Company Name: UCBH Holdings, Inc.
Public Availability Date: February 11, 2008
Document Sections:INQUIRY LETER 1
INQUIRY LETER 2
APPENDIX
STAFF REPLYLETTER
[INQUIRY LETER 1]
January 24, 2008
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: UCBH Holdings, Inc. - Exclusion of Stockholder Proposal from Gerald R.
Armstrong Regarding Annual Election of Directors
Ladies and Gentlemen:
UCBH Holdings, Inc. (the "Company") has received a stockholder proposal (the
"2008 Proposal") from Gerald R. Armstrong, residing at 820 Sixteenth Street, No.
705, Denver, Colorado, 80202-3227, with a request that the 2008 Proposal and a
supporting statement be included in the proxy materials for the Company's 2008
annual meeting (the "2008 Annual Meeting"). A copy of the 2008 Proposal and
written correspondence from Mr. Armstrong is attached as Exhibit A to this
letter.
The Company intends to exclude the 2008 Proposal from its proxy materials for
its 2008 Annual Meeting, and, for the reasons set forth below, the Company
respectfully requests that the staff of the Division of Corporation Finance (the
"Staff") confirm that it will not recommend enforcement action by the Securities
and Exchange Commission against the Company upon such exclusion.
Pursuant to Rule 14a-8(j)(2) promulgated under the Securities Exchange Act of
1934, enclosed with this letter are six paper copies of this letter and the 2008
Proposal and written correspondence from Mr. Armstrong.
Background
The Company's certificate of incorporation and bylaws currently provide that
members of the Company's board of directors (the "Board") shall be elected for
three-year terms of office. The Board is divided into three classes, and the
terms of each class are staggered so that only one class of directors stands for
election in any one year.
On December 18, 2006, the Company received a non-binding stockholder proposal to
declassify the Board from Mr. Armstrong (the "2007 Proposal"). The Company
included the 2007 Proposal in its proxy materials for its 2007 annual
stockholders meeting, and the Company's stockholders approved the 2007 Proposal
at the meeting.
To afford the Company's stockholders the opportunity to implement the 2007
Proposal, the Board has approved the inclusion of the Company's own binding
proposal to declassify the Board in the proxy materials for its 2008 Annual
Meeting. The Company's certificate of incorporation provides that the
affirmative vote of at least 80 percent of the voting power of all of the
then-outstanding shares of the capital stock of the Company is required to
approve an amendment to the certificate of incorporation to eliminate the
Company's classified Board. Subject to the approval of the Company's proposal by
the stockholders, the Board has approved a conforming amendment to the Company's
bylaws.
On November 6, 2007, the Company received the 2008 Proposal from Mr. Armstrong,
which reads as follows:
"That the shareholders of UCBH HOLDINGS, INC. request its Board of Directors to
take the steps necessary to eliminate classification of terms of its Board of
Directors to require that all Directors stand for election annually. The Board
declassification shall be completed in a manner that does not affect the
unexpired terms of the previously-elected Directors."
Following receipt of the 2008 Proposal, the Company's management communicated to
Mr. Armstrong the Board's intent to submit its own binding proposal to
declassify the Board to the Company's stockholders. Nevertheless, Mr. Armstrong
did not agree to withdraw his 2008 Proposal.
Discussion
The Board has approved the inclusion of its own binding proposal to declassify
the Board in the proxy materials for its 2008 Annual Meeting, and will not make
a recommendation with respect to such proposal. Subject to stockholder approval
of the Company's proposal, the Board has approved and authorized conforming
amendments to the Company's certificate of incorporation and bylaws, and the
taking of those steps necessary to effect declassification of the Board.
The Company Has Substantially Implemented the 2008 Proposal
Rule 14a-8(i)(10) permits a registrant to exclude a stockholder proposal from
its proxy materials "if the company has already substantially implemented the
proposal." The 2008 Proposal requests that the Board "take those steps
necessary" to require that all directors stand for election annually. The Board
has already taken those necessary steps by resolving to submit an amendment to
the Company's certificate of incorporation for stockholder approval at the 2008
Annual Meeting. Stockholder approval is required to effect such an amendment
under the relevant provisions of the Company's certificate of incorporation. If
the Company's stockholders approve the amendment, annual election of directors
will be phased-in beginning with those directors elected at the 2009 annual
meeting of stockholders, so as not to affect the unexpired terms of the
previously elected directors.
