Company Name: Williams Cos., Inc.
Public Availability Date: February 6, 2008
Document Sections: INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 15, 2008
VIA HAND DELIVERY
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Stockholder Proposal of the AFL-CIO Reserve Fund Exchange Act of 1934Rule
14a-8
Dear Ladies and Gentlemen:
This letter is to inform you that our client, The Williams Companies, Inc. (the
"Company"), intends to omit from its proxy statement and form of proxy for its
2008 Annual Stockholders Meeting (collectively, the "2008 Proxy Materials") a
stockholder proposal and statements in support thereof (the "Proposal") received
from the AFL-CIO Reserve Fund (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).
THE PROPOSAL
The Proposal requests that the Board of Directors of the Company (the "Board")
adopt a policy addressing conflicts of interest involving board members with
health industry affiliations. Specifically, the Proposal states:
Resolved: Shareholders request that the Board of Directors (the "Board") of The
Williams Companies, Inc. ("Williams Companies," or the "Company") adopt a policy
addressing conflicts of interest involving board members with health industry
affiliations. The policy shall provide for recusal from voting and from chairing
board committees when necessary. The policy shall address conflicts associated
with Company involvement in public policy issues related to Board members'
health industry affiliations and shall be explicitly integrated with the
company's existing policies regarding related party transactions. For the
purposes of this policy, "board members with health industry affiliations" means
any Board member who is also a director, executive officer or former executive
officer of a company or trade association whose primary business is in the
health insurance or pharmaceutical industries.
A copy of the Proposal, as well as related correspondence with the Proponent, is
attached to this letter as Exhibit A.
BASES 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)(7) because the Proposal deals with matters related to the
Company's ordinary business operations; and
Rule 14a-8(i)(10) because the Company has substantially implemented the
Proposal.
ANALYSIS
I. The Proposal May Be Excluded under Rule 14a-8(i)(7)
Because It Deals with Matters Related to the Company's Ordinary Business
Operations.
Rule 14a-8(i)(7) permits the omission of a stockholder proposal dealing with
matters relating to a company's "ordinary business" operations. According to the
Commission release accompanying the 1998 amendments to Rule 14a-8, the
underlying policy of the ordinary business exclusion is "to confine the
resolution of ordinary business problems to management and the board of
directors, since it is impracticable for shareholders to decide how to solve
such problems at an annual shareholders meeting." Exchange Act Release No. 40018
(May 21, 1998) (the "1998 Release").
In the 1998 Release, the Commission described the two "central considerations"
for the ordinary business exclusion. The first is that certain tasks are "so
fundamental to management's ability to run a company on a day-to-day basis" that
they cannot be subject to direct stockholder oversight. The second consideration
relates to "the degree to which the proposal seeks to `micromanage' the company
by probing too deeply into matters of a complex nature upon which stockholders,
as a group, would not be in a position to make an informed judgment."
As discussed in more detail below, the Proposal relates to the Company's
ordinary business operations because: (A) the Proposal pertains to
implementation of policies and procedures relating to conflicts of interest on
health care matters; and (B) the Proposal relates to employee benefits. In
well-established precedent, the Staff consistently has concurred that
stockholder proposals relating to both of these matters implicate ordinary
business matters, and as such, these types of proposals are excludable under
Rule 14a-8(i)(7).
A. The Proposal Involves Ordinary Business Matters Because It Seeks to
Micro-Manage the Company's Policies and Procedures Relating to Conflicts of
Interest.
The Proposal requests that the Board adopt a policy addressing conflicts of
interest that arise as a result of Board members with "health industry
affiliations" and Company decision-making regarding health care. At the outset,
we note that the Company is in the business of finding, producing, gathering,
processing and transporting natural gas. Thus, the Company does not operate in
the health care industry, and the extent of its involvement in this regard is as
a health care consumer with respect to the benefits it provides its employees.
Moreover, the Company's Board and its committees typically do not engage in
discussions regarding "pharmaceutical or health insurance issues." Instead, the
Company's management is responsible for such matters as part of its day-to-day
management function.
