Company Name: Pfizer Inc.
Public Availability Date: February 12, 2008
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 21, 2007
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Shareholder Proposal of Julia Randall Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that Pfizer Inc. ("Pfizer") intends to omit from
its proxy statement and form of proxy for its 2008 Annual Meeting of
Shareholders (collectively, the "2008 Proxy Materials") a shareholder proposal
and statements in support thereof (the "Proposal") received from Julia Randall
(the "Proponent").
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 Pfizer intends to
file its definitive 2008 Proxy Materials with the Commission; and
concurrently sent copies of this correspondence to the Proponent.
Rule 14a-8(k) provides that shareholder 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
that if the Proponent elects 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
Pfizer pursuant to Rule 14a-8(k).
THE PROPOSAL
The Proposal requests that
the Board report to shareholders on the rationale for increasingly exporting the
Company's animal experimentation to countries which have either nonexistent or
substandard animal welfare regulations and little or no enforcement. Further,
the shareholders request that the report include information on the extent to
which Pfizer requires adherence to U.S. animal welfare standards at facilities
in foreign countries.
A copy of the Proposal, as well as related correspondence with the Proponent, is
attached to this letter as Exhibit A.
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(i)(12)(iii) because the Proposal deals with substantially the same subject
matter as three previously submitted shareholder proposals that were included in
Pfizer's 2004, 2006 and 2007 proxy materials, and the most recently submitted of
those proposals did not receive the support necessary for resubmission.
ANALYSIS
The Proposal May Be Excluded under Rule 14a-8(i)(12)(iii) Because It Deals with
Substantially the Same Subject Matter as Three Previously Submitted Proposals,
and the Most Recently Submitted of Those Proposals Did Not Receive the Support
Necessary for Resubmission.
Rule 14a-8(i)(12)(iii) permits the exclusion of a shareholder proposal dealing
with "substantially the same subject matter as another proposal or proposals
that has or have been previously included in the company's proxy materials
within the preceding 5 calendar years," and the proposal received "less than 10%
of the vote on its last submission to shareholders if proposed three times or
more previously within the preceding 5 calendar years."
A. Precedent Regarding Exclusion under Rule 14a-8(i)(12).
The Commission has indicated that the reference in Rule 14a-8(i)(12) that the
proposals must deal with "substantially the same subject matter" does not mean
that the previous proposals and the current proposal must be exactly the same.
Although the predecessor to Rule 14a-8(i)(12) required a proposal to be
"substantially the same proposal" as prior proposals, the Commission amended
this rule in 1983 to permit exclusion of a proposal that "deals with
substantially the same subject matter." The Commission explained the reason for
and meaning of the revision, stating:
The Commission believes that this change is necessary to signal a clean break
from the strict interpretive position applied to the existing provision. The
Commission is aware that the interpretation of the new provision will continue
to involve difficult subjective judgments, but anticipates that those judgments
will be based upon a consideration of the substantive concerns raised by a
proposal rather than the specific language or actions proposed to deal with
those concerns.
Exchange Act Release No. 20091 (Aug. 16, 1983).
Moreover, consistent with the language of the rule, the Staff has confirmed
numerous times that Rule 14a-8(i)(12) does not require that the proposals, or
their subject matters, be identical in order for a company to exclude the
later-submitted proposal. When considering whether proposals deal with
substantially the same subject matter, the Staff has focused on the "substantive
concerns" raised by the proposals, rather than the specific language or
corporate action proposed to be taken. Thus, the Staff has concurred with the
exclusion of proposals under Rule 14a-8(i)(12) when the proposal in question
shares similar underlying social or policy issues with a prior proposal, even if
the proposals recommended that the company take different actions. See Medtronic
Inc. (avail. June 2, 2005) and Bank of America Corp. (avail. Feb. 25, 2005)
(both proposals requesting that the companies list all of their political and
charitable contributions on their websites were excludable as each dealt with
substantially the same subject matter as prior proposals requesting that the
companies cease making charitable contributions); Dow Jones & Co., Inc. (avail.
Dec. 17, 2004) (proposal requesting that the company publish in its proxy
materials information relating to its process for donations to a particular
non-profit organization was excludable as it dealt with substantially the same
subject matter as a prior proposal requesting an explanation of the procedures
governing all charitable donations); Saks Inc. (avail. Mar. 1, 2004) (proposal
requesting that the board of directors implement a code of conduct based on
International Labor Organization standards, establish an independent monitoring
process and annually report on adherence to such code was excludable as it dealt
with substantially the same subject matter as a prior proposal requesting a
report on the company's vendor labor standards and compliance mechanism);
Bristol-Myers Squibb Co. (avail. Feb. 11, 2004) (proposal requesting that the
board review pricing and marketing policies and prepare a report on how the
company will respond to pressure to increase access to prescription drugs was
excludable because it dealt with substantially the same subject matter as prior
proposals requesting the creation and implementation of a policy of price
restraint on pharmaceutical products); Eastman Chemical Co. (avail. Feb. 28,
1997) (proposal requesting a report on legal issues related to the supply of raw
materials to tobacco companies related to substantially the same subject matter
as a proposal that requested that the company divest its filter tow products
line, a line that produced materials used to manufacture cigarette filters);
Bristol-Myers Squibb Co. (avail. Feb. 6, 1996) (concurring that a proposal
requesting the formation of a committee to develop an educational plan to inform
women of the potential abortifacient action of the company's products was
excludable because it dealt with "substantially the same subject matter (i.e.
