislation restricting retail development, and have at times generated
substantial press coverage and impacted company expansion plans.
According to the report Not in My Backyard: An Analysis of Community Opposition
to Big Box Retail, by Bernstein Research (April 25, 2005), "Objections to large
retailers are many with the core concerns revolving around the belief that
big-box players negatively impact local businesses and the environment and
result in costly infrastructure investments and inefficient land
development....Local opposition has successfully squashed numerous plans among
the big-box players in different parts of the country."
Lowe's operates more than 1,400 stores in 49 states and is the second-largest
home improvement retaller in the world. We believe that retallers should be
seeking to understand the roots of community resistance to the growth of this
industry, and developing effective mechanisms to address these concerns. To
mitigate these risks, we believe that retailers should take proactive steps to
incorporate social and environmental considerations into their store siting
decisions.
Retailers such as Target and Wal-Mart provide information on store siting. As
Wal-Mart's report notes, "We want to work harder to ensure that our real estate
process looks at both the quantity and quality of the stores we are developing
and takes into account the desires of the community." Target provides
information on the company's environmental due diligence procedures when
acquiring property.
RESOLVED: The shareholders request the Board of Directors of Lowe's to develop a
policy for land procurement, leasing and store siting and use that incorporates
social and environmental factors. A report on this policy and its implementation
shall be prepared at reasonable expense, omitting proprietary information, and
made available to shareholders within six months of the 2008 annual meeting.
Supporting Statement
The policy requested should include guidelines to consult with affected
communities and ensure preservation of communities' cultural heritage and
natural environment and respect for human rights.
[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 Relating to Land
Procurement, Leasing and Store Siting and Use Policy
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 Christian Brothers
Investment Services, Inc. (the "Proponent"). As described more fully below, the
Proposal is excludible pursuant to Rule 14a-8(i)(7) because it deals with
matters relating to the Company's ordinary business operations.
A copy of this letter has been provided to the Proponent and emailed to
cfletters@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: The shareholders request the Board of Directors of Lowe's to develop
a policy for land procurement, leasing and store siting and use that
incorporates social and environmental factors. A report on this policy and its
implementation shall be prepared at reasonable expense, omitting proprietary
information, and made available to shareholders within six months of the 2008
annual meeting."
A copy of the complete Proposal is attached here to 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 the selection of
sites for company facilities is a matter of ordinary business operations. The
Proposal is excludible because it requests the development of a policy for land
procurement, leasing and store siting and use and the distribution of a report
on the policy and its implementation.
The Proposal is excludible because it deals with matters relating to the
Company's ordinary business operations, namely the location of the Company's
facilities.
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 "1998 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
1998 Release, the Commission stated 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 1998 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 1998
Release "relates to the degree to which the proposal 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." Id.
The Company believes the Proposal is excludible based on both of the
considerations discussed in the 1998 Release. First, tasks that are fundamental
to management's ability to run the Company, such as the selection of sites for
the Company's retail stores, fall into the category of ordinary course matters.
The selection of sites for stores is integral to the long-range goals and
overall success of the Company. The Company is the second-largest home
improvement retailer in the world, operating more than 1,475 stores in 49 states
and three in Canada. In fiscal 2007, the Company is on track to open
approximately 153 stores, the equivalent of about three stores per week. The
process of selecting locations for the Company's new and relocated retail stores
is a major part of management's responsibility at a growth-oriented company such
as the Company, and an integral part of the normal or routine practice in
running the Company's day-to-day operations.
