Company Name:New York Times Co.
Public Availability Date: January 15, 2008
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 14, 2007
Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Re: The New York Times Company, File No. 1-5837
Ladies and Gentlemen:
The New York Times Company (the "Company") has received a letter from Legal &
General Assurance (Pension Management) Limited (the "Proponent"), requesting
that a proposal (the "Proposal") be included in the Company's proxy soliciting
material for its 2008 Annual Meeting of Stockholders to be held on or about
April 22, 2008. A copy of the Proponent's letter and the Proposal is attached as
Exhibit A.
The Proponent states in its letter that it is the beneficial owner of at least
$2,000 worth of Common Stock, has held such Common Stock for over a year and
intends to continue to do so through the date of the next annual meeting of
stockholders. The Company has two classes of voting stock outstanding: Class A
and Class B Common Stock. The Proponent has advised the Company that it holds
Class A Common Stock, which is the class that is publicly traded.
The Company believes that the Proposal may be omitted from the proxy soliciting
material for its next annual meeting of stockholders because, among other
reasons, the Proponent, as a holder of shares of Class A Common Stock of the
Company, is not the owner of "securities entitled to be voted on the proposal at
the meeting" as is required by the Securities and Exchange Commission's Rule
14a-8(b)(1).
Under Article Fourth, Paragraphs (II) to (V) of the Company's Certificate of
Incorporation, a copy of which is attached hereto as Exhibit B, the Company's
Class A Common Stock has limited voting rights. Holders ("Class A Stockholders")
are entitled to vote on only the following matters: the election of 30% of the
Company's board of directors, ratification of the selection of the Company's
independent certified public accountants, certain acquisitions, and the
reservation of stock for options to be granted to officers, directors or
employees.
The Company's Certificate of Incorporation provides that, except as outlined
above, and except as otherwise provided by the laws of the State of New York:
"[T]he entire voting power shall be vested solely and exclusively in the holders
of the shares of Class B Common Stock ... and the holders of the Class A Common
structure was established as a means to manage for the long term and to protect
the long-term editorial quality and independence of The New York Times, while at
the same time allowing the public to invest in the Company's equity.
As a result of these limited voting rights, the Class A Stockholders, including
the Proponent, would not be entitled to vote upon the Proposal in the event it
were submitted to the vote of the stockholders of the Company. Thus, the Company
may properly omit the proposal from its proxy material pursuant to Rule
14a-8(b)(1).
Class A Stockholders of the Company have on prior occasions sought to introduce
proposals for consideration at an annual meeting of the Company respecting
matters on which they were not entitled to vote. In each instance, the staff of
the Division of Corporation Finance has agreed with the Company that such
proposals could properly be omitted from the proxy statement since the
proponents of such proposals, as Class A Stockholders, were unable to satisfy
the requirement of Rule 14a-8 that they be entitled to vote at the Company's
meeting on the proposals they intended to present for action. (See the SEC's
letters to The New York Times Company, available December 18, 2006, January 3,
2003, December 21, 1998, December 19, 1997, December 19, 1997, February 24,
1997, December 28, 1994, January 17, 1992, January 22, 1991, January 4, 1991,
January 16, 1981, December 22, 1980, January 4, 1979, November 9, 1978, March
25, 1975 and April 1, 1974, copies of which are attached hereto as Exhibit C.)
For the foregoing reasons, the Company believes that it may properly omit the
Proposal from its 2008 proxy material, and the Company intends to do so. The
Company reserves the right, should it be necessary, to present additional
reasons for omitting the Proposal. If the staff does not concur with the
Company's position, we would appreciate an opportunity to confer with the staff
coneerning this matter prior to the issuance of a Rule 14a-8 response.
In accordance with Rule 14a-8(j), six additional copies of this letter and the
Proposal are enclosed. If you have any questions with respect to the foregoing,
please call me at (212) 556-7127.
A copy of this letter, together with the enclosures, is being mailed to the
Proponent.
Very truly yours,
/s/
Rhonda L. Brauer
cc: Legal & General Assurance (Pension Management) Limited
Hermes Equity Ownership Services Ltd.
Cornish F. Hitchcock, Esq.