abortion-related matters)" as did prior proposals that requested the company
refrain from giving charitable contributions to organizations that perform
abortions).
Similarly, the Staff has permitted the exclusion under Rule 14a-8(i)(12) of
shareholder proposals that were concerned with the health and welfare of animals
used in research testing even though the proposals requested a wide variety of
corporate actions in this regard. For example, in Merck & Co., Inc. (avail. Dec.
15, 2006) ("Merck") and in Abbott Laboratories (avail. Feb. 28, 2006)
("Abbott"), the Staff concurred that a proposal was excludable under Rule
14a-8(i)(12) because the proposal addressed substantially the same subject
matter as a prior proposal, even though the actions requested by the two
proposals were quite different. The proposals in Merck and Abbott requested that
the board of directors prepare a feasibility study on amending the company's
animal research policy to extend to all contract labs and to address the
animals' social and behavioral needs. The prior proposals in Merck and Abbott
had requested the company commit to using non-animal methods for certain tests
and petition governmental agencies to accept alternative test methods. In both
Merck and Abbott, the Staff found the later-submitted proposals were excludable
because, despite the different actions the proposals requested, the substantive
concerns related to the health and welfare of animals used in research testing.
In Barr Pharmaceuticals, Inc. (avail. Sept. 25, 2006) ("Barr"), the Staff
concurred that a proposal to adopt an animal welfare policy that reduced the
number of animals used in research and implemented acceptable standards of care
was excludable under Rule 14a-8(i)(12) because it dealt with substantially the
same subject matter as a prior proposal that requested the company commit to
using non-animal methods for certain tests and petition governmental agencies to
accept alternative test methods. As in Merck and Abbott, the Staff found the
proposal under consideration was excludable, despite the fact that the actions
each proposal requested were different, because the substantive concern was the
health and welfare of the animals used in research testing.
In Gillette Co. (avail. Feb. 25, 1993) ("Gillette"), the Staff concurred that a
shareholder proposal was excludable under the predecessor to Rule
14a-8(i)(12)(iii), because it dealt with substantially the same subject matter
as three previously submitted proposals.
The proposal that Gillette was seeking to exclude requested that the company
form a committee to review its use of live animals in safety testing and report
to shareholders on which product lines had been tested on animals and whether
the tests accurately predict product safety.
One prior proposal requested that the company disclose which products were
tested on animals and implement a phase-out policy on animal testing.
Another prior proposal requested that the company stop all animal testing,
send the remaining animals to retirement farms, dismiss any employee who
violated the rules and refrain from hiring any outside contractor to conduct the
eliminated tests.
A third prior proposal requested that the board establish a review committee
to scrutinize the company's use of animals in safety testing.
Once again, the actions requested by the proposals were disparate but the Staff
concurred that all of the proposals dealt with the same substantive
concernhealth and welfare of animals used in research testingand allowed the
company to exclude the later-submitted proposal.
B. The Proposal Deals with Substantially the Same Subject Matter as Three
Previously Submitted Proposals.
Pfizer has received various shareholder proposals relating to its policies and
procedures regarding the health and welfare of animals used in research testing
over the past several years. Last year, Pfizer included a shareholder proposal
in its 2007 proxy materials, filed on March 15, 2007 (the "2007 Proposal,"
attached as Exhibit B), that is practically identical to the Proposal. The 2007
Proposal requested that the Board of Directors of Pfizer (the "Board"):
report to shareholders on the rationale for increasingly exporting the Company's
animal experimentation to countries which have either nonexistent or substandard
animal welfare regulations and little or no enforcement. Further, the
shareholders request that the report include information on the extent to which
Pfizer requiresat a minimum adherence to U.S. animal welfare standards at its
facilities in foreign countries.