The Staff repeatedly has concurred that, pursuant to Rule 14a-8(i)(7) or its
predecessor, a stockholder proposal relating to the adoption or amendment of
codes of conduct and related policies may be excluded, including proposals
relating to limiting potential director conflicts of interest. For example, in
Westinghouse Electric Corp. (avail. Jan. 28, 1997), the stockholder proposal
requested that the board "refrain from any business relationship with any
non-management director for which the non-management director directly or
indirectly receives compensation beyond the director fee." The Staff concurred
with the exclusion of the proposal under the predecessor to Rule 14a-8(i)(7)
because the "proposal is directed at matters relating to the conduct of the [c]ompany's
ordinary business operations (i.e., business relationships)." Further, in
Genetronics Biomedical Corp. (avail. Apr. 4, 2003), a stockholder proposal
sought to require that the company's officers and directors avoid "all"
financial conflicts of interest and not do business with any company in which an
officer or director has a financial stake. The Staff concurred in the exclusion
of the proposal under Rule 14a-8(i)(7) because the proposal appeared to include
matters relating to non-extraordinary transactions.
More generally, in Costco Wholesale Corp. (avail. Dec. 11, 2003) the Staff
permitted the company to exclude under Rule 14a-8(i)(7) a proposal to develop a
"Code of Ethics that would [] address issues of bribery and corruption" and to
make a report thereon. The Staff stated that the proposal could be excluded
under Rule 14a-8(i)(7) "as relating to ordinary business operations (i.e., terms
of its code of ethics)." See also Verizon Communications Inc. (avail. Feb. 23,
2007) (stockholder proposal requesting the formation of a board committee to
monitor adherence to ethical business practices was excludable under Rule
14a-8(i)(7)); Chrysler Corp. (avail. Mar. 18, 1998) (permitting the exclusion of
a proposal that requested the board review or amend the code of standards for
the company's international operations); USX Corp. (avail. Dec. 28, 1995)
(granting the exclusion of a proposal on the basis of "ordinary business
operations (i.e., the terms of a corporate Code of Ethics)" where the company
already maintained a comprehensive set of applicable policies); McDonald's Corp.
(avail. Mar. 19, 1990) (permitting the exclusion of a proposal requesting a
"code of business conduct" where one part of the code was to address
employer/employee relations and its business policies); NYNEX Corp. (avail. Feb.
1, 1989) (permitting the exclusion of a proposal that requested an amendment to
the code of corporate conduct where the "particular topics to be addressed in
the [c]ompany's code of conduct" included the ordinary business operations of
the company); Transamerica Corp. (avail. Jan. 22, 1986) (allowing the omission
of a proposal requesting a code of corporate conduct addressing relations with
various constituencies, conflicts of interest and equal employment opportunity).
The Proposal concerns conflicts of interest arising from directors with health
industry affiliations and Company decision-making regarding health care. As with
the stockholder proposals at issue in the precedents discussed above, the
Proposal concerns the Company's ordinary business operations because the
decision-making regarding health care issues is a core function of management's
day-to-day operations. Moreover, the Proposal seeks to interfere with the
Company's activities in managing conflicts of interests. The Board's oversight
of potential director conflicts of interest in this regard is a complex process
that stockholders, "as a group, [are] not ... in a position to make an informed
judgment" about. See 1998 Release.
Accordingly, the Proposal implicates the Company's ordinary business operations
and, thus, is excludable pursuant to Rule 14a-8(i)(7).
B. The Proposal Involves Ordinary Business Matters Because It Relates to
Employee Benefits.
The Proposal also is excludable under Rule 14a-8(i)(7) because it pertains to
health care costs and, thus, employee benefits. The design, maintenance and
administration of health care coverage are part of the Company's ordinary
business operations. In its day-to-day employee benefits administration, the
Company determines the coverage and applicable eligibility requirements for
employees, retirees and others. Decisions that could impact the nature of health
care coverage provided to the Company's employees are best left to those who
handle such decisions on a daily basis. However, as discussed below, the
Proposal clearly seeks to interfere with such decision-making.
The Staff has found on several recent occasions that proposals pertaining to a
company's health care costs are excludable. See General Motors Corp. (avail.