[INQUIRY LETTER]
14 November 2007
Ms Rhonda L Brauer Corporate Secretary
The New York Times Company
229 West [text illegible] Street
New York, New York
USA 10036
Via carrier and fax
Dear Ms Brauer,
Shareholder proposal for 2008 annual meeting
On behalf of Legal & General Assurance (Pensions Management) Limited. I submit
the enclosed shareholder proposal for inclusion in the proxy materials that The
New York Times Company plans to circulate to shareholders in anticipation of the
2008 annual meeting. The proposal is being submitted under SEC Rule 14a-8 and
relates to majority voting for the board of directors.
Legal & General Assurance (Pensions Management) Limited is the record owner of
11,354 shares of The New York Times Company common stock. Legal & General
Assurance (Pensions Management) Limited has beneficially owned more than $2000
worth of The New York Times Company's common stock for more than a year and
plans to continue ownership through the date of the 2008 annual meeting, which a
representative is prepared to attend.
If you require any additional information please let me know.
Yours sincerely
/s/
For and or behalf of Legal & General Assurance (Pensions Management) Limited
[APPENDIX]
RESOLVED: That the shareholders of The New York Times Company (the "Company")
hereby request that the board of directors amend the Company's governing
documents and take such other steps as may be necessary to provide that at each
shareholder meeting where there is on uncontested election for the board of
directors, a director shall be elected by the vote of a majority of the votes
cost with respect to that director, with any incumbent director who falls to
achieve such a majority vote obligated to tender his or her resignation.
Supporting Statement
The New York Times Company uses a "plurality vote" standard to elect directors.
What this means is that in an uncontested election, there is no way for
shareholders to vote against on individual candidate; shareholders can merely
"withhold" support for that candidate, who will be elected anyway, in effect,
plurality voting allows a candidate to be elected even if a substantial majority
of shares are not affirmatively voteci in favour of that candidate.
This proposal asks the Board to adopt a "majority vote" policy for electing
directors. This would mean that nominees for the board must receive a majority
of the votes cast in order to be elected or re-elected to the board, %ii.e.,%i
the number of votes cast "for" a nominee must exceed the number of votes cast
"against" a nominee. If the only options are to vote "yes" or to "withhold"
support, then a "withhold" vote would count as a vote "against" the nominee.
In our view, an effective majority vote policy should also require incumbent
directors who fail to win re-election to resign from the board. Without such a
provision, the [text illegible]llure of a candidate to achieve a majority might
be viewed as creating a vacancy, and state law may allow an incumbent to fill
until his or her successor is chosen.
Allowing a director to hold onto his or her seat in that situation undercuts the
goal of majority voting, which is why resignations are required at companies
that adopt majority voting and why in that situation a board must decide and
announce within 90 days whether it will accept the resignation.
Majority voting has been adopted by dozens of companies in recent years, in our
view, such a "majority vote" standard in director elections would give
shareholders a more meaningful role in the director election process. We believe
that The New York Times Company should make appropriate changes to its
certificate of incorporation and bylows to empower shareholders here.
We urge your support for this important director election reform.
[INQUIRY LETTER]
January 14, 2008
Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Re: The New York Times Company, File No. 1-5837
Ladies and Gentlemen:
I am writing to comment on the letter to the Staff, dated January 11, 2008, from
Cornish F. Hitchcock, Esq. responding to my letter dated December 14, 2007. A
copy of my letter is enclosed. Mr. Hitchcock's client, Legal & General Assurance
(Pension Management) Limited (the "Proponent") submitted a shareholder proposal
(the "Proposal") for inclusion in the 2008 proxy material of The New York Times
Company (the "Company"). As detailed in my December letter, the Company may, and
intends to, omit the Proposal from its proxy material because the Proponent does
not hold "securities entitled to be voted on the proposal at the meeting" as
required by SEC Rule 14a-8(b)(1).
