Company Name: Qwest Communications Int'l. Inc.
Public Availability Date: January 23, 2008Document Sections:INQUIRY LETTER
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER
[INQUIRY LETTER]
January 8, 2008
Direct Dial
(202) 955-8287
Fax No.
(202) 530-9631
Client No.
C 93166-00069
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Stockholder Proposal of Mary Ann Neuman Exchange Act of 1934Rule 14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that our client, Qwest Communications International
Inc. (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 Mary Ann Neuman (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 the Company 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 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
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
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, which requests that the Company adopt
a policy allowing stockholders to vote on advisory resolutions regarding
executive compensation at each annual meeting, is attached to this letter as
Exhibit A.
BACKGROUND
The Proponent submitted the Proposal to the Company in a letter dated November
28, 2007, and the Company received the Proposal on November 29, 2007. See
Exhibit A. The Proponent included with the Proposal letters from LifeSTAGE
Wealth Management Group, LLC ("LifeSTAGE") relating to 1,700 shares and from
Ameriprise Financial relating to 108 shares, both of which are dated November
26, 2007, and purport to substantiate her ownership. However, these letters
failed to demonstrate satisfaction of the ownership requirements of Rule
14a-8(b). Furthermore, the Proponent does not appear on the records of the
Company's stock transfer agent as a stockholder of record.
Accordingly, the Company sought verification from the Proponent of her
eligibility to submit the Proposal. Specifically, the undersigned on behalf of
the Company sent a letter via United Parcel Service to the Proponent on December
10, 2007, which was within 14 calendar days of the Company's receipt of the
Proposal, notifying the Proponent 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 Deficiency Notice included a copy of Rule 14a-8. The Deficiency
Notice requests that the Proponent "submit sufficient proof of [her] continuous
ownership" and further states:
To remedy these defects, you must submit sufficient proof of your ownership of
Company shares. As explained in Rule 14a-8(b), sufficient proof may be in the
form of:
a written statement from the "record" holder of the securities (usually a
broker or a bank) verifying that, as of the date the proposal was submitted, you
continuously held ... the requisite number of Company shares for at least one
year; or
if you have filed with the [Commission] 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 you continuously
held the required number of shares for the one-year period.
United Parcel Service tracking records indicate that the Proponent received the
Deficiency Notice on December 11, 2007. See Exhibit C.
In a letter dated December 18, 2007, the Proponent acknowledged receipt of the
Deficiency Notice and submitted letters from Charles Schwab and LifeSTAGE dated
December 18, 2007 and December 13, 2007, respectively, relating to 1,700 shares
and purporting to substantiate the Proponent's eligibility to submit the
Proposal (the "Proponent's Response"). The Proponent's Response did not include
any additional information relating to the 108 shares addressed in the letter
from Ameriprise Financial that was included with the Proposal. A copy of the
Proponent's Response is attached hereto as Exhibit D.
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 29, 2007. On
December 10, 2007. which was within 14 days of receiving the Proposal, the
Company timely sent the Deficiency Notice to the Proponent. The Deficiency
Notice stated that the proof of ownership submitted by the Proponent did not
satisfy the ownership requirements of Rule 14a-8 as of the date the Proposal was
submitted to the Company. Specifically, the Deficiency Notice pointed out that:
the letter from Ameriprise Financial failed to establish that the Proponent
continuously owned the 108 shares for a period of one year as of the time that
she submitted the Proposal (the Proposal was submitted on November 28, 2007, but
the Ameriprise Financial letter was dated November 26, 2007);
it was unclear whether the letter from Ameriprise Financial was from the
record holder of the Proponent's shares;
the letter from LifeSTAGE failed to establish that the Proponent continuously
owned the 1,700 shares for a period of one year as of the time that she
submitted the Proposal (the Proposal was submitted on November 28, 2007, but the
LifeSTAGE letter was dated November 26, 2007); and
it did not appear that LifeSTAGE was the record holder of the Proponent's
shares, as the LifeSTAGE letter indicated that the Proponent's shares were held
in a Schwab account.
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 in a timely manner
the Deficiency Notice, which stated:
the ownership requirements of Rule 14a-8(b), including that the Proponent
provide evidence of her 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 received the Deficiency Notice; and
that a copy of the stockholder proposal rules set forth in Rule 14a-8 was
enclosed.
As set forth in more detail below, the Proponent's Response to the Deficiency
Notice, dated December 18, 2007, fails to meet the requirements set out in Rule
14a-8(b), and, as such, the Proposal is excludable under Rule 14a-8(f)(1).