Apr. 11, 2007); Target Corp. (avail. Feb. 27, 2007). In General Motors and
Target, the Staff concurred that a proposal involved a matter of ordinary
business where it requested the board to prepare a report examining the
implications of rising health care expenses and how each company was addressing
that public policy issue without compromising the health and productivity of its
workforce. These recent letters are supported by ample precedent. See, e.g.,
General Motors Corp. (avail. Mar. 24, 2005) (concurring in the exclusion of a
stockholder proposal requesting the formation of a "directors committee to
develop specific reforms for the health cost problem" because it related to
"employee benefits"). The Proposal requests that the Board develop a policy
addressing conflicts of interest that arise from Board members with health
industry affiliations making decisions regarding "pharmaceutical or health
insurance issues." The Proposal suggests that the benefits to the Company of
such a policy could include the Company increasing health care coverage and
lowering the attendant costs. In this regard, the Proposal states, "[h]ealth
care costs could be cut by as much as $1,160 per employee if Congress enacted
universal health insurance and required Medicare to negotiate prescription drug
prices directly with pharmaceutical companies." Moreover, the Proposal asserts
that a policy addressing conflicts of interests on these matters "could benefit
the Company," presumably by lowering the cost of health insurance.
The Proposal suggests that eliminating potential director conflicts of interest
could lead to comprehensive health insurance, which would result in lower health
care costs for the Company. Thus, the Proposal is excludable pursuant to Rule
14a-8(i)(7) because it relates to health care costs and employee benefits.
II. The Proposal May Be Excluded under Rule
14a-8(i)(10) Because it Has Been Substantially Implemented.
A. Background.
Rule 14a-8(i)(10) permits a company to exclude a stockholder proposal from its
proxy materials if the company has substantially implemented the proposal. The
Commission stated in 1976 that the predecessor to Rule 14a-8(i)(10) was
"designed to avoid the possibility of shareholders having to consider matters
which already have been favorably acted upon by the management... ." Exchange
Act Release No. 12598 (July 7, 1976). When a company can demonstrate that it
already has taken actions to address each element of a stockholder proposal, the
Staff has concurred that the proposal has been "substantially implemented" and
may be excluded as moot. See, e.g., Exxon Mobil Corp. (avail. Jan. 24, 2001);
The Gap, Inc. (avail. Mar. 8, 1996); Nordstrom, Inc. (avail. Feb. 8, 1995).
Moreover, a proposal need not be "fully effected" by the company in order to be
excluded as substantially implemented. See Exchange Act Release No. 20091, at
II.E.6. (Aug. 16, 1983); see also 1998 Release at n.30 and accompanying text.
The Staff has noted, "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." Texaco, Inc. (avail. Mar. 28, 1991). In other words, substantial
implementation under Rule 14a-8(i)(10) requires that a company's actions
satisfactorily address the underlying concerns of the proposal and that the
essential objective of the proposal has been addressed. See, e.g.,
Anheuser-Busch Cos., Inc. (avail. Jan. 17, 2007); ConAgra Foods, Inc. (avail.
July 3, 2006); Johnson & Johnson (avail. Feb. 17, 2006); The Talbots Inc.
(avail. Apr. 5, 2002); Masco Corp. (avail. Mar. 29, 1999).
B. Existing Conflict of Interest Requirements Applicable to Company Directors.
The Company is listed on the New York Stock Exchange (the "NYSE") and, as such,
is required to comply with the NYSE's listing standards ("Listing Standards").
Section 303A. 10 of the Listing Standards requires the Company to adopt and
disclose a code of business conduct and ethics for its directors. See Exhibit B.
Section 303A. 10 states that a "conflict of interest" exists "when an
individual's private interest interferes in any way - or even appears to
interfere - with the interests of the corporation as a whole," which may include
when a director "takes actions or has interests that may make it difficult to
perform his or her company work objectively and effectively." To this end, the
Company has adopted a Code of Business Conduct (the "Code") applicable to
Company employees and members of the Board. See Exhibit C and available at
http://www.williams.com/corporate responsibility/governance/code.aspx. The
Company's Code includes a specific section on conflicts of interest, which
provides that all employees and directors are "expected to avoid or disclose any
activity that may interfere, or have the appearance of interfering, with ...
responsibilities" to the Company and its stockholders. The Code then sets forth
specific examples of petential conflicts of interest, while noting, "no list of
potential conflicts of interest can be complete."
Moreover, the Company is subject to Item 404(b) of Regulation S-K, which
requires the disclosure of a company's "policies and procedures for the review,
approval, or ratification of any transaction required to be reported under" Item
404(a) of Regulation S-K. Item 404(a) requires disclosure of related party
transactions, including transactions where a director has or will have a "direct
or indirect material interest." In this regard, in addition to its Code
discussed above, the Company has adopted "Policies and procedures with respect
to related person transactions," which provide that the Board, acting through
the Audit Committee, will determine whether such a transaction "is in, or is not
inconsistent with, the best interests of the Company and its stockholders" (the
"Related Party Policy"). Available at http://www.williams.com/corporate_responsibility/governance/audit_committee.aspx.