Pfizer included a shareholder proposal in its 2006 proxy materials, filed on
March 16, 2006 (the "2006 Proposal," attached as Exhibit C), that requested that
Pfizer issue a report:
on the feasibility of amending the Company's Laboratory Animal Care and Use
policy [the "Animal Care Policy"] to ensure (a) that it extends to all contract
laboratories and that it is reviewed with such outside laboratories on a regular
basis and (b) superior standards of care for animals who continue to be used for
these purposes, both by the Company itself and by all independently retained
laboratories, including provisions that ensure that animals' psychological,
social and behavioral needs are met. Further, the shareholders request that the
Board issue an annual report to shareholders on the extent to which in-house and
contract laboratories are adhering to this policy, including the implementation
of the psychological enrichment measures.
Finally, Pfizer included a shareholder proposal in its 2004 proxy materials,
filed on March 12, 2004 (the "2004 Proposal," attached as Exhibit D), that
requested that the Board:
1. Issue a policy statement publicly committing to use in vitro tests for
assessing skin corrosion, skin absorption, skin irritation, phototoxicity and
pyrogenicity endpoints, and generally committing to the elimination of product
testing on animals in favor of validated in vitro alternatives; and 2. Formally
request that the relevant regulatory agencies accept validated in vitro tests as
replacements to animal tests.
As noted above, under Rule 14a-8(i)(12) a company may exclude a shareholder
proposal from its proxy materials if such proposal "deals with substantially the
same subject matter" as other proposals that the company "previously included in
[its] proxy materials within the preceding 5 calendar years." The substantive
concern expressed in the Proposal and in the 2007 Proposal, the 2006 Proposal
and the 2004 Proposal (collectively, the "Previous Proposals") is the welfare of
animals used in research. While the specific language and specific actions
proposed in the Proposal and the Previous Proposals in some instances may
differ, the fact that they deal with substantially the same subject matter is
demonstrated by a comparison of the Proposal and the Previous Proposals with
previous instances where the Staff has concurred that a variety of shareholder
proposals relating to animal health and welfare involve the same substantive
concerns.
In the instant case, the Proposal and the 2007 Proposal are virtually
identical; both using virtually identical language for the resolution and both
contain the same supporting statements. Therefore, for purposes of demonstrating
that the various proposals relate to the same substantive concern, we will first
analyze how the Proposal and the 2007 Proposal deal with substantially the same
subject matter as the 2006 Proposal.
The Proposal and the 2007 Proposal, on the one hand, and the 2006 Proposal, on
the other hand, seek to extend Pfizer's Animal Care Policy and U.S. welfare
standards to laboratories that currently may fall outside their purview and to
promote animal welfare and prevent cruel treatment of animals. Thus, the
substantive concern expressed in the proposals is the welfare of animals used in
research testing and each of the proposals expresses a desire for Pfizer to play
a role in stopping alleged abuses in this area. In this regard, the Proposal and
the 2007 Proposal, on the one hand, and the 2006 Proposal, on the other hand,
are even more similar than the proposals for which the Staff permitted exclusion
in the precedents discussed above. In Gillette, the Staff concurred that a
proposal that requested that the company send all of the research animals to
retirement farms and fire any employees who violate this rule dealt with
substantially the same subject matter as a proposal that requested that the
company review its use of live animals in research and report to shareholders on
whether the live animal tests accurately predict product safety. The actions
requested in Gillette were significantly more diverse than the actions requested
in the proposals submitted to Pfizer. Likewise, in Barr, the Staff found that a
proposal requesting the company adopt an animal welfare policy shared the same
concern as a proposal that requested the company petition the government to
accept certain non-animal test methods. Finally, the Proposal and the 2007
Proposal, on the one hand, and the 2006 Proposal, on the other hand, are more
similar to each other than the proposals submitted in either Merck or Abbott, in
each case where the Staff agreed that a proposal requesting a feasibility study
on amending the company's animal research policies addressed the same concern as
a proposal requesting that the company commit to using non-animal tests. Thus,
the Proposal and the 2007 Proposal deal with substantially the same subject
matter as the 2006 Proposal.
Now that we have analyzed the Proposal, the 2007 Proposal and the 2006
Proposal, we turn to an analysis of the 2004 Proposal. In determining whether
the 2004 Proposal addresses the same substantive concern as the Proposal, the
2007 Proposal and the 2006 Proposal, a review of the Merck and Abbott letters is
instructive, as the 2006 Proposal and the 2004 Proposal are substantially the
same as the two proposals analyzed in each of the Merck and Abbott letters. The
2006 Proposal contains the exact same resolution as in one of the proposals in
Abbott, and that resolution varies only by a few phrases from the resolution in
one of the Merck proposals. The 2004 Proposal is substantially the same as the
other proposal analyzed in both of the Merck and Abbott letters. The 2004
Proposal requests that Pfizer commit to using in vitro testing (a type of
non-animal testing method) to assess five different types of skin reactions.
