Company Name: Time Warner Inc.
Public Availability Date: January 31, 2008Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
STAFF REPLY LETTER
[INQUIRY LETTER]
January 9, 2008
VIA OVERNIGHT MAIL
Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Time Warner Inc. - Proposal Submitted by Kenneth Steiner
Ladies and Gentlemen:
This letter respectfully requests that the staff of the Division of Corporation
Finance (the "Staff") of the Securities and Exchange Commission (the "SEC")
advise Time Warner Inc. (the "Company") that it will not recommend any
enforcement action to the SEC if the Company omits from its proxy statement and
proxy to be filed and distributed in connection with its 2008 annual meeting of
stockholders (the "Proxy Materials") a proposal (the "Proposal") it received
from Kenneth Steiner (the "Proponent"), naming John Chevedden as his proxy. The
Proposal, which is titled "Special Shareholder Meetings," asks the Board of
Directors of the Company (the "Board") to "amend [the Company's] bylaws and any
other appropriate governing documents in order that there is no restriction on
the shareholder right to call a special meeting, compared to the standard
allowed by applicable law on calling a special meeting."
The Company intends to omit the Proposal from its Proxy Materials pursuant to
Rule 14a-8(i)(10) of the Securities Exchange Act of 1934 (the "Exchange Act")
because the Company has substantially implemented the Proposal through By-law
amendments that the Board adopted in December 2007 (the "Special Stockholder
Meeting By-law Amendments") and pursuant to Rule 14a-8(i)(3) and Rule 14a-9 of
the Exchange Act because it is impermissibly vague.
Pursuant to Rule 14a-8(j) under the Exchange Act, we are enclosing six copies of
each of this letter, the Proposal (Exhibit A) and the amended By-laws (Exhibit
B). By copy of this letter, the Company hereby notifies the Proponent as
required by Rule 14a-8(j) of its intention to exclude the Proposal from its
Proxy Materials.
Background
At the Company's 2007 annual meeting of stockholders, the Proponent submitted a
stockholder proposal asking the Board to amend the Company's By-laws to give
holders of 10% to 25% of the Company's outstanding common stock the power to
call a special stockholder meeting. This proposal received the support of a
majority of the votes cast at the Company's 2007 annual meeting. In response to
the stockholders vote on the proposal, after consideration, on December 13,
2007, the Board adopted the Special Stockholder Meeting By-law Amendments, which
establish procedures for stockholders owning shares representing in the
aggregate at least 25% of the combined voting power of the then outstanding
shares of the Company to request that a special meeting of stockholders be
called. The Board took this action after the current Proposal was submitted for
the Company's 2008 annual meeting of stockholders.
Grounds for Omission
The Company has substantially implemented the
Proposal, and the Proposal may therefore be omitted from the Proxy Materials
pursuant to Rule 14a-8(i)(10).
Rule 14a-8(i)(10) permits a company to exclude a proposal "if the company has
already substantially implemented the proposal." According to the SEC, the
exclusion provided in Rule 14a-8(i)(10) "is designed to avoid the possibility of
stockholders having to consider matters which have already been favorably acted
upon by management." See Exchange Act Release No. 34-12598 (July 7, 1976). Under
Staff precedent, it is well-established that a company need not be compliant
with every element of a proposal as presented by the proponent for the proposal
to be excludable under Rule 14a-8(i)(10). The Staff has stated that "a
determination that the company has substantially implemented the proposal
depends upon whether [the company's] particular policies, practices and
procedures compare favorably with the guidelines of the proposal." See Texaco,
Inc. (March 28, 1991).
In SED International Holdings, Inc. (October 25, 2007), the Staff permitted the
company to exclude a stockholder proposal asking the board of directors to amend
the bylaws to give holders of at least 25% of the outstanding common stock the
power to call a special stockholder meeting. The proposal was excludable under
Rule 14a-8(i)(10) as being substantially implemented because the board of
directors had already adopted such a by-law amendment and thereby rendered moot
the stockholder proposal requesting the same amendment.
