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Company Name: Moody's Corp.
Public Availability Date: January 29, 2008
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 28, 2007
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Stockholder Proposal of Nick Rossi, Custodian, as Represented by John
Chevedden Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that our client, Moody's Corporation (the
"Company"), intends to omit from its proxy statement and form of proxy for its
2008 Annual Meeting of Stockholders (collectively, the "2008 Proxy Materials") a
stockholder proposal and statements in support thereof (the "Proposal") received
from Nick Rossi as custodian (the "Proponent"), designating John Chevedden as
his representative.
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's
representative.
Rule 14a-8(k) provides that stockholder 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
and his representative that if they elect to submit additional correspondence to
the Commission or the Staff with respect to this Proposal, a copy of that
correspondence should concurrently be furnished to the undersigned on behalf of
the Company pursuant to Rule 14a-8(k).
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(b)
and Rule 14a-8(f)(1) because the Proponent has not provided the requisite proof
of continuous stock ownership in response to the Company's proper request for
that information. A copy of the Proposal as well as related correspondence with
the Proponent and his representative, is attached to this letter as Exhibit A.
BACKGROUND
The Proponent submitted the Proposal to the Company on November 8, 2007, via
facsimile. The Company received the Proposal on November 8, 2007. See Exhibit A.
The Proponent did not include with the Proposal evidence demonstrating
satisfaction of the ownership requirements of Rule 14a-8(b) and the Company has
informed us that the Proponent does not appear in its transfer agent's records
as a record holder of the Company's stock.
Accordingly, the Company sought verification from the Proponent's representative
of the Proponent's eligibility to submit the Proposal. Specifically, the Company
sent a letter via email on November 19, 2007, and via Federal Express on
November 20, 2007, both of which were within 14 calendar days of the Company's
receipt of the Proposal, notifying the Proponent's representative of the
requirements of Rule 14a-8 and how the Proponent could cure the procedural
deficiency, specifically that a stockholder must satisfy the ownership
requirements under Rule 14a-8(b) (the "Deficiency Notice"). A copy of the
Deficiency Notice is attached hereto as Exhibit B. In addition, the Company
attached to the Deficiency Notice a copy of Rule 14a-8. The Deficiency Notice
requests that the Proponent "provide proof of ownership that satisfies the
requirements of Rule 14a-8" and further states:
In order to comply with the aforesaid rules, appropriate documentation must be
sent to [the Company] within 14 calendar days after receipt of this letter by
[the Proponent's representative]. As explained in Rule 14a-8(b), appropriate
documentation may be in the form of:
a written statement from the "record" holder of the securities (usually a
broker or bank) verifying that, as of the date the proposal was submitted, [the
Proponent] continuously held the requisite number of Company shares for at least
one year; or
if [the Proponent] has filed with the SEC a Schedule 13D, Schedule 13G, Form
3, Form 4 or Form 5, or amendments to those documents or updated forms, ... a
copy of the schedule and/or form ... and a written statement that [the
Proponent] continuously held the required number of shares for the one-year
period.
The Company's email tracking records confirm delivery of the Deficiency Notice
to the Proponent's representative via email at 4:53 p.m. on November 19, 2007.
See Exhibit C. Federal Express records confirm delivery of the Deficiency Notice
to the Proponent's representative at 1:21 p.m. on November 21, 2007. See Exhibit
C.
On December 4, 2007, the Proponent's representative submitted letters from
Charles Schwab and Morgan Stanley, both dated November 26, 2007, purporting to
substantiate the Proponent's eligibility to submit the Proposal (the
"Proponent's Response"). A copy of the Proponent's Response is attached hereto
as Exhibit D. The Proponent's Response, which was received by the Company on
December 4, 2007, indicated that the Proponent deposited 1,200 shares of the
Company's stock into a Morgan Stanley account on February 12, 2007. The
Proponent's Response further indicated that the Proponent transferred those
1,200 shares of Company stock from his Morgan Stanley account to a Charles
Schwab account on November 8, 2007.
ANALYSIS
The Proposal May Be Excluded under Rule 14a-8(b) and Rule
14a-8(f)(1) Because the Proponent Failed To Establish the Requisite Eligibility
To Submit the Proposal.