Second, this result is consistent with the Commission's approach to proposals
which seek to "micro-manage" a company. The Proposal requests that the board of
directors of the Company develop a policy for land procurement, leasing and
store siting and use that incorporates social and environmental factors and
distribute a report on this policy and its implementation to shareholders. The
determination of where to locate the Company's retail stores depends upon
numerous complex and interrelated factors, including, but not limited to, the
cost of maintaining or constructing the facility, the demographics of the area,
competition, the location of the Company's other facilities in the area,
geographical and physical constraints and conditions, customer convenience,
employee and community relations, and a patchwork of land use laws and
regulations. These factors must be analyzed and balanced by management personnel
with intimate knowledge of the Company's business. The determination of where to
locate the Company's retail stores also requires significant business judgment,
more properly exercised by experienced management and the board of directors
than by shareholders who, as a group, would not be in a position to make an
informed judgment. Such activities clearly fall within the type of
"micro-management" that Rule 14a-8(i)(7) is meant to avoid. See Section 55-8-01
of the North Carolina Business Corporation Act (the law of the jurisdiction in
which the Company is incorporated) ("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..."). Thus, under
North Carolina law, the selection of sites for the location of the Company's
facilities is within the scope of responsibilities assigned to the board of
directors and management.
Additionally, decisions regarding land procurement and store siting also involve
complex considerations related to compliance with federal, state and local laws
and regulations, and are therefore, a matter of ordinary business operations.
Cities, towns and counties throughout the United States have historically
regulated land use within their jurisdictions by adopting comprehensive zoning
laws and regulations. These laws and regulations, which vary greatly in their
scope and complexity throughout the country and are subject to constant change,
form a challenging patchwork of regulation affecting the Company's decisions
about store location and design that management must develop flexible strategies
to comply with as management implements the Company's store development program.
The Federal Government has also increasingly become involved in regulating land
use and development, for example, through laws and regulations affecting an
expanded definition of "wetlands" and laws and regulations protecting endangered
species.
The Commission's staff has repeatedly recognized the complex task of complying
with laws and regulations as a matter of ordinary business operations that
should remain within the exclusive province of a company's management. See,
e.g., The AES Corporation (January 9, 2007) (proposal seeking creation of board
oversight committee to monitor compliance with applicable laws, rules and
regulations of federal, state and local governments); H&R Block Inc. (August 1,
2006) (proposal seeking implementation of legal compliance program with respect
to lending policies); Sprint Nextel Corporation (February 15, 2006) (proposal
requesting the board prepare a report evaluating the company's compliance with
federal proxy rules); Monsanto Corp. (November 3, 2005) (proposal seeking
establishment of board oversight committee for compliance with code of ethics
and applicable federal, state and local rules and regulations); Assoclates First
Capital Corporation (February 23, 1999) (proposal requesting the Board monitor
and report on legal compliance of lending practices); Citicorp (January 9, 1998
(proposal seeking to initiate a program to monitor and report on compliance with
federal law in transactions with foreign entities); Crown Central Petroleum
Corporation (February 19, 1997) (proposal requesting the board investigate and
report on compliance with applicable laws regarding sales of cigarettes to
minors); and Citicorp (January 8, 1997) (proposal requesting review of and
reporting on policies and procedures to ensure compliance with anti-money
laundering statutes). Similarly, the Company's decisions regarding land
procurement and store siting, which involve compliance with laws and
regulations, are a matter of ordinary business operations.
In applying the Rule 14a-8(i)(7) exclusion to proposals requesting companies to
prepare reports on specific aspects of their business, the Commission's staff
has determined that such proposals may be excluded if the subject matter of the
report involves a matter of ordinary business. See Release No. 34-20091 (August
16, 1983). In that release, the Commission stated that where the proposal
requests that companies prepare reports on specific aspects of their business,
"the staff will consider whether the subject matter of the special report ...
involves a matter of ordinary business" and "where it does, the proposal will be
excludable." Id. See also The Boeing Company (February 25, 2005); AT&T Corp.
(February 21, 2001); The Mead Corporation (January 31, 2001); Wal-Mart Stores,
Inc. (March 15, 1999); and Nike, Inc. (July 10, 1997). The Proposal falls
precisely within this category.
