Company Name: Omnicom Group Inc.
Public Availability Date: February 4, 2008
Document Sections: INQUIRY LETTER
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
STAFF REPLY LETTER
[INQUIRY LETTER]
February 1, 2008
Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal of Lucian Bebchuk
Ladies and Gentlemen:
Pursuant to our discussion on January 31, 2007, Omnicom Group Inc. (the
"Company") is withdrawing its no-action request submitted on January 15, 2007
with respect to the proposal received by the Company from Lucian Bebchuk. The
Company's withdrawal of its no-action request is based upon the correspondence
received from Mr. Bebchuk on January 30, 2007 attached as Exhibit A hereto. This
correspondence indicates that Mr. Bebchuk is formally withdrawing his proposal
and will not appear at the Company's upcoming annual meeting of shareholders.
Please contact me at (202) 637-2165 to discuss any questions you may have
regarding this matter.
Very truly yours,
/s/
Joel H. Trotter of LATHAM & WATKINS LLP
cc: Lucian Bebchuk 1545 Massachusetts Avenue Cambridge, MA 02138
Michael J. O'Brien Senior Vice President, General Counsel, and Secretary Omnicom
Group Inc.
[INQUIRY LETTER]
January 15, 2008
Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Shareholder Proposal of Lucian Bebchuk
Ladies and Gentlemen:
This letter is submitted on behalf of Omnicom Group Inc. (the "Company")
pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended.
The Company has received a shareholder proposal and supporting statement
attached as Exhibit A hereto (the "Proposal") from Lucian Bebchuk (the
"Proponent") for inclusion in the Company's proxy statement for its 2008 annual
meeting of shareholders. The Proposal seeks to create a new, wholly unregulated,
"total access" regime that would subvert and circumvent the carefully crafted
regulatory framework of the Securities and Exchange Commission (the
"Commission") that currently governs shareholder proposals. In particular, the
Proposal seeks adoption of a shareholder resolution recommending that the
Company's Board of Directors adopt a by-law mandating inclusion in the Company's
proxy materials of virtually any proposal for an amendment of the Company's
By-Laws that is submitted by any shareholder who meets specified minimalist
procedural requirements that are arbitrarily and selectively derived from Rule
14a-8 while ignoring other fundamental requirements codified in Rule 14a-8.
The Company hereby advises the Commission that it intends to exclude the
Proposal from its 2008 proxy materials pursuant to Rule 14a-8(i)(3) for the
reasons described below, and respectfully requests confirmation from the staff
(the "Staff") of the Division of Corporation Finance that no enforcement action
will be recommended if the Company so excludes the Proposal. By copy of this
letter, we are advising the Proponent of the Company's intention. In accordance
with Rule 14a-8(j)(2), we are submitting herewith five additional copies of this
letter and the attached materials.
The Company intends to file its definitive 2008 proxy materials with the
Commission no earlier than April 4, 2008. Accordingly, pursuant to Rule
14a-8(j), we submit this letter not less than 80 days before the Company intends
to file its 2008 proxy materials.
The Company respectfully submits that the Proposal may be properly excluded from
its 2008 proxy materials pursuant to Rule 14a-8(i)(3), which authorizes
exclusion of a shareholder proposal from the Company's proxy materials if the
proposal is contrary to the Commission's proxy rules. The Proposal would create
a parallel regime, operating wholly outside of Rule 14a-8, that would allow
shareholder proponents to opt out of Rule 14a-8 and nonetheless mandate
shareholder use of companies' proxy materials. As a result, the Proposal is
contrary to the Commission's proxy rules and should be excluded under Rule
14a-8(i)(3) because (1) the Staff has already determined that a substantially
similar proposal to the Proposal could be properly excluded under Rule
14a-8(i)(3); (2) the Proposal would undermine the Commission's judgment that
Rule 14a-8 serves as the exclusive means of shareholder access to company proxy
materials; (3) the Proposal undermines the Commission's and the Staff's
authority to review shareholder proposals; and (4) the Proposal is contrary to
the Commission's fundamental policy determinations, including the Commission's
recent amendment to Rule 14a-8(i)(8).
(1) The Staff has already permitted exclusion under
Rule 14a-8(i)(3) of a similar proposal.