The Company may exclude the Proposal under Rule 14a-8(f)(1) because the
Proponent did not substantiate eligibility to submit the Proposal under Rule
14a-8(b). Rule 14a-8(b)(1) provides, in part, that "[i]n order to be eligible to
submit a proposal, [a stockholder] must have continuously held at least $2,000
in market value, or 1%, of the company's securities entitled to be voted on the
proposal at the meeting for at least one year by the date [the stockholder]
submit[s] the proposal." Staff Legal Bulletin No. 14 specifies that when the
stockholder is not the registered holder, the stockholder "is responsible for
proving his or her eligibility to submit a proposal to the company," which the
stockholder may do by one of the two ways provided in Rule 14a-8(b)(2). See
Section C.1.c, Staff Legal Bulletin No. 14 (July 13, 2001).
As described above, the Company received the Proposal on November 8, 2007. On
November 19, 2007, and November 20, 2007, both of which were within 14 days of
receiving the Proposal, the Company timely sent the Deficiency Notice via email
and via Federal Express, respectively. The Proponent's representative received
the Deficiency Notice by email on November 19, 2007, and by Federal Express on
November 21, 2007. The Proponent's Response, dated December 4, 2007, indicated
that 1,200 shares of the Company's stock was deposited by the Proponent into a
Morgan Stanley account on February 12, 2007, and transferred into a Charles
Schwab account on November 8, 2007. Because the Proposal was submitted on
November 8, 2007, and the Proponent's Response only substantiates ownership
since February 12, 2007, the Proponent has failed to provide evidence that he
has satisfied the requirement in Rule 14a-8(b) that the shares be held
continuously for at least one year by the date the Proposal was submitted to the
Company.
Rule 14a-8(f) provides that a company may exclude a stockholder proposal if the
proponent fails to provide evidence of eligibility under Rule 14a-8, including
the continuous ownership requirements of Rule 14a-8(b), provided that the
company timely notifies the proponent of the problem and the proponent fails to
correct the deficiency within the required time. The Company satisfied its
obligation under Rule 14a-8 by transmitting to the Proponent's representative in
a timely manner the Deficiency Notice, which stated:
the ownership requirements of Rule 14a-8(b), including that the Proponent
provide evidence of his continuous ownership of Company stock for at least one
year;
the type of documentation necessary to demonstrate the Proponent's continuous
ownership under Rule 14a-8(b);
that the Proponent had to reply to the Deficiency Notice no later than 14
calendar days from the date the Proponent's representative received the
Deficiency Notice; and
that a copy of the stockholder proposal rules set forth in Rule 14a-8 was
enclosed.
On numerous occasions the Staff has taken a no-action position concerning a
company's omission of stockholder proposals based on a proponent's failure to
provide satisfactory evidence of eligibility under Rule 14a-8(b) and Rule
14a-8(f)(1). See, e.g., General Motors Corp. (Koloski) (avail. Apr. 5, 2007);
Yahoo, Inc. (avail. Mar. 29, 2007); CSK Auto Corp. (avail. Jan. 29, 2007);
Motorola, Inc. (avail. Jan. 10, 2005), Johnson & Johnson (avail. Jan. 3, 2005);
Agilent Technologies (avail. Nov. 19, 2004); Intel Corp. (avail. Jan. 29, 2004).
More specifically, the Staff consistently has concurred in the exclusion of
stockholder proposals where at the time the proponent submitted the proposal,
the proponent did not own for one year $2,000 in market value, or 1%, of
securities entitled to be voted at the meeting, as required by Rule 14a-8(b).
AT&T Inc. (Morse) (avail. Jan. 18, 2007); Seagate Technology (avail. Aug. 11,
2003); J.P. Morgan Chase & Co. (avail. Mar. 13, 2002). See also Pall Corp.