Likewise, the proposals in Merck and Abbott requested that the company commit to
using non-animal testing methods to assess the exact same five types of skin
reactions. Further, the 2004 Proposal and the relevant Merck and Abbott
proposals all request that the company petition "relevant regulatory agencies"
to accept certain non-animal testing methods. Thus, the 2004 Proposal and the
relevant Merck and Abbott proposals are substantially the same. Since the Staff
has already concurred that the proposals in both the Merck and Abbott letters
addressed the same substantive concern, we believe that the 2004 Proposal
addresses the same substantive concern as the 2006 Proposal. In turn, the 2006
Proposal deals with substantially the same subject matter as both the Proposal
and the 2007 Proposal, and, thus, we believe that the Proposal deals with the
same substantive concern as all of the previously submitted proposals.
C. In the Alternative, Another Proposal Included in the 2007 Proxy Materials
Deals with Substantially the Same Subject Matter as the Proposal Submitted to
Pfizer by the Proponent.
In the alternative, we note that shareholders at Pfizer's 2007 Annual Meeting
voted on both the 2007 Proposal and another proposal related to animal welfare.
This second proposal (the "Second 2007 Proposal," attached as Exhibit E),
requested the Board issue a report:
on the feasibility of amending the Company's [Animal Care Policy] to ensure
that: i) it extends to all contract laboratories and is reviewed with such
outside laboratories on a regular basis, and ii) it addresses animals' social
and behavioral needs. Further, the shareholders request that the report include
information on the extent to which in-house and contract laboratories are
adhering to the [Animal Care Policy], including the implementation of enrichment
measures.
With the exception of minor differences in a few phrases, the Second 2007
Proposal is virtually identical to the 2006 Proposal. Accordingly, in the
alternative, we would argue that the Proposal is substantially identical to the
2007 Proposal, that the 2006 Proposal is virtually identical to the Second 2007
Proposal, and thus, under the same analysis as provided above, the Proposal
deals with substantially the same subject matter as three previously submitted
proposals.
We recognize that, under this alternative argument, two of the previous
proposals were submitted in the same year. However, we believe that both of the
2007 proposals count towards satisfaction of the thresholds in Rule 14a-8(i)(12)
because, as required by the Rule, each was "previously included in the company's
proxy materials within the preceding 5 calendar years." Further, the express
language of Rule 14a-8(i)(12) states that the proposal must have been "proposed
three times or more" during the preceding 5 calendar years; it does not require
the proposal to have been submitted at three different meetings. Analysis of
both 2007 proposals also is consistent with the purpose of the exclusion, "to
prevent matters of little interest from consistently being placed before an
issuer's security holders." Exchange Act Release No. 12598 (Jul. 7, 1976). In
that Release, the Commission indicated that the Rule 14a-8(i)(12) exclusion
"effectively limit[s] the scope of shareholder proposals [included in a
company's proxy materials] to those matters that either have not been acted upon
by an issuer's security holders within the period specified in the rule, or, if
acted upon, have evoked a significant shareholder vote during that period."
As the above analysis indicates, the subject matter of the Proposal and the
Previous Proposalsthe health and welfare of animals used in research
testingdeals with substantially the same subject matter for purposes of Rule
14a-(8)(i)(12).
D. The Proposals Included in Pfizer's 2007 Proxy Materials Did Not Receive the
Shareholder Support Necessary to Permit Resubmission.
In addition to requiring that the proposals address the same substantive
concern, Rule 14a-8(i)(12) sets thresholds with respect to the percentage of
shareholder votes cast in favor of the last proposal submitted and included in
Pfizer's proxy materials. In this case, two proposals relating to animal welfare
were included in Pfizer's 2007 proxy materials, the 2007 Proposal and a second
proposal.1 Staff Legal Bulletin No. 14 (avail. July 13, 2001) ("SLB 14")
explains that only votes for and against a proposal are included in the
calculation of the shareholder vote; abstentions and broker non-votes are not
included. According to Pfizer's Quarterly Report on Form 10-Q filed on May 4,
2007, there were 307,549,848 votes cast in favor of and 3,910,545,608 votes cast
against the 2007 Proposal. See Exhibit F. Tallying the votes in accordance with
the guidelines established by SLB 14, only 7.29% of the votes were cast in favor
of the 2007 Proposal. Thus, the last time that Pfizer's shareholders considered
a substantially similar proposal, it received less than 10% of the votes cast.
Rule 14a-8(i)(12)(iii) provides that a company may exclude a proposal that deals
with substantially the same subject matter as previously submitted proposals if
the proposal received "less than 10% of the vote on its last submission to
shareholders if proposed three times or more previously within the preceding 5
calendar years." Thus, the Proposal is excludable under Rule 14a-8(i)(12)(iii).
CONCLUSION
Based upon the foregoing analysis, we respectfully request that the Staff concur
that it will take no action if Pfizer excludes the Proposal from its 2008 Proxy
Materials. We would be happy to provide you with any additional information and
answer any questions that you may have regarding this subject. In addition,
Pfizer agrees to promptly forward to the Proponent any response from the Staff
to this no-action request that the Staff transmits by facsimile to Pfizer only.