A. The Proponent Has Failed To Demonstrate Continuous Ownership of the Company's
Securities.
In order to substantiate her eligibility to submit the Proposal, the Proponent
submitted (1) a letter from Ameriprise Financial relating to 108 shares, and (2)
two letters from LifeSTAGE and a letter from Charles Schwab relating to 1,700
shares. None of these letters is sufficient to show the Proponent's continuous
ownership of the Company's securities as required by Rule 14a-8(b).
The letter from Ameriprise Financial relating to 108 shares establishes the
Proponent's ownership of these shares as of November 26, 2007, two days prior to
the date that the Proponent submitted the Proposal on November 28, 2007.
Moreover, the Proponent failed to subsequently provide satisfactory proof of
continuous ownership despite notice of this deficiency in the Deficiency Notice.
With respect to the 1,700 shares:
the initial letter from LifeSTAGE purported to establish the Proponent's
ownership of these shares as of November 26, 2007, two days prior to the date
that the Proponent submitted the Proposal on November 28, 2007.
the letter from Charles Schwab establishes the Proponent's ownership of these
shares on December 18, 2007, which does not correspond to the date that the
Proposal was submitted to the Company on November 28, 2007, and the letter does
not make any statement about, nor provide any record regarding, the length of
time that the Proponent has held those shares.
the subsequent letter from LifeSTAGE, dated December 13, 2007, fails to
establish the Proponent's continuous ownership of the Company's securities.
Instead, the LifeSTAGE letter enclosed two account statements, one from
September 2006 and one from August 2007, and a verification that the shares were
transferred to a Charles Schwab account in October 2007. While these documents
may show that the Proponent has held 1,700 shares at various fixed points in the
year preceding her submission of the Proposal, they are insufficient in proving
her continuous ownership of those securities for at least one year as of the
date the Proposal was submitted to the Company on November 28, 2007, as required
by Rule 14a-8(b).
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. (avail. Apr. 5, 2007) (concurring
with the exclusion of a stockholder proposal and noting that "the proponent
appear[ed] to have failed to supply documentary support sufficiently evidencing
that he satisfied the minimum ownership requirement for the one-year period as
of the date that he submitted the proposal as required by rule 14a-8(b)"). See
also 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, Inc. (avail, Nov. 19, 2004); Intel Corp. (avail. Jan. 29,
2004); Seagate Technology (avail. Aug. 11, 2003); JPMorgan Chase & Co. (avail.
Mar. 13, 2002). Similarly, the Proponent has not satisfied her burden of proving
her eligibility to submit the Proposal based on her continuous ownership for at
least one year of the requisite amount of Company securities as required by Rule
14a-8(b).
More specifically, the Staff has previously concurred with the exclusion of
stockholder proposals because a stockholder proponent failed to provide
documentary support of his or her continuous ownership of a company's
securities. See General Motors Corp. (avail. Apr. 3, 2001) (noting that "[w]hile
it appears that the propouent did provide some indication that he owned shares,
it appears that he has not provided a statement from the record holder
evidencing documentary support of continuous beneficial ownership of $2,000 or
1%, in market value of voting securities, for at least one year prior to
submission of the proposal") (emphasis added). In addition, the Staff has taken
a no-action position based on the insufficiency of fixed-dated account records
in proving that a proponent has met the minimum ownership requirements of Rule
14a-8(b). See Duke Realty Corp. (avail. Feb. 7, 2002) (noting that despite the
proponent's submission of monthly account statements in response to a deficiency
notice, "the proponent ha[d] not provided a statement from the record holder
evidencing documentary support of continuous beneficial ownership of $2,000, or
1%, in market value of voting securities for at least one year prior to
submission of the proposal") (emphasis added). See also Section C.1.c.(2), Staff
Legal Bulletin No. 14 (July 13, 2001) (noting that a stockholder's "monthly,
quarterly or other periodic investment statements [do not] demonstrate
sufficiently continuous ownership of the securities"). Accordingly, the letters
and account statements submitted with the Proposal and as a part of the
Proponent's Response are insufficient as evidence that the Proponent has met the
minimum ownership requirements of Rule 14a-S(b) because they fail to show
continuous ownership of the Company's securities.
B. The Proponent's Submission of Documentation from an Investment Advisor Is
Insufficient Proof of Her Beneficial Ownership of the Company's Securities.