(avail. Sept. 20, 2005) (permitting the exclusion of a proposal where "the
proponent appears to have failed to supply support sufficiently evidencing that
it satisfied the minimum ownership requirement continuously for the one-year
period as of the date it submitted the proposal as required by rule 14a-8(b)");
General Motors Corp. (avail. Mar. 20, 2001) (concurring in the exclusion of a
proposal, noting that "the proponent does not satisfy the minimum ownership
requirement for the one year period specified in rule 14a-8(b)"). Similarly
here, the Proponent has not satisfied his burden of proving his eligibility to
submit the Proposal based on his continuous ownership for at least one year of
the requisite amount of Company stock as required by Rule 14a-8(b).
Moreover, the Proponent's representative should be well aware of the need to
demonstrate compliance with the continuous ownership requirements of Rule 14a-8.
The Staff has, on numerous occasions, determined that stockholders represented
by the Proponent's representative failed to satisfy the ownership requirements
of Rule 14a-8(b) in order to be eligible to submit stockholder proposals. See,
e.g., General Motors Corp. (Koloski) (avail. Apr. 5, 2007); Intel Corp. (avail.
Feb. 1, 2005); Moody's Corp. (avail. Mar. 7, 2002) (in each case, concurring in
the exclusion of stockholder proposals submitted by the Proponent's
representative, noting that the proponent appears to have failed to supply
documentary support sufficiently evidencing that he satisfied the minimum
ownership requirements for the one-year period as required by rule 14a-8(b)).
See also, e.g., Sabre Holdings Corp. (avail. Jan. 28, 2004); The Dow Chemical
Co. (avail. Feb. 26, 2002) (both concurring in the exclusion of a proposal
submitted by the Proponent's representative under Rule 14a-8(b) "because at the
time the proponent submitted the proposal, the proponent did not own for one
year at least $2,000 in market value, or 1%, of the company's securities
entitled to be voted on the proposal at the meeting").
Thus, despite the Deficiency Notice, the Proponent has failed to provide the
Company with satisfactory evidence of the requisite one-year continuous
ownership of Company stock as of the date the Proposal was submitted to the
Company. Accordingly, we ask that the Staff concur that the Company may exclude
the Proposal under Rule 14a-8(b) and Rule 14a-8(f)(1).
CONCLUSION
Based upon the foregoing analysis, we respectfully request that the Staff concur
that it will take no action if the Company excludes the Proposal from its 2008
Proxy Materials pursuant to Rule 14a-8(b) and Rule 14a-8(f)(1). 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's representative 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) 955-8671, my colleague Elizabeth A. Ising at (202) 955-8287 or
Jane Clark, the Company's Corporate Secretary, at (212) 553-0300.
Sincerely,
/s/
Ronald O. Mueller
ROM/ggw
Enclosures
cc: Jane Clark, Moody's Corporation
Elizabeth McCarroll, Moody's Corporation
John Chevedden
[APPENDIX 1]
Mr. Raymond W. McDaniel
Chairman
Moody's Corporation (MCO)
99 Church St
New York NY 10007
Rule 14a-8 Proposal
Dear Mr. McDaniel,
This Rule 14a-8 proposal is respectfully 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 until after the date of the
respective shareholder meeting and the presentation of this proposal at the
annual meeting. This submitted format, with the shareholder 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 my 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) earthlink.net
(In the interest of company efficiency and cost savings please communicate via
email.)
PH: 310-371-7872
2215 Nelson Ave., No. 205
Redondo Beach, CA 90278
Your consideration and the consideration of the Board of Directors is
appreciated in support of the long-term performance of our company. Please
acknowledge receipt of this proposal by email.
Sincerely,
/s/
10/5/07
cc: Jane B. Clark<jane.clark@moodys.com>
Corporate Secretary
Phone: 212 553-0300
Fax: 212 553-7194
T: 212-553-1079
FX: 212-553-0882
F: 212-553-0990
Felix Sotomayer<felix.sotomayor@moodys.com>
PH: 212-553-7932
FX: 212-553-7840
FX: 212-298-7194
[APPENDIX 2]
[MCO: Rule 14a-8 Proposal, November 8, 2007]
3 - Adopt Simple Majority Vote
RESOLVED, Shareowners urge our company to take all steps necessary, in
compliance with applicable law, to fully adopt simple majority vote requirements
in our Charter and By-laws. This includes any special solicitations needed for
adoption.