The Commission's staff, both before and after the 1998 Release, has consistently
taken the position that a company's decisions about the location of its
facilities falls within the purview of management as the conduct of the ordinary
business operations of the company. For example, in a letter to Sears, Roebuck &
Co. (March 6, 1980), the Commission's staff took the view that a shareholder
proposal requesting the board of directors to adopt a policy that would favor
development within central business districts over replacement of downtown
stores with stores in suburban malls dealt with a matter of ordinary business
operations and therefore could be omitted from Sears' proxy materials pursuant
to the predecessor to Rule 14a-8(i)(7).
Additional examples of the Commission's policy to allow exclusion of proposals
relating to location of company facilities as ordinary business operations
follow: Minnesota Corn Processors (April 3, 2002) (proposal relating to location
of corn processing plants); The Allstate Corporation (February 19, 2002)
(proposal requesting that the company cease operations in Mississippi); AT&T
Corp. (March 6, 2001) (proposal requesting that the company develop a policy
with respect to the construction and placement of cellular phone towers); MCI
Worldcom (April 20, 2000) (proposal requesting analysis of economic impact of
relocating company facilities); McDonald's Corporation (March 3, 1997) (proposal
requesting that the company take steps to prevent the loss of public park lands
when determining the location of new restaurants); Exxon Corporation (February
28, 1992) (proposal requesting report on plant operations); Pacific Gas &
Electric Co. (January 3, 1986) (proposal relating to the determination of
location of company headquarters); and American Telephone & Telegraph Co.
(December 30, 1980) (proposal relating to the location and relocation of company
buildings). As such, proposals of this nature are not proper for consideration
by the shareholders.
The Company recognizes that the Commission's staff has found in some situations
that proposals dealing with ordinary business matters are nevertheless not
excludible if they focus on "sufficiently significant social policy issues ...
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." Release 34-40018. Examples of subject matter the Commission's staff has
previously found to involve sufficiently significant policy issues include human
rights issues, genetic engineering, child labor and internet censorship and
monitoring by foreign governments. The Commission's staff's decisions indicate
the high threshold of significance a policy issue must reach in order to
override the "ordinary business" exclusion. Moreover, the Commission's staff has
already determined that the subject matter of the Proposaldecisions about
location and type of company facilitiesdoes not involve policy issues
significant enough to override the ordinary business classification. For
example, in a 1997 letter to McDonald's Corporation (March 3, 1997), the
Commission's staff concurred in the exclusion of a proposal requesting that the
company take steps to prevent the loss of public park lands when determining the
location of new restaurants because the proposal dealt with the ordinary
business decision of plant location. Significantly, the Commission's staff
reached this conclusion despite the proponent's argument that the issues of
environmental and community conservation cited in the proposal raised
significant policy implications.
Conclusion
The Proposal should be excluded pursuant to Rule 14a-8(i)(7) as dealing with and
requesting a report on matters relating to the Company's ordinary business
operations, namely, the location of the Company's facilities. 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
[STAFF REPLY LETTER]
February 19, 2008
Ernest S. DeLaney III
Moore & Van Allen PLLC
Attorneys at Law
Suite 4700
100 North Tryon Street
Charlotte, NC 28202-4003
Re: Lowe's Companies, Inc.
Dear Mr. DeLaney:
This is in regard to your letter dated February 18, 2008 concerning the
shareholder proposal submitted by Christian Brothers Investment Services, Inc.
for inclusion in Lowes' proxy materials for its upcoming annual meeting of
security holders. Your letter indicates that the
proponent has withdrawn the
proposal, and that Lowe's therefore withdraws its January 24, 2008 request for a
no-action letter form the Division. Because the matter is now moot, we will have
no further comment.
Sincerely,
/s/
William A. Hines
Special Counsel
cc: Julie Tanner
Corporate Advocacy Director
Christian Brothers Investment Services
90 Park Avenue, 29th Floor
New York, NY 10016 |