Rule 14a-8(b) allows stockholder proponents to demonstrate their beneficial
ownership of a company's securities by providing a written statement from the
"record" holder of the securities verifying that, as of the date the proposal
was submitted, the proponent had continuously held the requisite number of
company shares for at least one year. With regard to this form of showing
documentary support for a proponent's beneficial ownership of a company's
securities, Staff Legal Bulletin No. 14 (July 13, 2001) states that such a
written statement "must be from the record holder of the [stockholder's]
securities, which is usually a broker or bank" and that a written statement from
an investment adviser is insufficient "unless the investment adviser is also the
record holder."
The letters that the Proponent submitted from LifeSTAGE and Ameriprise Financial
in order to demonstrate her beneficial ownership of the Company's securities
fail to satisfy the ownership requirements of Rule 14a-8(b). As pointed out in
the Deficiency Notice, LifeSTAGE, in its letter, does not purport to be a record
holder of the Company's securities and, in fact, only provides copies of account
information from third parties showing the Proponent's account balances and
transfers as of fixed dates. In addition, as pointed out in the Deficiency
Notice, Ameriprise Financial, in its letter, does not purport to be a record
holder of the Company's securities. In fact, the Ameriprise Financial letter is
signed by a "Senior Financial Advisor and Certified Financial Planner," who
makes reference to the shares the Proponent owns "in her investment portfolio."
Moreover, the Company's records verify that neither LifeSTAGE nor Ameriprise
Financial are record owners of the Company's securities. Therefore, the letters
that the Proponent submitted from LifeSTAGE and Ameriprise Financial are
insufficient to demonstrate her beneficial ownership of the Company's
securities.
In recent years, the Staff frequently has found that documentary support from
parties other than the record holder of a company's securities are insufficient
to prove a stockholder proponent's beneficial ownership of such securities. In
AMR Corp. (avail. Mar. 15, 2004), the proponent submitted documentary support
from a financial services representative for an investment company that was not
a record holder of AMR's securities. In response, the Staff noted that "[w]hile
it appears that the proponent provided some indication that she owned shares, it
appears that she has not provided a statement from the record-holder evidencing
documentary support of continuous beneficial ownership of $2,000, or 1% in
market value of voting securities, for at least one year prior to submission of
the proposal" (emphasis added). In General Motors Corp. (avail. Apr. 3, 2002), a
proponent submitted documentation from a financial consultant, and the Staff
granted no-action relief under Rule 14a-8(b) noting that "the proponent appears
to have failed to supply, within 14 days of receipt of General Motors's request,
documentary support sufficiently evidencing that he satisfied the minimum
ownership requirement for the one-year period required by rule 14a-8(b)."
Moreover, the account statements that LifeSTAGE included with its letter also
are insufficient under Rule 14a-8(b) to demonstrate the Proponent's ownership of
the Company's securities. In SciClone Pharmaceuticals, Inc. (avail. Apr. 14,
2005), the Staff noted that a proponent's submission of an account statement did
not qualify as "a statement from the record holder evidencing documentary
support of continuous beneficial ownership of $2,000, or 1% in market value of
voting securities for at least one year prior to the submission of the
proposal." See also Duke Realty Corp. (avail. Feb. 7, 2002) (noting that "the
proponent ha[d] not provided a statement from the record holder evidencing
documentary support of continuous beneficial ownership" where the proponent
submitted a monthly account statement in order to demonstrate ownership under
Rule 14a-8(b)).
Thus, despite the information provided in 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. None of the documentation provided by the Proponent
demonstrates the Proponent's continuous ownership of the Company's securities.
In addition, the documentation from LifeSTAGE and Ameriprise Financial is
insufficient to prove the Proponent's beneficial ownership of the Company's
securities because neither LifeSTAGE nor Ameriprise Financial are record owners
of the Company's securities. 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. 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 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) 955-8287 or Stephen E. Brilz, the Company's Vice President and
Deputy General Counsel, at (303) 992-6244.
Sincerely,
/s/
Elizabeth A. Ising
EAI/pah
Enclosures
cc: Stephen E. Brilz, Qwest Communications International Inc.
Mary Ann Neuman
[INQUIRY LETTER]
November 28, 2007
Richard N. Baer
Executive Vice President,
General Counsel and Corporate Secretary
Qwest Communications International, Inc.
1801 California Street, 52nd/ Floor
Denver, CO 80202
Dear Mr. Baer:
I hereby submit the attached stockholder proposal for inclusion in the Company's
2008 proxy statement as provided under Securities and Exchange Commission Rule
14a-8.