If we can be of any further assistance in this matter, please do not hesitate to
call me at (212) 733-4802.
Sincerely,
/s/
Margaret M. Foran
Enclosures
cc: Susan L. Hall, People for the Ethical Treatment of Animals Julia Randall
-----FOOTNOTES-----
1 The second animal welfare proposal submitted in 2007 requested that Pfizer
provide its "rationale for increasingly exporting the Company's animal
experimentation" to countries with substandard animal welfare regulations (the
"Second 2007 Proposal," attached as Exhibit E). We believe that the Second 2007
Proposal addresses the same substantive concern as the Proposal, the 2007
Proposal, the 2006 Proposal and the 2004 Proposal. We note that there were
357,791,090 votes cast in favor of, and 3,849,371,227 votes cast against, the
Second 2007 Proposal. See Exhibit F. As a result, 8.50% of the votes were cast
in favor of the Second 2007 Proposal. Thus, regardless of which vote is
considered the "last" vote, both of the 2007 Proposals received less than 10% of
the votes cast.
[APPENDIX 1]
November 13, 2007
Margaret M. Foran
Secretary, Pfizer Inc.
235 East 42nd Street
New York, NY 10017-5755
Re: Shareholder Proposal Regarding Outsourcing Animal Testing to Asia
Dear Ms. Foran:
I am the holder of 1,700 shares of Pfizer stock and the proponent of a
shareholder proposal relating to the Company's outsourcing animal testing to
Asia. The proposal is attached for inclusion in the proxy statement for the 2008
annual meeting. Also enclosed is a letter from my brokerage firm certifying to
my ownership of shares. I have held these shares continuously for more than one
year and intend to hold them through and including the date of the 2007 annual
meeting of shareholders.
Please communicate with my authorized representative, Susan L. Hall, Esq. if you
need any further information. If the Company will attempt to exclude any portion
of the proposal under Rule 14a-8, please so advise my representative within 14
days of your receipt of this proposal. Ms. Hall may be reached at 10 Holden
Street, North Adams, MA 01247, by telephone at (413) 662-4022, or by e-mail at
SusanH@peta.org.
Very truly yours,
/s/
Julia Randall
Enclosures
cc: Susan L. Hall
[APPENDIX 2]
PFIZER
REPORT ON EXPORTING ANIMAL TESTING
This Proposal is submitted by Julia Randall.
RESOLVED, that the Board report to shareholders on the rationale for
increasingly exporting the Company's animal experimentation to countries which
have either nonexistent or substandard animal welfare regulations and little or
no enforcement. Further, the shareholders request that the report include
information on the extent to which Pfizer requires adherence to U.S. animal
welfare standards at facilities in foreign countries.
Supporting Statement:
Pfizer has publicly committed to the "3Rs" of animal research:
Refinement of the use of research animals to use less painful or the least
invasive procedures whenever possible.
Reduction of the numbers of animals used in each study to the absolute minimum
necessary.
Replacement of animal experiments with non-animal experiments.1
Furthermore, the Company declares that "[e]very proposed use of animals in our
research will be thoroughly evaluated and the health and well being of all
laboratory animals under our care will be attended to meticulously." However,
some of the countries to which the Company is relocating its animal research are
known for having no or poor animal welfare standards and negligible oversight.
In October 2005, Pfizer announced the opening of a new Research & Development
Center in Shanghai, China, with Pfizer's Chief Medical Officer stating that
"Pfizer's planned investment into this R&D center will near US$25 million over
the next 5 years." 2 Company sources stated that "research and development in
China is an indispensable part of the company's global R&D program" 3 and that
"[t]he Pfizer investment in this centre demonstrates ... our commitment to
broaden the scope of our operations here in China." 4
The November 13, 2006, issue of Forbes magazine reported on Pfizer's research in
China, noting that the rationale for shifting animal testing to China is that
"scientists are cheap, lab animals plentiful and pesky protesters held at bay"
and quoting a pharmaceutical industry executive who "admits that Chinese testing
companies lack quality control and high standards on treatment." 5
Our Company now conducts a significant proportion of its research in foreign
laboratories. Purposely relocating research to countries with lower animal
costs, easy animal availability, and lower welfare standards is in direct
conflict with Pfizer's stated commitment to the 3Rs.
As recent media reports of safety scandals and product recalls have made
abundantly clear, standards for products exported from China to the U.S. are
lacking. Shareholders deserve to understand why animal testing is being moved to
foreign countries, such as China. Moreover, our Company should report on the
steps that are being taken to ensure that animal testing conducted in other
countries is held to at least the same animal welfare standards as testing
conducted here.