The Staff has consistently confirmed that it will not recommend enforcement
action when proposals are excluded under similar circumstances. See, for
example, Staples, Inc. (March 31, 2006). In Staples, Inc., Staples received a
shareholder proposal to require annual election of directors after its board of
directors had already approved the submission of a bylaw amendment to the
shareholders to effect such a change. In confirming its "no-action"
recommendation, the Staff noted that Staples must receive shareholder approval
in order to provide for the annual election of directors, and that shareholders
would have the opportunity to give that approval at Staples' annual meeting. The
Staff reached similar conclusions in Raytheon Company (February 11, 2005) and
Sabre Holdings Corporation (March 2, 2005).
Because the declassification of the Company's Board requires stockholder
approval, and because the Board has already approved submission of the Company's
own binding proposal to declassify the Board to the stockholders in the proxy
materials for the 2008 Annual Meeting, the Company has substantially implemented
the 2008 Proposal and therefore may exclude the 2008 Proposal from the proxy
materials for its 2008 Annual Meeting pursuant to Rule 14a-8(i)(10).
The 2008 Proposal Directly Conflicts With The Company's Own Proposal To Be
Submitted To Stockholders At The 2008 Annual Meeting
Rule 14a-8(i)(9) permits a registrant to exclude a stockholder proposal from its
proxy materials "if the proposal directly conflicts with one of the company's
own proposals to be submitted to shareholders at the same meeting." The Staff
has previously recommend "no-action" when a company seeks to exclude a
stockholder proposal that, if submitted along with the company's proposal for
approval, would present alternative and conflicting decisions for shareholders
and could provide inconsistent and ambiguous results. See, for example, Croghan
Bancshares, Inc. (March 13, 2002) and Phillips-Van Heusen Corp. (April 21,
2000).
The 2008 Proposal and the Company's proposal to declassify the Board deal with
the same issue and, if both are included in the proxy materials for the 2008
Annual meeting, would present alternative and conflicting decisions for
stockholders that may lead to inconsistent and ambiguous results. The 2008
Proposal requests that the Board "take those steps necessary" to require that
all directors stand for election annually. The Company's own proposal is to do
just thatto amend the Company's certificate of incorporation to provide for
annual election of directors. The two proposals are conflicting because, if both
are successful, the Company cannot reasonably implement one proposal without
rendering the other moot. If both proposals are included in the proxy materials,
stockholders would be faced with the confusing proposition of either
declassifying the Board or requesting that the Board take those steps necessary
for declassification, or both, which would likely result in an unclear and
inconsistent mandate from stockholders from which the Board would have
difficulty determining how to proceed.
Moreover, it would not serve the interests of stockholders for the Company to
withdraw its own binding proposal. If the Company were to do so, the
stockholders would once again be presented with a non-binding resolution to
declassify the Board, rather than being afforded the opportunity to approve a
binding resolution to accomplish the same result. Rather than delaying a binding
vote for another year, the Board has determined that it is in the best interests
of the stockholders to present the Company's binding resolution to declassify
the Board for approval at the 2008 Annual Meeting.
Because the 2008 Proposal clearly and directly conflicts with the Company's own
proposal to declassify its Board, the 2008 Proposal can be properly excluded
from the Company's proxy materials under Rule 14a-8(i)(9).
Conclusion
The Company has already taken those steps necessary to respond to stockholder
sentiment and declassify the Board. Inclusion of Mr. Armstrong's 2008 Proposal
would be a step backward and would likely confuse the issue for stockholders and
delay its implementation. Therefore, for reasons set forth above, the Company
intends to exclude the 2008 Proposal from the proxy materials for its 2008
Annual Meeting, and respectfully requests that the Staff confirm that it will
not recommend enforcement action to the Securities and Exchange Commission as a
result of such exclusion.
Pursuant to Rule 14a-8(j)(1), a copy of this letter has been mailed
simultaneously to the proponent, Mr. Armstrong.
If you have any questions or wish to discuss any of the above, please contact
the undersigned at (650) 843-3238.
Very truly yours,
/s/
Nicholas Unkovic, Partner
Squire, Sanders and Dempsey L.L.P.
[INQUIRY LETER 2]
November 1, 2007
The Secretary
UCBH HOLDINGS, INC.