My resolution urges the Board of Directors to adopt a policy that the
shareholders will be given an opportunity at each annual meeting to vote on an
advisory resolution, proposed by management and included as a voting item
printed in the proxy statement, to approve or disapprove the compensation of the
named executive officers as set forth in the proxy statement's Summary
Compensation Table (the "SCT") and the accompanying narrative disclosure of
material factors provided to understand the SCT.
As indicated just above the attached resolution, I have continuously held a
qualifying number of shares (currently 1,808) for more than one year. I intend
to continue to own these shares and to attend the next Qwest annual meeting to
introduce and speak in favor of my stockholder resolution. Proof of my
beneficial ownership is also attached.
Thank you in advance for including my proposal in the Company's next annual
proxy statement. If you have any questions or need any additional information,
please do not hesitate to contact me in writing.
Sincerely yours,
/s/
Mary Ann Neuman
6073 Quebec Avenue North
New Hope, MN 55428-2811
Attachments
[APPENDIX]
Shareholder Advisory Vote on Executive Compensation
Mary Ann Neuman, 6073 Quebec Avenue North, New Hope, MN 55428, owner of 1,808
shares of the Company's common stock, intends to present the following proposal
at the 2008 Annual Meeting for action by the stockholders:
PROPOSAL
RESOLVED, the shareholders of Qwest Communications International ("Qwest")
hereby urge the Board of Directors to adopt a policy that the shareholders will
be given an opportunity at each annual meeting to vote on an advisory
resolution, proposed by management and included as a voting item printed in the
proxy statement, to approve or disapprove the compensation of the named
executive officers as set forth in the proxy statement's Summary Compensation
Table (the "SCT") and the accompanying narrative disclosure of material factors
provided to understand the SCT. The board's proposal shall make clear that the
vote is advisory and will not abrogate any employment agreement.
SUPPORTING STATEMENT
We believe the owners of the company should be able to express their approval or
disapproval of the Board's compensation package for the CEO and other senior
executives, Just as shareholders do at public companies in the U.K., Australia
and the Netherlands (which requires a binding shareholder vote).
Greater scrutiny and accountability is particularly needed at Qwest, in our
view.
Qwest's Board has been criticized for excessive CEO pay relative to performance.
A study by the Corporate Library ("Pay for Failure II: The Compensation
Committees Responsible," May, 2007) singled out Qwest as one of 12 companies
identified as "the very worst performerswhich were also among the highest
payerswithin the group of largest companies in the U.S."
The study reports that over the five fiscal years through 2006, CEO compensation
totaled $155.7 million, but total shareholder return was negative 40.8%. "The
CEO and CFO alone have [long-term equity] awards that vest based on a stock
price target as well as tenure," the Corporate Library reported.
In our opinion, Qwest's executive pension, severance and perquisites stand out
as unjustifiably costly.
Former CEO Richard Notebaert's "golden severance" agreement could have paid out
$63.5 million if he terminated after a change in control. Since he quit
voluntarily last year, his severance package cost a mere $14.5 million.
And after just 4.5 years of employment the present value of Notebaert's accrued
pension benefit exceeded $10.1 million. Notebaert received 30.4 additional years
of credited service, boosting his benefits by $7.5 million.
Because these severance and pension payouts were guaranteed and not
performance-based, they did nothing in our view to align management incentives
with long-term shareholder interests.
Qwest's perquisites also appear excessive. For example, Qwest disclosed that a
company jet ferries current CEO Edward Mueller's wife and stepdaughter back and
forth between their home in California and Denver - a perk that could cost Qwest
$600,000 according to an estimate by Footnoted.org. Qwest also agreed to
reimburse Mueller "for any federal or state income taxes" that result from this
imputed income A recent Corporate Library study reported that only 28 of 215
large public companies it examined allowed a CEO's family or friends to use
corporate aircraft.
According to Institutional Shareholder Services (ISS), in the U.K. the required
shareholder advisory vote on compensation policies "has proven a valuable tool
in encouraging companies to improve their practices."
Please vote FOR this proposal.
[STAFF REPLY LETTER]
January 23, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Qwest Communications International Inc. Incoming letter dated January 8,
2008
The proposal relates to compensation.
There appears to be some basis for your view that
Qwest may exclude the proposal under rule 14a-8(f). We note that the proponent
appears to have failed to supply, within 14 days of receipt of Qwest's request,
documentary support sufficiently evidencing that she satisfied the minimum
ownership requirement for the one-year period required by rule 14a-8(b).
Accordingly, we will not recommend enforcement action to the Commission if Qwest
omits the proposal from its proxy materials in reliance on rules 14a-8(b) and
14a-8(f).
Sincerely,
/s/
Greg Belliston
Special Counsel |