We urge shareholders to support this resolution.
-----FOOTNOTES-----
1 http://www.pfizer.com/responsibility/laboratory_animal_care.jsp
2 http://www.pfizer.com.cn/htmls/news/english/2006224213820.htm
3 "Pfizer Inaugurates R&D Center in Shanghai"; People's Daily (Nov. 1, 2005)
4 "Pfizer's Strategic Presence in China"; China Daily, p.3 (Nov. 1, 2005)
5 "Comparative Advantage"; Forbes, p. 76 Vol. 178 No. 10 (Nov. 13, 2006)
[INQUIRY LETTER]
January 10, 2008
BY REGULAR & ELECTRONIC MAIL: cfletters@sec.gov
Office of the Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F. Street, N.W.
Washington, D.C. 20549
Re: PFIZER: Shareholder Proposal of Frank Randall relating to Violations of the
Animal Welfare Act; and Shareholder Proposal of Julia Randall relating to
Outsourcing Animal Testing to Foreign Countries
Ladies and Gentlemen:
This letter is filed in response to two no action letters dated December 21,
2007, submitted to the SEC by Pfizer, Inc. ("Pfizer" or "the Company"). The
Company seeks to exclude a shareholder proposal submitted by Frank Randall
relating to Pfizer's violations of the Animal Welfare Act (also referred to as
the "AWA Violations" proposal). Mr. Randall is a member of People for the
Ethical Treatment of Animals ("PETA"), holds 1,500,000 shares of Pfizer stock,
and has designated the undersigned as his authorized representative.
The second no action letter relates to a shareholder resolution submitted by
Julia Randall (unrelated to Frank Randall) who is also a member of PETA. Ms.
Randall's resolution concerns Pfizer's outsourcing animal testing to countries
such as China, which have no animal welfare laws or protections (hereinafter
referred to as the "Outsourcing" resolution).
The Company argues that the AWA Violations proposal intrudes on Pfizer's
ordinary business operations and can be omitted pursuant to Rule 14a-8(i)(7).
Pfizer asserts that both the AWA Violations proposal and the Outsourcing
resolution are substantially the same as resolutions filed in 2004, 2006 and
2007, and should be omitted pursuant to Rule 14a-8(i)(12). The arguments made in
both of the no action letters in support of Pfizer's position that all
resolutions filed at Pfizer since 2004 are substantially similar, are nearly
identical. Accordingly, we are submitting one opposition to both no action
letters in the interests of brevity and conciseness. The AWA Violations proposal
will be addressed first with respect to the ordinary business operations
exception.
I. The Animal Welfare Action Violations Proposal Implicates Significant Social
and Public Policy Issues That Override the Ordinary Business Operations
Exception of Rule 14a-8(i)(7).
The subject resolution is worded as follows:
RESOLVED, that the Board issue a report to shareholders annually on the measures
it is taking to resolve, correct, and prevent further U.S. Department of
Agriculture ("USDA") citations for violations of the Animal Welfare Act.
PETA's position is that this resolution cannot and does not involve the
Company's ordinary business affairs. Pfizer argues that the proposal involves
the conduct of its "ordinary business operations" and amounts to an effort to
"micro-manage" the Company. (No action letter p. 3.)
PETA has the following responses to Pfizer's arguments. First, the proposal does
not relate to tasks that are fundamental to management's ability to run the
company on a day-to-day basis. Rather, the proposal is rooted in compelling
principles of animal care, treatment, and welfaresocial and public policy
issues of considerable concern to the average shareholder.
The Company cites to Exchange Act Release No. 34-40018 (May 21, 1998), which
articulates 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."
In Staff Legal Bulletin No. 14C released June 28, 2005, the Division further
elucidated the scope of the ordinary business rule. The Staff Bulletin explained
that the pivotal question is whether the proposal is focused on the internal
fiscal operations of the company, or on "broader policy issues." Pfizer admits
that "certain operations-related proposals may focus on sufficiently significant
social policy issues so as to preclude exclusion in certain circumstance." (No
action letter p. 5.) Nevertheless, Pfizer concludes that "although the Proposal
touches on social policy issues, its main concern relates to ordinary business
matters ..." (No action letter p. 6.)
To this argument we respond that the proposal is blatantly and expressly
concerned with the social policy issue of animal protection as mandated by the
Animal Welfare Act - that is what the "Resolved" clause is focused on, and even
more so the supporting statement. Most of the resolution involves listing some
of the more egregious violations of the Animal Welfare Act for which Pfizer has
been sanctioned by the USDA (i.e., sick, dead, injured, stressed and neglected
animals). Also included in the proposal are statistics culled from Pfizer's own
most current filings with the USDA that indicate that over 76,000 animals were
used in tests in one year and that many thousands of those animals were
subjected to experimentation without benefit of analgesics or pain relievers.