The Staff has previously determined that a proposal substantially similar to the
Proposal could be properly excluded pursuant to Rule 14a-8(i)(3) as contrary to
the Commission's proxy rules. State Street Corporation (Feb. 3, 2004). Similar
to the Proposal, the State Street proposal would have required State Street to
include in its proxy statement every proposed by-law amendment that met selected
procedural criteria drawn from, but less restrictive than, those specified by
Rule 14a-8. State Street reasoned that the proposal was excludable under Rule
14a-8(i)(3) because the proposal would have allowed access to State Street's
proxy statement without compliance with Rule 14a-8:
"The ... attempt to clothe stockholders with rights of access to the Company's
proxy statement and form of proxy absent compliance with Rule 14a-8 is flatly
inconsistent with the scheme for access to the corporate machinery that the
Commission has carefully crafted, including under Rule 14a-8."
State Street concluded that the proposal warranted exclusion pursuant to Rule
14a-8(i)(3) because the proposal "would both (1) eliminate the requirement of
compliance with Rule 14a-8 for access to the proxy material, and (2) impose new
obligations on State Street's proxy statement and form of proxy that Regulation
14A does not require." In response, the Staff concurred with State Street's
exclusion on the specific grounds that the proposal was contrary to the proxy
rules pursuant to Rule 14a-8(i)(3).
Just as the proposal in State Street sought to create a parallel access regime
outside of Rule 14a-8, the Proposal seeks to pick and choose individual elements
of Rule 14a-8 to create a new proxy access scheme operating wholly outside of
the Commission's proxy rules. The Proposal is based on a patchwork of several
procedural eligibility requirements stitched together from four out of thirteen
requirements in Rule 14a-8(i) as well as three other requirements that the
Proponent has selected from Rule 14a-8.1 As such, the Proposal is similarly
excludable pursuant to Rule 14a-8(i)(3) because the Proposal shares the same
fatal flaw contained in the State Street proposal by attempting to subvert and
circumvent the Commission's carefully crafted regulatory framework.
(2) The Proposal inappropriately attempts to use Rule 14a-8
to undermine Rule 14a-8 itself as the exclusive means of access to companies'
proxy statements.
The Commission has created two alternative and exclusive regimes for shareholder
proposals: (i) conventional proxy solicitation under Rule 14a-12 and related
rules, under which shareholders may solicit proxies and engage in proxy
contests; and (ii) proposals included in companies' proxy statements under Rule
14a-8, which is carefully tailored to provide an alternative, but specifically
limited, means of permitting shareholders to use a company's proxy statement
under controlled conditions and the active oversight of the Staff. Here, the
Proponent seeks to remove shareholder proposals from the Commission's oversight
by creating a third, wholly unregulated means of advancing proposals at the
expense of all of the shareholders (i.e., the Company) rather than by the
particular shareholder proponent who is unable to satisfy the requirements of
Rule 14a-8 and therefore, under the Commission's existing rules, must bear the
expense directly. This third regime contemplated by the Proposal is flatly
contrary to the Commission's existing proxy rules and therefore should be
excluded under Rule 14a-8(i)(3).
The Company respectfully submits that Rule 14a-8 should remain the exclusive
means of shareholder access to company proxy materials. The Commission has
carefully crafted Rule 14a-8 over decades of deliberation and dialogue with
stakeholders in the United States securities markets. Over the years, the
Commission's consideration of shareholder access changes has reaffirmed the
central and exclusive role of Rule 14a-8 as the means of shareholder access to
the Company's proxy statement. See Release No. 34-20091 (Aug. 16, 1983)
(affirming that the basic framework of Rule 14a-8 provides a fair and efficient
mechanism for the proposal process and serves the interests of shareholders and
issuers well); Release No. 34-56914 (Dec. 6, 2007) (amending Rule 14a-8(i)(8) to
clarify that companies are not required to include shareholder nominees in
company proxy materials because a contrary result would "circumvent the other
proxy rules designed to assure the integrity of director elections").
In contrast to the Commission's existing regulatory framework, the Proposal
attempts wholesale circumvention of the Commission's proxy rules by developing a
novel regime permitting virtually unlimited shareholder access to companies'
proxy materials. If a shareholder proposal attempting to end-run Rule 14a-8 is
not directly "contrary to ... the Commission's proxy rules," then nothing is.
The shareholder proposal process under Rule 14a-8 is simply not an appropriate
mechanism for seeking to re-engineer the Commission's established proxy rules.
As such, the Proposal is excludable pursuant to Rule 14a-8(i)(3).
(3) The Proposal undermines the authority of the Commission and the Staff to
review shareholder proposals and maintain oversight of the process.