On December 19, 2007, I received a copy of an e-mail that Mr. Hitchcock had sent
to the Staff stating that he would be providing a letter in response to my
letter during the week of January 6. Mr. Hitchcock stated that the Proposal
involved "issues and legal arguments that were not present in earlier no-action
determinations". Having now received and reviewed Mr. Hitchcock's letter on
January 11, 2008, the Company remains of the view, and trusts the Staff will
agree, that for the reasons set out in my December 14, 2007 letter, the Proposal
may be omitted from the Company's proxy materials pursuant to the clear and
unambiguous requirements of Rule 14a-8, as confirmed by the Staff to the Company
on 16 separate occasions over a 34-year period.
The Proposal is a request that the Company's Board of Directors take steps to
implement majority voting for directors.
This is not a debate regarding the potential merits of the Proposal or the
actions it recommends, which Mr. Hitchcock's letter, in part, attempts to
articulate. Rather, it is a straightforward question regarding the Company's
Certificate of Incorporation. As outlined in more detail in my December 14, 2007
letter, the Company's Certificate of Incorporation provides that Class A Common
Stock only votes on certain expressly specified items. Requests and
recommendations to the Board are not among these specified items. Since the
Proposal is not an item on which the holders of Class A Common Stock would be
entitled to vote, the Proponent, as a holder of Class A Common Stock, may not
require the Company to include it in its proxy material.
The Company's Certificate of Incorporation, which neither the Company management
nor the Board has the authority to alter on its own, has provided limited voting
rights to the Class A Common Stock since before it was first listed for public
trading on a national securities exchange in 1969. The Company's dual class
capital structure was established as a means to manage for the long term and to
protect the long-term editorial quality and independence of The New York Times,
while at the same time allowing the public to invest in the Company's equity.
The voting rights of the Class A Common Stock are fully described by the Company
in its public filings, and so investors in Class A Common Stock make their
investment with notice of them.
As I noted above, the Staff has agreed with the Company's reading of Rule 14a-8
in this context on 16 previous occasions. The Company does not accept Mr.
Hitchcock's contention that these letters are of diminished precedential value
because they "were not contested by the proponent" and did not pertain to
majority voting. Just like the current Proposal, each proposal considered in the
prior letters sought a Class A vote on an item on which the Class A stock was
not entitled to vote. In each of those letters, the Staff agreed that because
the proponent did not hold shares eligible to vote on the submitted proposal,
the proponent had failed to meet the threshold eligibility requirements under
Rule 14a-8 to submit the proposal.
I would like to call the Staff's attention, in particular, to the January 17,
1992 letter. That letter allowed the Company to omit a proposal requesting that
holders of Class A Common Stock be given the opportunity to vote for Board
nominees who would refrain from giving money to organizations that supported
abortion. The Company fully acknowledges that the action requested of the Board
by the 1992 proposal is not comparable to majority voting, which, as Mr.
Hitchcock notes, has been adopted by many public companies. However, the 1992
letter is instructive in that a proponent sought to include a proposal in the
Company's material by linking a policy recommendation (in that case, opposition
to organizations supporting abortion) to the right of the Class A stockholders
to vote for 30% of the Board. Similarly, Mr. Hitchcock argues that because the
holders of Class A Common Stock elect 30% of the Board, they are also entitled
to vote on requests to the Board regarding election procedures. However, it is
clear under the Company's Certificate of Incorporation that holders of Class A
Stock vote on the election of 30% of the Board, and not, in the 1992 case, on
recommendations regarding criteria for nominations, or in the present case, on
requests to take action to implement majority rather than plurality voting for
directors.
For the foregoing reasons, the Company stands by its December 14, 2007 letter
and requests the Staff's confirmation that it concurs.
In addition to the matters discussed in the December 14, 2007 letter, the
Company believes the Proposal, as the Proponent may seek to modify it, may be
omitted under Rule 14a-8(e). In his letter, Mr. Hitchcock states that the
Proponent is willing to modify the Proposal to refer only to the election of
directors that are to be chosen by Class A stockholders. The Company believes
that this modification, which the Company neither acknowledges nor accepts,
would result in a substantially new proposal which, if submitted at this time,
could be omitted from the Company's proxy materials pursuant to Rule 14a-8(e) as
the deadline for submission of proposals for inclusion in the 2008 proxy
materials expired November 15, 2007. See Staff Legal Bulletin No. 14 (July 13,
2001), Sections E. 3 and 4. See also the letter to Johnson & Johnson (available
January 31, 2007), a copy of which is enclosed, for a recent example in a
related Rule 14a-8 context of the Staff's concurrence with a strict
interpretation of when a proponent may modify a proposal to overcome a
registrant's argument for omitting it from the proxy materials. Similar to the
Johnson & Johnson case, the Proponent had notice in advance of submitting the
Proposal of the limited voting rights of the Class A Common Stock.