And lastly, if the plain language of the resolution is not enough, the Staff
must be aware that PETA is an organization dedicated to promoting the ethical
treatment of animals, not to encroaching upon the day-to-day operations of
Pfizer.
Although the Staff's Legal Bulletins and Releases are controlling, it is worth
mentioning that the two non-concurrences cited by Pfizer, namely Conesco, Inc.
(avail. Apr. 5, 2001) and Yahoo! Inc. (avail Apr. 16, 2007) are the only
analogous precedents and fully support inclusion of the resolution in the 2008
proxy materials. (No action letter p.5.)
In sum, Pfizer's position can be reduced to the following proposition:
Violating the Animal Welfare Act and being cited for those violations by the
U.S. Department of Agriculture is an inherent aspect of the Company's ordinary
business operations about which shareholders have no business inquiring.
If the Company is correct that violating laws designed to protect animals used
in experiments is just part of its ordinary business, then that disturbing
proposition alone implicates serious social and public policy issues.
II. All Previous Resolutions Filed at Pfizer by PETA or Its Members During the
Past Five Years Are Materially Different from the Animal Welfare Act Violations
Proposal and the Outsourcing Resolution.
In seven single-spaced, excruciatingly obtuse pages of discourse, Pfizer seeks
to make the case that three previously filed shareholder proposals are
substantially the same as the Animal Welfare Act Violations proposal and the
Outsourcing resolution. These two resolutions are not remotely, much less
substantially, similar to any previously filed resolutions included in the
Company's 2004, 2006, or 2007 proxy statements. We will attempt to address this
Rule 14a-8(i)(12) issue in fewer, but more understandable, words then those
presented in Pfizer's no action letter.
The following shareholder resolutions have been filed at Pfizer, starting with
the most current:
1. Resolutions in 2007 and 2006 requested that Pfizer amend its Guidelines and
Policy on Laboratory Animal Care to extend to outside laboratories and include
psychological, environmental, and behavioral enrichment measures. The proposals
received 6.4% of the vote in 2006 and 7.3% in 2007. These two proposals were
substantially the same. This resolution has not be refiled despite the fact that
it received greater than 6% of the vote on its second submission.
2. The Outsourcing resolution was first submitted in 2007 and appeared in the
Company's proxy material. The Outsourcing resolution attained 8.5% of the vote
in 2007. Since this resolution received more than 3% of the vote, it has been
refiled this year for inclusion in the 2008 proxy materials.
3. A resolution was filed in 2006 relating to Pfizer's donating millions of
dollars for the exclusive purpose of training scientists to develop skills for
and concentrate on performing animal experimentation. This resolution received
5.3% of the vote. It was refiled in 2007 but the SEC concurred with the
Company's position that it related to ordinary business operations and was
omitted. This resolution was informally referred to as the "Charitable
Contribution" resolution. Pfizer does not mention this resolution in its no
action letter.
4. A resolution was filed in 2004, encouraging the Company to adopt five
internationally accepted non-animal tests to replace their animal counterparts
for assessing various human health effects and to petition the regulators to
accept validated non-animal assays. This resolution received 2.2% of the vote
and was never refiled. This resolution was informally referred to as the "Give
the Animals Five" or the "GTA5" resolution.
It is evident from the votes that all of the resolutions described above (except
for the GTA5 proposal) were of significant concern to shareholders, since each
received far better than 3% of the vote on the first filing and far better than
6% of the vote on the second filing. The voting trends also make it clear that
shareholders understood the differences in these resolutions, especially when
the 2.2% vote for the GTA5 resolution is contrasted with the much higher votes
on the later resolutions. And yet, so the Company contends, it is the GTA5
resolution to which all subsequent resolutions are "substantially similar." That
fact makes it clear that Pfizer is simply trying to deprive shareholders of
their right to vote on these important social and public policy matters.
The fact that each of these resolutions touches on animals, does not make them
substantially similar any more than resolutions relating to humans would. No one
would seriously dispute that a resolution relating to human rights violations is
the same as one relating to child labor simply because both address the human
condition or human beings generally.
Specifically on point, the Staff has previously stated that two proposals
dealing with the use of animals in product testing do not necessarily implicate
substantially the same subject matter. In Bristol-Myers Squibb Company (March 7,
1991), the Staff stated that Bristol-Myers Squibb could not omit a shareholder
proposal dealing with animal testing under the "substantially similar" rule. The
proposal under review in Bristol-Myers Squibb requested that the company cease
all animal tests not required by law and stop selling certain products that
required animal testing. The Staff held that the proposal was not substantially
similar to a prior proposal which had requested a report detailing the scope of
the company's use of animal tests in product testing. The Staff stated:
In arriving at this position the staff takes particular note of the fact that,
while the four proposals concern the same broad issue (i.e., use of live animals
in product development and testing), the present proposal recommends that the
Company take a very active and defined course of action as to the broad issue
(i.e., cease all animal tests not required by law and drop certain products).