The Board has substantially implemented both the letter and the spirit of the
Proposal. By its own terms, the Proposal requests that the Board amend the
Company's By-laws and any other appropriate governing documents so that "there
is no restriction on the shareholder right to call a special meeting, compared
to the standard allowed by applicable law on calling a special meeting"
(emphasis added). The standard allowed by applicable law is Delaware General
Corporation Law Section 211(d), which provides that "[s]pecial meetings of the
stockholders may be called by the board of directors or by such person or
persons as may be authorized by the certificate of incorporation or the bylaws."
As indicated by this provision, the only standard for persons other than the
board of directors to call special meetings is that which is authorized in the
certificate of incorporation or by the bylaws. Following the Board's adoption of
the Special Stockholder Meeting By-law Amendments, there are no restrictions on
the right of stockholders to request a special meeting of stockholders other
than those specified in the Company's Bylaws, which is the standard allowed by
applicable Delaware law.
Further, the Board has substantially fulfilled the apparent intent of the
Proposal. It appears from the Proponent's supporting statement that the goal of
the Proposal is to seek the implementation of the similar proposal submitted by
the Proponent at the Company's 2007 annual meeting of stockholders. The
Proponent states, in his supporting statement, that "this topic" won 64% at the
Company's 2007 annual meeting and that The Council of Institutional Investors (CII)
recommends that companies adopt stockholder proposals that have received a
majority vote.
As noted above, the Proponent submitted a proposal at the Company's 2007 annual
meeting of stockholders asking the Board to "amend the [Company's] bylaws to
give holders of 10% to 25% of the outstanding common stock the power to call a
special shareholder meeting." A majority of the votes cast were in favor of the
proposal. After considering the voting results, on December 13, 2007, the
Company's Board adopted the Special Stockholder Meeting By-law Amendments. The
amendments state, among other things, that a special meeting of stockholders
shall be called by a majority of the entire Board, or a Committee delegated such
authority by the Board, following receipt of a written request for a special
meeting from the record holders of shares representing at least 25% of the
combined voting power of the then outstanding shares of all classes and series
of capital stock of the Company entitled generally to vote in the election of
directors of the Company, voting as a single class. By adopting the Special
Stockholder Meeting By-law Amendments, the Proposal has been substantially
implemented.
For these reasons, the Company respectfully submits that the Proposal be
excluded from the Proxy Materials pursuant to Rule 14a-8(i)(10).
The Proposal may be omitted from the Proxy Materials
under Rule 14a-8(i)(3) and Rule 14a-9 because it contains impermissibly vague
statements.
To the extent that the Proposal asks the Board to do more than implement the
2007 proposal, it is impermissibly vague. As noted above, the Proposals asks the
Board to amend the Company's By-laws "and any other appropriate governing
documents in order that there is no restriction on the shareholder right to call
a special meeting, compared to the standard allowed by applicable law on calling
a special meeting."
As discussed above, the literal interpretation of this language refers to the
standard set forth in Section 211 (d) of the Delaware General Corporation Law,
which states: "Special meetings of the stockholders may be called by the board
of directors or by such person or persons as may be authorized by the
certificate of incorporation or by the bylaws." Under this provision, the only
standard for persons other than the board of directors to call special meetings
of stockholders is that which is authorized in the certificate of incorporation
or by the bylaws. If the Proponent intends some meaning other than this literal
interpretation of the phrase "compared to the standard allowed by applicable law
on calling a special meeting," the Proposal would be impermissibly vague because
the Proponent gives no guidance as to any alternative meaning.
In particular, the Proposal does not define or provide adequate guidance to
stockholders or the Board as to many features of the procedures it seeks to
implement or what it intends by the reference to "the standard allowed by
applicable law." As a result, in considering the Proposal, the stockholders will
not necessarily know what they are voting for and the Board will not necessarily
know how to implement the Proposal if it is approved by the stockholders. These
uncertainties include, among others: the failure to specify a threshold number
or value of shares that would be required for stockholders to request that a
special meeting be called and any specifications relating to the submission of
requests to hold special meetings. It is not clear whether the "no restrictions"
language in the Proposal is intended to (a) permit the holder of even a single
share to call a special meeting of stockholders of the Company, (b) prohibit any
restrictions on the subject matter for a special meeting of stockholders, or (c)
prohibit any restrictions on when or how frequently special meetings of
stockholders may be requested.