If the Staff does not concur with the Company, we would appreciate an
opportunity to confer with you concerning this matter prior to the issuance of
your response.
In accordance with Rule 14a-8(j), six additional copies of this letter are
enclosed. A copy of this letter is being provided to the Proponent and its
advisors listed below.
If you have any question, or require any additional information, please call me
at (212) 556-7127.
Very truly yours,
/s/
Rhonda L. Brauer
cc: Legal & General Assurance (Pension Management) Limited
Hermes Equity Ownership Ltd.
Cornish F. Hitchcock, Esq.
Enclosures
[INQUIRY LETTER]
11 January 2008
Office of the Chief Counsel
Division of Corporation Finance
Securitics & Exchange Commission
100 F Street, NE
Washington, DC 20549
By hand
Dear Counsel:
I have been asked to respond to the letter dated 14 December 2007 from The New
York Times Company (the "Company"), which asks the Division to concur in the
Company's view that no enforcement action will be recommended if the Company
omits from its 2008 proxy materials a shareholder proposal (the "Proposal")
submitted by Legal & General Assurance (Pension Management) Limited ("Legal &
General"). The Company argues that Legal & General is not a holder of securities
that may be voted at the Company's annual meeting within the meaning of SEC Rule
14a-8(b)(1). For the reasons set forth below, we respectfully ask that the
Division deny the requested relief.
Factual background.
The Proposal is a straight-forward "majority vote" proposal of the sort that has
become commonplace in recent years. In brief, the Proposal asks the Company to
amend the governing documents and to take such other steps as may be necessary
to provide that in uncontested elections for the Board of Directors, a director
shall be elected by the vote of a majority of the votes cast as to that
candidate, with an incumbent who fails to achieve a majority vote obliged to
tender his or her resignation.
Majority voting has quickly become the principal governance practice for board
elections at widely-held companies such as The New York Times Company. According
to a recent study by RiskMetrics Group, 63.8 percent of the companies in the S&P
500 index (which includes The New York Times Company) have adopted some form of
policy that gives effect to the views expressed by a majority of shares voted.
Two-thirds of these firms have an explicit policy requiring board candidates to
attain a majority of the vote casts in order to be elected, while the remaining
one-third may ask a director candidate who fails to receive a majority to submit
his or her resignation. RiskMetrics reports that 496 of the companies that it
tracks currently have a majority voting policy in place. RiskMetrics Group, 2007
POSTSEASON REPORT: A CLOSER LOOK AT ACCOUNTABILITY AND ENGAGEMENT, p. 17
(October 2007).
The Division has rejected attempts by companies to keep majority voting
proposals off company proxy statements, e.g., Citigroup Inc. (14 February 2005).
And when majority voting proposals are presented to shareholders, such
resolutions typically do well. In 2007 these proposals garnered an average of 50
percent of the vote, reaching a high of 85% at International Paper and 76
percent at Praxair and Newell-Rubbermaid despite management opposition to those
proposals. Id.
Notwithstanding this obvious trend line, The New York Times Company has not
adopted majority voting of its own accord. In response to the current Proposal,
the Company has sought no-action relief to prevent its shareholders from having
a say on the matter. To the Company's legal arguments we now turn.
Discussion.
The Company relies on its Certificate of Incorporation, which establishes two
classes of stock. Members of the public (including Legal & General) hold Class A
stock, which accounts for approximately 30 percent of the voting power. Class B
stock is held by members of the Sulzberger-Ochs family and shareholders
associated with family members.
The Company cites Article Fourth, Paragraphs (II) to (V), of the Certificate for
the proposition that class A stockholders may vote only on specified matters:
"the election of 30% of the Board of Directors;" ratification of the selection
of the company's independent auditors; certain acquisitions; and the reservation
of stock for options to be granted to officers, directors or employees.