The scheme embodied in the Proposal would bypass the Commission's and the
Staff's authority over shareholder proposals and their inclusion or exclusion in
proxy statements. In the past, the Commission repeatedly declined to adopt
proposals that would curtail or reduce the Commission's and the Staff's role in
the review of shareholder proposals. See Release No. 34-40018 (May 21, 1998)
(noting that "some of the proposals we are not adopting share a common theme: to
reduce the Commission's and its staff's role in the process and to provide
shareholders and companies with a greater opportunity to decide for themselves
which proposals are sufficiently important and relevant to the company's
business to justify inclusion in its proxy materials" (emphasis added)); see
also Release No. 34-20091 (Aug. 16, 1983). In contrast, the Proposal seeks to
remove the Commission's role in the review of shareholder proposals by requiring
that virtually any proposed by-law amendment would be included in the Company's
proxy statement. As a result, the Proponent's attempt to eliminate the
Commission's oversight role over shareholder proposals directly conflicts with
the Commission's express recognition of the importance of its oversight and its
repeated refusals to adopt rules that would increase the ability of a lone
shareholder to propound any conceivable by-law amendment at the expense of all
of the shareholders. The Proposal is contrary to the authority of the Commission
and is thus clearly contrary to the proxy rules and excludable under Rule
14a-8(i)(3).
(4) The Proposal is contrary to the Commission's fundamental policy
determinations, including the Commission's recent amendment to Rule 14a-8(i)(8).
The Proposal imposes no substantive limitation on the issues that shareholders
could raise under the contemplated amendment to the Company's By-Laws, except
"to the extent permitted under federal law and state law" and except that any
proposed by-law must "be legally valid if adopted." Under this rubric, the
Proposal could be interpreted as a deliberate strategy to allow shareholders to
have access to the Company proxy for director nominations, which is directly
contrary to the Commission's recent release reaffirming the Commission's
longstanding position that shareholder proposals relating to the process of
director elections can be categorically excluded pursuant to Rule 14a-8(i)(8).
Release No. 34-56914 (Dec. 6, 2007). As such, the Proposal could operate as the
first step in a two-step plan to overturn the Commission's decision regarding
shareholder proposals relating to director elections: (1) the Proposal itself
could initiate a process of superseding and altering the Company's By-laws to
circumvent the restrictions of Rule 14a-8 with respect to shareholder proposals
in general; and (2) following adoption of a by-law amendment negating the
conditions and restrictions under Rule 14a-8, a proponent could then deploy the
newly adopted by-law to use the Company's proxy materials to propose an
additional amendment to the Company's By-laws specifically mandating direct
access to the Company's proxy materials. Thus, the Proposal would effectively
invalidate the Commission's recent action with respect to Rule 14a-8(i)(8).
Moreover, without recourse to the substantive categories for exclusion under
Rule 14a-8(i), all manner of frivolous, wasteful and distracting proposals would
be included in the Company's proxy materials and brought to a potentially
binding shareholder vote. As a result, the Proposal may be excluded as contrary
to the Commission's proxy rules under Rule 14a-8(i)(3) because it disregards the
Commission's policy determinations, including the Commission's recent amendment
of Rule 14a-8(i)(8), with respect to those shareholder proposals that may be
excluded under Rule 14a-8(i).
Accordingly, the Proposal may be properly excluded from the Company's 2008 proxy
materials under Rule 14a-8(i)(3).
* * *
For each of the foregoing reasons, the Company respectfully submits that the
Proposal may be excluded from the Company's 2008 proxy materials. If the Staff
does not concur with the Company's position, we would appreciate an opportunity
to confer with the Staff concerning this matter prior to the determination of
the Staff's final position. The Proponent is requested to copy the undersigned
on any response he may choose to make to the Staff.
Please contact Barry A. Bryer at (212) 906-1340 or the undersigned at (202)
637-2165 to discuss any questions you may have regarding this matter.
Very truly yours,
/s/
Joel H. Trotter of LATHAM & WATKINS LLP
cc: Lucian Bebchuk 1545 Massachusetts Avenue Cambridge, MA 02138
Michael J. O'Brien Senior Vice President, General Counsel, and Secretary Omnicom
Group Inc.