Simple majority vote won an impressive 72% yes-vote average at 24 major
companies in 2007. This topic was receiving the highest yes-vote average of any
shareholder proposal topic in 2007. The Council of Institutional Investors
www.cii.org recommends adoption of simple majority vote.
Currently a 1%-minority can frustrate the will of our 79%-shareholder majority
under our multiple supermajority provisions of 80%. Also our supermajority vote
requirements can be almost impossible to obtain when one considers abstentions
and broker non-votes.
For example, a Goodyear (GT) proposal for annual election of each director
failed to pass even though 90% of votes cast were yes-votes. While companies
often state that the purpose of supermajority requirements is to protect
minority shareholders, supermajority requirements are arguably most often used
to block initiatives opposed by management but supported by most shareowners.
The Goodyear vote is a perfect illustration.
The merits of adopting this proposal should also be considered in the context of
our company's overall corporate governance structure and individual director
performance. For instance in 2007 the following structure and performance issues
were reported (and certain concerns are noted):
We had no shareholder right to:
1) Cumulative voting.
2) Act by written consent.
3) Call a special meeting.
4) Elect each director annually.
5) Elect any director through a majority vote.
Additionally:
We could only cast a ballot regarding two of our directors in 2007.
In 2008 we were scheduled to vote on only 3 directors:
Mr. Glauber
Ms. Newcomb
Mr. Mack
We had a poison pill with a 15% trigger.
Mr. Wulff, serving on 5 boards and who we will not be able to cast a vote for
or against in 2008, held seats on boards rated D by The Corporate Library:
Fannie Mae (FNM)
Celanese Corp. (CE)
The above concerns show there is room for improvement and reinforces the reason
to take one step forward to encourage our board to respond positively to this
proposal:
Notes:
Nick Rossi, Custodian, P.O. Box 249, Boonville, Calif. 95415 sponsors 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 1, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
# 1 Moody's Corporation (MCO) Shareholder Position on Company No-Action Request
Rule 14a-8 Proposal: Special Shareholder Meetings Nick Rossi
Ladies and Gentlemen:
The company December 28, 2007 no action request is at least materially
incomplete.
The company failed to note that in 2006 and in part of 2007 that the company
knew that this stockholding was on the books and records of the company.
The company apparently did not even ask for any broker letter whatsoever for the
2007 proxy-published rule 14a-8 proposal by Nick Rossi, custodian. This seems to
be supported by this exchange of email messages, apparently necessitated by the
company not asking for any broker letter whatsoever for the 2007 proposal by
Nick Rossi, custodian and additionally not even timely confirming receipt of the
2007 rule 14a-8 proposal submitted back on November 16, 2006:
------ Forwarded Message
From: "Clark, Jane" <Jane.Clark@moodys.com>
Date: Wed, 17 Jan 2007 13:22:09 -0500
To: J<olmsted7p@earthlink.net>
Conversation: (MCO) Rule 14a-8 Proposal
Subject: RE: (MCO) Rule 14a-8 Proposal
Dear Mr. Chevedden,
I can confirm that we did receive Mr. Rossi's proposal.
Regards,
Jane Clark
-----Original Message-----
From: J [mailto:olmsted7p@earthlink.net]
Sent: Tuesday, January 16, 2007 1:35 AM
To: Clark, Jane; Sotomayor, Felix
Subject: (MCO) Rule 14a-8 Proposal
Please confirm by January 17 that Mr. Nick Rossi's rule 14a-8 proposal for the
2007 annual meeting was received.
Sincerely,
John Chevedden
cc: Nick Rossi
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 this reason it is respectfully requested that concurrence not be granted to
the company on any basis. It is also respectfully requested that the shareholder
have the last opportunity to submit material in support of including this
proposalsince the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Nick Rossi
Jane B. Clark<jane.clark@moodys.com>
[INQUIRY LETTER]
January 10, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
# 2 Moody's Corporation (MCO) Shareholder Position on Company No-Action Request
Rule 14a-8 Proposal: Special Shareholder Meetings Nick Rossi
Ladies and Gentlemen:
In further response to the company December 28, 2007 no action request, this is
to emphasize that there is a continuous holding of company stock that supports
this proposal. Initially during the one-year period the proponent's stock was
shown on the books and records of the company. Then, as supported by the
company's exhibits it was in the proponent's Morgan Stanley account and then in
the proponent's Charles Schwab account. The company makes no claim to challenge
this specific continuous ownership chain, although apparently the company hopes
that no one will focus on this critical continuous link.