Additionally, the Company is incorporated in Delaware, and Delaware law
addresses conflicts of interests, which would include any potential conflicts
with "health industry affiliated" directors. Directors of Delaware corporations
are subject to numerous fiduciary duties, including a duty of loyalty. The duty
of loyalty requires that a corporate director act in the interests of the
corporation and not in the director's own interests or the interests of a third
party, such as an organization with which the director is affiliated. See, e.g.,
Cede & Co. v. Technicolor, Inc.,
634 A.2d 345, 361 (Del. 1993) ("Essentially,
the duty of loyalty mandates that the best interest of the corporation and its
shareholders takes precedence over any interest possessed by a director, officer
or controlling shareholder and not shared by the stockholders generally.")
(citations omitted). Because conflicts of interest implicate the duty of
loyalty, many boards of directors, including the Company's Board, follow general
corporate practice in this regard and, when a conflict of interest arises,
require disclosure of the director's interest in the matter, followed by recusal
from deliberations and voting on the matter, and approval of the matter by the
"disinterested" directors (directors who do not have a conflict). See, e.g., In
re The Walt Disney Co. Derivative Litig., 2004 Del. Ch. LEXIS 132, *24 & n.49
(concluding that Disney President Michael Ovitz appropriately abstained from
attending meeting where a substantial part of his own compensation was to be
discussed and decided upon because of duty of loyalty, which "imposes an
affirmative obligation to protect and advance the interests of the corporation
and mandates that [a director] absolutely refrain from any conduct that would
harm the corporation") (citations omitted); In re Tri-Star Pictures, Inc., Litig.,
1995 Del. Ch. LEXIS 27, *10 (noting "the Supreme Court [of Delaware's] command
... that directors who have a conflict of interest relating to a proposed
transaction should totally abstain from participating in the board's
consideration of that transaction" (citing Weinberger v. UOP, Inc.,
457 A.2d 701, 711 (Del. 1983))). In addition, the Delaware General Corporation Law (the "DGCL")
sets forth procedures for approving contracts or transactions between a
corporation and another organization where one of the corporation's directors
serves a director or officer, and contracts or transactions in which a director
has a financial interest, that are designed to safeguard the board's
decision-making process from potential conflicts and maintain the enforceability
of the contract or transaction. See 8 Del. Code 144 (2007).
While the Code, the Related Party Policy and Delaware law do not specifically
address "health industry affiliations," this is to be expected as it is not
possible to identify in advance all the types of potential conflicts of interest
that might arise. This is why the Company's Code specifically notes that "no
list of potential conflicts can be complete." Instead, the Code's provision
related to conflicts of interest is intended to be a broad statement of ethical
responsibility so that the Board can deal with specific situations as they
occur. Thus, through Board actions adopting the Code and the Related Party
Policy and through Delaware law, the Company has implemented the essential
objective of the Proposal - addressing conflicts of interest by health industry
affiliated directors. See, e.g., The Talbots, Inc. (avail. Apr. 5, 2002)
(concurring with the exclusion of a proposal requiring the establishment of a
code of corporate conduct regarding human rights because the company had an
existing Standard for Business Practice and Code of Conduct); The Gap, Inc.
(avail. Mar. 16, 2001) (permitting the exclusion of a proposal that requested a
report on the child labor practices of the company's vendors because the company
had established a code of vendor conduct, monitored vendor compliance and
published related information); Nordstrom Inc. (avail. Feb. 8, 1995) (proposal
that the company commit to a code of conduct for overseas suppliers was
substantially addressed by existing company guidelines and, thus, was excludable
as moot).
Moreover, the fact that the Company has not implemented the Proposal through a
specific amendment to the Company's "existing policies regarding related party
transactions" alone is irrelevant since existing provisions in the Code, the
Related Party Policy and Delaware law "compare favorably with the guidelines of
the [P]roposal." For example, in Intel Corp. (avail. Feb. 14, 2005), the company
received a proposal asking that it "establish a policy" of expensing all future
stock options. The company argued that the proposal had been substantially
implemented through the Financial Accounting Standards Board's adoption of
Statement No. 123(R), requiring the expensing of stock options. Although the
proponent asserted that adoption of the accounting standard was different from
company adoption of a policy as requested under the proposal, the Staff
concurred that the new accounting standard had substantially implemented the
proposal and permitted exclusion of the proposal.