The previous proposals asked only that the Company take a passive course of
action (i.e., supply information). Accordingly, the staff does not believe the
Company may rely on Rule 14a-8(i)(12) as a basis for omitting the proposal from
its proxy materials. (Emphasis supplied.)
The resolutions challenged in the Bristol-Myers were vastly more similar than
those under review here, and yet the Staff quite correctly issued a
non-concurrence.
Perhaps most telling is the fact that Pfizer has never challenged any of the
resolutions detailed above based on their being substantially similar. If Pfizer
believed that any or all of these resolutions were the same as the AWA
Violations proposal and the Outsourcing resolution, it would have challenged
every resolution filed after 2005 arguing that each was precluded because the
originalGTA5 resolution only received 2.2% of the vote. Pfizer knew that these
resolutions were not substantially similar and that is why it did not seek to
exclude them based on Rule 14a-8(i)(12).1
III. Prior Non-Concurrences on Animal Related Issues
During the last 20 years, the Staff has ruled on a number of proposals submitted
by PETA and its members that implicate the use of live animals in product
testing. For example, in Procter & Gamble (July 27, 1988) the Staff denied the
company's no-action application finding that a proposal which requested that the
company cease all animal tests not required by law and phase out product lines
that required animal tests, was not substantially similar to a prior proposal
asking the company to report on the cost of live-animal testing. In its denial,
the Staff stated "The proposal relates to the preparation of a report to
shareholders regarding the scope and cost of live-animal testing in Company
research."
Just as Procter & Gamble argued that the "underlying subject of both proposals
is manifestly that of the Company's practice of conducting safety testing of
products on animals," Pfizer argues that the proposals are substantially similar
because "they all deal with substantially the same subject matter ..."
(No-Action Letter, p. 10.) The Procter & Gamble opinion reflects the
Commission's long-standing intent to focus on the substantive concerns raised by
a proposal in order to determine whether the proposal should be excluded for
being "substantially similar" pursuant to the policy objective embodied in Rule
14a-8(i)(12).
As was the case in Procter & Gamble, the resolutions filed at Pfizer were
intended to address entirely distinct substantive concerns. To that end, they
request that the Company take vastly different courses of action, namely:
The GTA5 proposal attempted to eliminate five specific animal tests in favor
of their internationally validated non-animal alternatives;
The resolutions filed in 2006 and 2007 asked the Board to amend the Company's
Guidelines and Policy on Laboratory Animal Care to provide psychological and
environmental enrichment for the animals;
The Charitable Contribution resolution asked the Board to justify donating
millions of dollars to educate and train a new crop of vivisectors when the
Company had made a public commitment to reduce and replace animal testing
wherever possible;
The Outsourcing resolution seeks to curtail the Company's shipping animal
testing to countries like China which lack animal protection laws; and
The Animal Welfare Act violations proposal seeks to hold Pfizer accountable
for the Company's blatant and unacceptable disregard for the law.
For the foregoing reasons, the proponents of the Outsourcing resolution and the
Animal Welfare Act Violations proposal respectfully urge the Staff not to concur
that Pfizer may exclude these shareholder proposals pursuant to Rule 14a-8(i)(7)
and (12).
Very truly yours,
/s/
Susan L. Hall
Counsel
cc: Margaret M. Foran (via fax 212-573-1853)
-----FOOTNOTES-----
1 To the extent that Pfizer relies upon Abbott Laboratories (March 22, 2006),
PETA respectfully urges that the Staff's concurrence was ill-advised and
contrary to the controlling authority of Bristol-Myers Squibb Company (March 7,
1991). Moreover, the Staff's non-concurrence in Bristol Myers Squibb actually
addressed the resolutions, analyzed them, and provided a rationale for the
non-concurrence. In contrast, the Abbott Laboratories concurrence merely
concludes that there is "some basis" for the view that the two resolutions under
review were similar. There is no legal analysis, discussion of the facts, or
anything except that conclusory statement.
[STAFF REPLY LETTER]
February 12, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Pfizer Inc. Incoming letter dated December 21, 2007
The proposal asks for a report regarding Pfizer's exportation of animal
experimentation to countries that have either nonexistent or substandard animal
welfare regulations and the extent to which Pfizer requires adherence to animal
welfare standards at facilities in foreign countries.
There appears to be some basis for your view that Pfizer may exclude the
proposal under rule 14a-8(i)(12)(iii). Accordingly, we will not recommend
enforcement action to the Commission if Pfizer omits the proposal from its proxy
materials in reliance on rule 14a-8(i)(12)(iii).
Sincerely,
/s/
William A. Hines
Special Counsel
|