Returning to the text of the January 1, 2008 letter: The company December 28,
2007 no action request is at least materially incomplete.
The company failed to note that in 2006 and in part of 2007 that the company
knew that this stockholding was on the books and records of the company.
The company apparently did not even ask for any broker letter whatsoever for the
2007 proxy-published rule 14a-8 proposal by Nick Rossi, custodian. This seems to
be supported by this exchange of email messages, apparently necessitated by the
company not asking for any broker letter whatsoever for the 2007 proposal by
Nick Rossi, custodian and additionally not even timely confirming receipt of the
2007 rule 14a-8 proposal submitted back on November 16, 2006:
------ Forwarded Message
From: "Clark, Jane" <Jane.Clark@moodys.com>
Date: Wed, 17 Jan 2007 13:22:09 -0500
To: J<olmsted7p@earthlink.net>
Conversation: (MCO) Rule 14a-8 Proposal
Subject: RE: (MCO) Rule 14a-8 Proposal
Dear Mr. Chevedden,
I can confirm that we did receive Mr. Rossi's proposal.
Regards,
Jane Clark
-----Original Message-----
From: J [mailto:olmsted7p@earthlink.net]
Sent: Tuesday, January 16, 2007 1:35 AM
To: Clark, Jane; Sotomayor, Felix
Subject: (MCO) Rule 14a-8 Proposal
Please confirm by January 17 that Mr. Nick Rossi's rule 14a-8 proposal for the
2007 annual meeting was received.
Sincerely,
John Chevedden
cc:
Nick Rossi
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 this reason it is respectfully requested that concurrence not be granted to
the company on any basis. It is also respectfully requested that the shareholder
have the last opportunity to submit material in support of including this
proposalsince the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Nick Rossi
Jane B. Clark<jane.clark@moodys.com>
[INQUIRY LETTER]
January 23, 2008
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Withdrawal of No-Action Letter Request Regarding the Stockholder Proposal of
Nick Rossi, Custodian, as Represented by John Chevedden Exchange Act of
1934Rule 14a-8
Dear Ladies and Gentlemen:
In a letter dated December 28, 2007, I requested that the staff of the Division
of Corporation Finance (the "Staff") concur that Moody's Corporation (the
"Company") could properly exclude from its proxy materials for its 2008 Annual
Meeting of Stockholders a stockholder proposal (the "Proposal") received from
Nick Rossi as custodian, designating John Chevedden as his representative (the
"Proponent"). A copy of the no-action request is attached hereto as Exhibit A.
Based on the additional information provided in the Proponent's letter to the
Staff, dated January 1, 2008, regarding ownership not reflected in the documents
originally furnished to the Company by the Proponent, the Company has determined
to include the Proposal in its proxy materials for its 2008 Annual Meeting of
Shareholders. Accordingly, I hereby withdraw the December 28, 2007, no-action
request relating to the Company's ability to exclude the Proposal pursuant to
Rule 14a-8 under the Securities Exchange Act of 1934. Please do not hesitate to
call me at (202) 955-8671 with any questions in this regard.
Sincerely,
/s/
Ronald O. Mueller
cc: Jane Clark, Moody's Corporation
Elizabeth McCarroll, Moody's Corporation
John Chevedden
[STAFF REPLY LETTER]
January 29, 2008
Ronald O. Mueller
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5306
Re: Moody's Corporation
Dear Mr. Mueller:
This is in regard to your letter dated January 23,
2008 concerning the shareholder proposal submitted by Nick Rossi for inclusion
in Moodys' proxy materials for its upcoming annual meeting of security holders.
Your letter indicates that Moody's will include the proposal in its proxy
materials, and that Moody's therefore withdraws its December 28, 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
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