Thus, the Company's adoption of its Code of Business Conduct and Related Party
Policy, as well as its adherence to Delaware law and the NYSE Listing Standards,
demonstrate that it has substantially implemented the Proposal, and the Proposal
is excludable under Rule 14a-8(i)(10).
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 Brian K. Shore, the Company's Corporate Secretary,
at (918) 573-4201.
Sincerely,
/s/
Elizabeth A. Ising
EAI/csh
Enclosures
cc: Brian K. Shore, Corporate Secretary, The Williams Companies, Inc.
Daniel F. Pedrotty, AFL-CIO Reserve Fund
[APPENDIX 1]
December 3, 2007
By UPS Next Day Air
Mr. Brian K. Shore, Secretary
The Williams Companies, Inc.
One Williams Center, MD 47
Tulsa, Oklahoma 74172
Dear Mr. Shore:
On behalf of the AFL-CIO Reserve Fund (the "Fund"), I write to give notice that
pursuant to the 2007 proxy statement of The Williams Companies, Inc. (the
"Company"), the Fund intends to present the attached proposal (the "Proposal")
at the 2008 annual meeting of shareholders (the "Annual Meeting"). The Fund
requests that the Company include the Proposal in the Company's proxy statement
for the Annual Meeting. The Fund is the beneficial owner of 400 shares of voting
common stock (the "Shares") of the Company and has held the Shares for over one
year. In addition, the Fund intends to hold the Shares through the date on which
the Annual Meeting is held.
The Proposal is attached. I represent that the Fund or its agent intends to
appear in person or by proxy at the Annual Meeting to present the Proposal. I
declare that the Fund has no "material interest" other than that believed to be
shared by stockholders of the Company generally. Please direct all questions or
correspondence regarding the Proposal to me at (202) 637-5379.
Sincerely,
/s/
Daniel F. Pedrotty
Director
Office of Investment
DFP:ms
opeiu #2, afl-cio
Attachment
[APPENDIX 2]
Resolved: Shareholders request that the Board of Directors (the "Board") of The
Williams Companies, Inc. ("Williams Companies," or the "Company") adopt a policy
addressing conflicts of interest involving board members with health industry
affiliations. The policy shall provide for recusal from voting and from chairing
board committees when necessary. The policy shall address conflicts associated
with Company involvement in public policy issues related to Board members'
health industry affiliations and shall be explicitly integrated with the
company's existing policies regarding related party transactions. For the
purposes of this policy, "board members with health industry affiliations" means
any Board member who is also a director, executive officer or former executive
officer of a company or trade association whose primary business is in the
health insurance or pharmaceutical industries.
Supporting Statement
Williams Companies directors William R. Howell and George A. Lorch are also
directors of Pfizer Inc. Both sit on the Nominating and Governance Committee at
the Company. Mr. Howell is the Lead Director and also Chair of the Compensation
Committee at the Company.
In our view, our Company's existing director independence policies do not
adequately address the financial and professional interests of our Company's
health industry affiliated directors, nor does our Company require that health
industry affiliated directors recuse themselves from Board decisions related to
pharmaceutical or health insurance issues that are significant social policies.
Access to affordable, comprehensive health insurance is the most significant
social policy issue in America, according to polls by NBC News/The Wall Street
Journal, the Kaiser Foundation, and The New York Times/CBS News. John Castellani,
president of the Business Roundtable has stated that 52 percent of his members
say health costs represent their biggest economic challenge, explaining that
"The current situation is not sustainable in a global, competitive workplace." (BusinessWeek,
7/3/2007)
Health care costs could be cut by as much as $1,160 per employee if Congress
enacted universal health insurance and required Medicare to negotiate
prescription drug prices directly with pharmaceutical companies. (Dr. Kenneth
Thorpe, Emory University, 2007)
We are concerned that the financial and professional interests of health
industry affiliated directors could improperly influence our Company's position
on significant social policy issues that could benefit the Company.
We believe that chairing committees or voting by health industry affiliated
directors on Board decisions on health issues may create the appearance of a
conflict of interest. In our opinion, this proposal will help prevent health
industry affiliated directors from compromising their duty of loyalty to our
Company's shareholders.