Rule 14a-8(i)(3) permits the omission of a proposal or any statement in support
thereof if such proposal or statement is contrary to any proxy rule or
regulation, including Rule 14a-9, which prohibits materially false or misleading
statements in proxy soliciting material. The Company believes that the Proposal
violates Rule 14a-9 in that it contains impermissibly vague statements and is,
therefore, excludable under Rule 14a-8(i)(3).
The Staff has found that a proposal is misleading if the stockholders, or the
company, would not be able to determine with any reasonable certainty exactly
what actions or measures would be taken in the event the proposal were adopted.
See Philadelphia Electric Co. (July 30, 1992) (proposal relating to the election
of a committee of small stockholders to present plans "that will...equate with
the gratuities bestowed on management, directors and other employees" properly
excluded as vague and indefinite. See also Alaska Air Group, Inc. (April 11,
2007) (proposal requesting that the board of the company "complete the
appropriate process in 2007 to amend the company's governance documents
(certificate of incorporation and or bylaws) to assert, affirm and define the
right of the owners of the company to set standards of corporate governance"
properly excluded as vague and indefinite).
For these reasons, the Company believes that the Proposal may be omitted from
the Proxy Materials because it is impermissibly vague and, thus, contrary to
Rule 14a-8(i)(3).
* * * * *
The Company respectfully requests that the Staff confirm that it would not
recommend enforcement action if the Company excludes the Proposal from its Proxy
Materials for the foregoing reasons. If you have any questions or if the Staff
is unable to agree with our conclusions without additional information or
discussions, we respectfully request the opportunity to confer with members of
the Staff prior to issuance of any written response to this letter. Please do
not hesitate to call the undersigned at (212) 484-8952.
Please acknowledge receipt of this letter and its attachments by date-stamping
the enclosed copy of the first page of this letter and returning it in the
self-addressed stamped envelope provided for your convenience.
Very truly yours,
/s/
Ann Robertson
Senior Counsel
Attachments
cc: Kenneth Steiner c/o John Chevedden 2215 Nelson Avenue, No. 205 Redondo
Beach, CA 90278 Tel: 310-371-7872
[INQUIRY LETTER]
January 10, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
# 1 Time Warner Inc. (TWX)
Shareholder Position on Company No-Action Request
Rule 14a-8 Proposal: Special Shareholder Meetings
Kenneth Steiner
Ladies and Gentlemen:
The company January 9, 2008 no action request implicitly claims that the company
cannot establish a shareholder right to call a special without using 926-words
of restrictions. Given the number and extent of the restrictions the company
imposes, any requirement above 10% is essentially moot.
The company narrows the time-window for shareholders to call a special meeting
and gives itself the opportunity to preempt a shareholder-called special meeting
with its own meeting. There is also the exclusion of allowing a "similar item"
of some vague description, presented at any shareholder meeting, to quash a
shareholder right to call a special meeting.
There is also the vague but potentially overpowering provision of "the Board
shall have the discretion to determine whether or not to proceed with the
special meeting."
It seems that the company directed its text to a non-existent resolution for a
token shareholder right to call a special meeting.
A copy of this letter is forwarded to the company in a non-PDF email. In order
to expedite the rule 14a-8 process it is requested that the company forward any
addition rule 14a-8 response in the same type format to the undersigned.
For these reasons it is requested that the staff find that this resolution
cannot be omitted from the company proxy. It is also respectfully requested that
the shareholder have the last opportunity to submit material in support of
including this proposalsince the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Kenneth Steiner
Ann Robertson<Ann.Robertson@timewarner.com>
[APPENDIX 1]
Exhibit A
Mr. Richard D. Parsons
Time Warner Inc. (TWX)
1 Time Warner Center
New York NY 10019
Phone: 212 484-8000
Rule 14a-8 Proposal
Dear Mr. Parsons,
This Rule 14a-8 proposal is respectfully submitted in support of the long-term
performance of our company. This proposal is for the next annual shareholder
meeting, Rule 14a-8 requirements are intended to be met including the continuous
ownership of the required stock value until after the date of the respective
shareholder meeting and the presentation of this proposal at the annual meeting.