Moreover, the Company argues, the "entire voting power shall be vested solely
and exclusively in the holders of the shares of Class B Common Stock," with
Class A stockholders having "no voting power" except as specified above.
On the basis of these provisions, the Company argues that Class A stockholders
are not eligible to vote for a majority voting proposal; thus, they cannot
submit a shareholder proposal under Rule 14a-8(b)(1), which imposes certain
eligibility requirements on shareholders, including ownership of shares that are
entitled to vote on the proposal.
We are willing to address that concern by modifying the Proposal to clarify that
the Proposal would apply only to an uncontested election of directors to be
chosen by Class A stockholders. At present, four of the 13 directors are chosen
solely by Class A stockholders. With the suggested modification, only those four
directors would be affected, and the nine directors selected by Class B
directors would remain unaffected. The Proposal would thus not present the case
of a Class A stockholder trying to affect the voting of Class B stock.1
With that clarification, it would be plain that the Proposal is being submitted
by a holder of Class A stock, which the Company concedes may be voted on the
election of directors. The right to participate in the "election of 30% of the
Board of Directors proposed to be elected" logically carries with it the right
not to elect Class A directors. That is the focus of the Proposal, and it
integrally relates to a voting right that the Company acknowledges as belonging
to Class A stockholders.
With the clarification (and perhaps even without it), it also becomes apparent
that the no-action letters cited by the Company do not warrant no-action relief.
First, it appears from the appendices to the Company's submission (and our own
research) that the cited no-action requests were not contested by the proponent.
Thus, the cited authorities establish only that the Company carried its burden
of persuasion under Rule 14a-8(g) in a series of uncontested matters.
Second, none of the proposals involved the topic of majority voting, so there is
no direct precedent. None of them was limited to an issue affecting only Class A
stockholders. Indeed, many of them have nothing whatsoever to with how Class A
directors are elected. E.g., The New York Times Co. (19 September 1997) (request
to investigate a story in the Boston Globe); The New York Times Co. (4 January
1991) (request to refrain from endorsing organizations that endorse abortion);
The New York Times Co. (25 May 1975) (asking the Company to have its microfilm
subsidiary reduce scratches on microfilm).
Third, the only cited resolution that did involve elections to the board of
directors requested declassification of the entire board. The New York Times Co.
(18 December 2006). When faced with the objections that the Company raises here,
the proponent did not seek to modify the proposal so as to affect only those
directors elected by Class A stockholders, thus distinguishing that situation
from what we have here.
For these reasons, the Company has not sustained its burden of persuading the
Division that the modified Legal & General proposal may be excluded from The New
York Times Company's proxy materials under Rule 14a-8(b)(1).
Thank you very much for your consideration of these points. Please do not
hesitate to contact me if there is any further information that we can provide.
We would be grateful as well if you could send by facsimile a copy of the
Division's decision to me at (202) 315-3552. The Company's fax number is (212)
556-4634.
Very truly yours,
/s/
Cornish F. Hitchcock
cc: Rhonda L. Brauer, Esq.
Mr. Barry Holman
-----FOOTNOTES-----
1 The text of the "Resolved" clause could be amended slightly to read
"uncontested election of directors chosen by Class A stockholders" in lieu of
"uncontested election for the board of directors."
[STAFF REPLY LETTER]
January 15, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: The New York Times Company
Incoming letter dated December 14, 2007
The proposal relates to majority voting.
There appears to be some basis for your view that the New York Times may exclude
the proposal under rule 14a-8(b). You represent that holders of the New York
Times' Class A Common Stock are entitled to vote only on certain matters, which
do not include the subject of this proposal. Rule 14a-8(b) requires that in
order to be eligible to have a proposal included, a shareholder must hold "at
least $2,000 in market value, or 1%, of the company's securities entitled to be
voted on the proposal." Accordingly, we will not recommend enforcement action to
the Commission if the New York Times omits the proposal from its proxy materials
in reliance on rule 14a-8(b).
Sincerely,
/s/
Greg Belliston
Special Counsel
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