555 Montgomery Street
San Francisco, California 94111
Greetings
Pursuant to Rule X-14 of the Securities and Exchange Commission, this letter is
formal notice to the management of UCBH HOLDINGS, INC., at the coming annual
meeting in 2008, I, Gerald R. Armstrong, a shareholder for more than one year
and the owner of in excess of $2,000.00 worth of voting stock, 802 shares are
registered in my own name and are shares which I intend to own for all of my
life, will cause to be introduced from the floor of the meeting, the attached
resolution.
I ask that, if management intends to oppose this resolution, my name, address,
and telephone numberGerald R. Armstrong, 820 Sixteenth Street, No. 705; Denver,
Colorado; 80202-3227; 303-355-1199; together with the number of shares owned by
me as recorded on the stock ledgers of the corporation, be printed in the proxy
statement, together with the text of the resolution and the statement of reasons
for introduction. I also ask that the substance of the resolution be included in
the notice of the annual meeting and on management's form of proxy.
Yours for "Dividends and Democracy."
/s/
Gerald R. Armstrong, shareholder
Certified Mail No. 7004 2510 0004 8299 0821
[APPENDIX]
RESOLUTION
That the shareholders of UCBH HOLDINGS, INC. request its Board of Directors to
take the steps necessary to eliminate classification of terms of its Board of
Directors to require that all Directors stand for election annually. The Board
declassification shall be completed in a manner that does not affect the
unexpired terms of the previously-elected Directors.
STATEMENT
In last year's annual meeting, 74,577,276 shares (89.32% of shares voted) worth
$1,343,136,740.76 on the meeting date, were voted in favor of this proposal.
8,428,985 shares (10.09% of shares voted) were voted against.
Our directors, however, have not seen fit to honor the shareholders' wishes for
greater accountability!
The proponent believes the election of directors is the strongest way that
shareholders influence the directors of any corporation. Currently, the board of
UCBH HOLDINGS, INC. is divided into three classes with each class serving
three-year terms. Because of this structure, shareholders may only vote for
one-third of the directors each year. This is not in the best interest of
shareholders because it reduces accountability.
U. S. Bancorp, Associated Banc-Corp, Piper Jaffray Companies, Fifth-Third
Bancorp, Pan Pacific Retail Properties, Qwest Communication International, Xcel
Energy, Greater Bay Bancorp, North Valley Bancorp, Pacific Continental
Corporation, Regions Financial Corporation, CoBiz Financial Inc., Marshall &
Illsley Corporation, and Wintrust Financial, Inc. are among the corporations
electing directors annually because of the efforts of the proponent.
Performance of our management and our Board of Directors is now being more
strongly tested and challenged in merging Summit Bank Corporation and the
accountability for performance is to a greater number of shareholders whose
capital has been entrusted in the form of share investments.
A study by researchers at Harvard Business School and the University of
Pennsylvania's Wharton School titled "Corporate Governance and Equity Prices"
(Quarterly Journal of Economics, February, 2003), looked at the relationship
between corporate governance practices (including classified boards) and firm
performance. The study found a significant positive link between governance
practices favoring shareholders (such as annual directors elections) and firm
value.
The proponent regards as unfounded the concern expressed by some that annual
election of all directors could leave companies without experienced directors in
the event that all incumbents are voted out by shareholders. In the unlikely
event that shareholders do vote to replace all directors, such a decision would
express dissatisfaction with the incumbent directors and reflect a need for
change.
If you agree that the shareholders of UCBH HOLDINGS may benefit from greater
accountability afforded by annual election of all Directors, please vote "FOR"
this proposal.
[STAFF REPLYLETTER]
February 11, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: UCBH Holdings, Inc. Incoming letter dated January 24, 2008
The proposal requests that the board take the steps necessary to eliminate the
classification of terms for its board of directors to require that all directors
stand for election annually.
There appears to be some basis for your view that UCBH Holdings may exclude the
proposal under rule 14a-8(i)(10). We note in particular your representation that
UCBH Holdings must receive shareholder approval in order to declassify the board
and that shareholders will be provided the opportunity to give that approval at
UCBH Holdings' 2008 Annual Meeting. Accordingly, we will not recommend
enforcement action to the Commission if UCBH Holdings omits the proposal from
its proxy materials in reliance on rule 14a-8(i)(10). In reaching this position,
we have not found it necessary to address the alternative basis for omission
upon which UCBH Holdings relies.
Sincerely,
/s/
William A. Hines
Special Counsel |