-----FOOTNOTES-----
1 The procedural requirements embodied in the Proposal derive loosely from
paragraphs (i)(1), (i)(2), (i)(11) and (i)(12) of Rule 14a-8 (without requiring
compliance with any other of the thirteen bases for exclusion contained in
paragraph (i) of Rule 14a-8) as well as paragraphs (b)(1), (d) and (e) of Rule
14a-8 (without requiring compliance with any other requirements of Rule 14a-8).
[APPENDIX 1]
December 13, 2007
VIA FACSIMILE AND OVERNIGHT MAIL
Michael J. O'Brien
Secretary
Omnicom Group Inc.
437 Madison Ave.
New York, NY 10022
Re: Shareholder Proposal of Lucian Bebchuk
To Michael J. O'Brien:
I am the owner of 70 shares of common stock of the Omnicom Group Inc. (the
"Company"), which I have continuously held for more than 1 year as of today's
date. I intend to continue to hold these securities through the date of the
Company's 2008 annual meeting of shareholders.
Pursuant to Rule 14a-8, I enclose herewith a shareholder proposal and supporting
statement (the "Proposal") for inclusion in the Company's proxy materials and
for presentation to a vote of shareholders at the Company's 2008 annual meeting
of shareholders.
Please let me know if you would like to discuss the Proposal or if you have any
questions.
Sincerely,
/s/
Lucian Bebchuk
[APPENDIX 2]
RESOLVED that shareholders of Omnicom Group Incorporated recommend that the
Board of Directors adopt a by-law provision under which the Corporation, to the
extent permitted under federal law and state law, shall include in its proxy
materials for an Annual Meeting of shareholders any qualified proposal for an
amendment of the by-laws submitted by a proponent, as well as the proponent's
supporting statement if any, and shall allow shareholders to vote with respect
to such a qualified proposal on the Corporation's proxy card. A qualified
proposal refers in this resolution to a proposal that satisfies the following
requirements:
(a) The proposed amendment of the by-laws would be legally valid if adopted;
(b) The proponent submitted the proposal and supporting statement to the
Corporation's Secretary by the deadline specified by the Corporation for
shareholder proposals for inclusion in the proxy materials for the Annual
Meeting;
(c) The proponent beneficially owned at the time of the submission at least
$2,000 of the Corporation's outstanding common stock for at least one year, and
did not submit other shareholder proposals for the Annual Meeting;
(d) The proposal and its supporting statement do not exceed 500 words;
(e) The proposal does not substantially duplicate another proposal previously
submitted to the Corporation by another proponent that will be included in the
Corporation's proxy materials for the same meeting; and
(f) The proposal is not substantially similar to any other proposal that was
voted upon by the shareholders at any time during the preceding three calendar
years and failed to receive at least 3% of the votes cast when so considered.
SUPPORTING STATEMENT:
Statement of Professor Lucian Bebchuk: In my view, the ability to place
proposals for by-law amendments on the corporate ballot could in some
circumstances be essential for shareholders' ability to use their power under
state law to initiate by-law amendments. In the absence of ability to place such
a proposal on the corporate ballot, the costs involved in obtaining proxies from
other shareholders could deter a shareholder from initiating a proposal even if
the proposal is one that would obtain shareholder approval were it to be placed
on the corporate ballot. Current and future SEC rules may in some cases allow
companies - but do not currently require them - to exclude proposals from the
corporate ballot. In my view, even when SEC rules may allow exclusion, it would
be desirable for the Corporation to place on the corporate ballot proposals that
satisfy the requirements of a qualified proposal. I urge even shareholders who
believe that no changes in the Corporation's by-laws are currently desirable to
vote for my proposal to facilitate shareholders' ability to initiate proposals
for by-law amendments to be voted on by their fellow shareholders.
I urge you to vote for this proposal.
[STAFF REPLY LETTER]
February 4, 2008
Joel H. Trotter
Latham & Watkins LLP
555 Eleventh Street, N.W., Suite 1000
Washington, DC 20004-1304
Re: Omnicom Group Inc.
Dear Mr. Trotter:
This is in regard to your letter dated February 1,
2008 concerning the shareholder proposal submitted by Lucian Bebchuk for
inclusion in Omnicom's proxy materials for its upcoming annual meeting of
security holders. Your letter indicates that the proponent has withdrawn the
proposal, and that Omnicom therefore withdraws its request for a no-action
letter from the Division. Because the matter is now moot, we will have no
further comment.
Sincerely,
/s/
Heather L. Maples
Special Counsel
cc: Lucian Bebchuk 1545 Massachusetts Avenue Cambridge, MA 02138
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