This submitted format, with the sharoholder-supplied emphasis, is intended to be
used for definitive proxy publication. This is the proxy for John Chevedden
and/or his designee to act on my behalf regarding this Rule 14a-8 proposal for
the forthcoming shareholder meeting before, during and after the forthcoming
shareholder meeting. Please direct all future communication to John Chevedden
at:
olmsted7p (at) earthlink.net
(In the interest of company cost savings and improving the efficiency of the
rule 14a-8 process please communicate via email.)
PH: 310-371-7872
2215 Nelson Ave., No. 205
Redondo Beach, CA 90278
Your consideration and the consideration of the Board of Directors is
appreciated in support of the long-term performance of our company. Please
acknowledge receipt of this proposal promptly by email.
Sincerely,
/s/
Kenneth Steiner
10/27/07 Date
cc: Paul F. Washington
Corporate Secretary
PH: 212-484-6753
FX: 212-484-7174
Janet Silverman
Assistant General Counsel
T: 212-484-7961
F: 212-202-4124
F: 212-484-7278
[APPENDIX 2]
[TWX: Rule 14a-8 Proposal, November 23, 2007]
3Special Shareholder Meetings
RESOLVED. Shareholders ask our board to amend our bylaws and any other
appropriate governing documents in order that there is no restriction on the
shareholder right to call a special meeting, compared to the standard allowed by
applicable law on calling a special meeting.
Special meetings allow investors to vote on important matters, such as a
takeover offer, that can arise between annual meetings. If shareholders cannot
call special meetings, management may become insulated and investor returns may
suffer.
Shareholders should have the ability to call a special meeting when they think a
matter is sufficiently important to merit expeditious consideration. Shareholder
control over timing is especially important regarding a major acquisition or
restructuring, when events unfold quickly and issues may become moot by the next
annual meeting.
This topic won our 64%-support at our 2007 annual meeting. The Council of
Institutional Investors www.cii.org recommends the adoption of shareholder
proposals upon receiving their first majority vote.
Eighteen (18) proposals on this topic also averaged 56%-support in 2007 -
including 74%-support at Honeywell (HON) according to RiskMetrics (formerly
Institutional Shareholder Services). Fidelity and Vanguard support a shareholder
right to call a special meeting. The proxy voting guidelines of many public
employee pension funds, including the New York City Employees Retirement System,
also favor this right.
The merits of this proposal should also be considered in the context of our
company's overall corporate governance structure and individual director
performance. For instance in 2007 the following structure and performance issues
were identified:
The Corporate Library (TCL) http://www.thecorporatelibrary.com/ an independent
investment research firm rated our company:
"D" in Overall Board Effectiveness.
"Very High Concern" in executive pay.
"High Governance Risk Assessment."
We had no shareholder right to:
1) Cumulative voting.
2) Act by written consent.
3) Call a special meeting.
Poison pill: Our directors can adopt a poison pill that is never subject to a
shareholder vote.
Additionally:
We had two inside directors and one inside-related directorIndependence
concern.
We did not have an Independent ChairmanIndependence concern.
We would have to marshal an awesome 80% shareholder vote to make certain key
governance improvementsEntrenchment concern.
Two directors served on 4 boards eachOver-commitment concern:
Mr. Miles
Mr. Bollenbach
The above concerns shows there is room for improvement and reinforces the reason
to take one step forward now and encourage our board to respond positively to
this proposal:
[STAFF REPLY LETTER]
January 31, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Time Warner Inc. Incoming letter dated January 9, 2008
The proposal asks the board to amend the "bylaws and any other appropriate
governing documents in order that there is no restriction on the shareholder
right to call a special meeting, compared to the standard allowed by applicable
law on calling a special meeting."
There appears to be some basis for your view that
Time Warner may exclude the proposal under rule 14a-8(i)(3) as vague and
indefinite. Accordingly, we will not recommend enforcement action to the
Commission if Time Warner omits the proposal from its proxy materials in
reliance on rule 14a-8(i)(3). In reaching this position, we have not found it
necessary to address the alternative basis for omission upon which Time Warner
relies.
Sincerely,
/s/
Heather L. Maples
Special Counsel
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