[INQUIRY LETTER]
February 5, 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: The Williams Companies, Inc.'s Request to Exclude Proposal Submitted by the
AFL-CIO Reserve Fund
Dear Sir/Madam:
This letter is submitted in response to the claim of the Williams Companies,
Inc. ("Williams" or the "Company"), by letter dated January 15, 2008, that it
may exclude the shareholder proposal ("Proposal") of the AFL-CIO Reserve Fund
("Fund" or the "Proponent") from its 2008 proxy materials.
I. Introduction
Proponent's shareholder proposal to Williams urges:
that the Board of Directors adopt a policy addressing conflicts of interest
involving board members with health industry affiliations. The policy shall
provide for recusal from voting and from chairing board committees when
necessary. The policy shall address conflicts associated with company
involvement in public policy issues related to their health industry
affiliations and shall be explicitly integrated with the company's existing
policies regarding related party transactions. For the purposes of this policy,
"board members with health industry affiliations" means any Board member who is
also a director, executive officer or former executive officer of a company or
trade association whose primary business is in the health insurance or
pharmaceutical industries (emphasis added).
Williams' letter to the Commission stated that it intends to omit the Proposal
from its proxy materials to be distributed to shareholders in connection with
the Company's 2008 annual meeting of shareholders. Williams argues that the
Proposal is in violation of:
Rule 14a-8(i)(7) as an ordinary business matter, despite the fact that the
Proposal addresses a significant social policy issue, and
Rule 14a-8(i)(10) because Williams has substantially implemented the Proposal,
even though the statutory, regulatory and Company Code of Conduct for directors
is inapplicable to conflicts of interest involving significant social policy
issues.
The Proposal was carefully crafted to address the significant social policy
issue of health care reform and the conflicts of interest that arise when health
industry affiliated directors vote or chair board actions on this issue. The
statutory and regulatory requirements on director conflicts of interest cited by
Williams, together with the Company's own policies and procedures on conflicts
of interest, address commercial transactions, not conflicts of interest on
significant social policy issues.
II. Health industry affiliated directoir conflicts of interest are significant
social policy issues and may not be excluded under Rule 14a-8(i)(7).
A. Health care reform is a significant social policy issue.
The Commission stated in Exchange Act Release No. 40018 that "proposals that
relate to ordinary business matters but that focus on `sufficiently significant
social policy issues ... would not be excludable, because the proposals would
transcend day-to-day business matters....'" The Proposal before Williams is just
such a proposal. It addresses the significant social policy issue of health care
reform and conflicts of interest that are presented by the Company's health
industry affiliated directors on this issue. The Proposal does not ask the
Company to provide any information or reports on its internal operations, nor
does it attempt to micromanage the Company. Instead, it urges the board to
integrate the Company's existing policies with an amended policy to protect the
Company and shareholders from health industry affiliated director conflicts of
interest.
Health care reform is, in fact, the most important domestic issue in America.
Public opinion polls by The Wall Street Journal/NBC News, the Kaiser Foundation
and The New York Times all document its significance. In the latest Wall Street
Journal/NBC News poll, for example, 52 percent of Americans "say the economy and
health care are most important to them in choosing a president, compared with 34
percent who cite terrorism and social and moral issues.... That is the reverse
of the percentages recorded just before the 2004 election. The poll also shows
that voters see health care eclipsing the Iraq war for the first time as the
issue most urgently requiring a new approach." 1
Many businesses now cite health care costs as their biggest economic challenge.
Indeed, Williams is a member of the Business Roundtable, whose president, John
Castellani, has called health care reform a top priority for business and
Congressional action." 2 In September, the CEOs of Kelly Services and Pitney
Bowes, Inc., together with GE's Global Health Director, called on Congress to
enact health care reform.3 They joined other leading business coalitions,
including the National Coalition on Health Care and the National Business Group
on Health. The latter's membership consists of 245 major companies, including 60
of the Fortune 100.4 Each organization maintains that the cost of health care
for business is now greater than it should be and will continue to rise as long
as 47 million Americans who have no health insurance remain without coverage.
Other leading business organizations have recently announced their support for
health care reform: Divided We Fail, a coalition of the AARP, the Business
Roundtable, the Service Employees International Union (SEIU) and the National
Federation of Independent Business, states that it will "make access to quality,
affordable health care and long-term financial security top issues in the
national political debate." 5 In addition, Wal-Mart has joined with SEIU calling
on Congress to enact health care reform.6
Underscoring the significance of health care reform as a major social policy
issue, the American Cancer Society has taken the unprecedented step of
redirecting its entire $15 million advertising budget "to the consequences of
inadequate health care coverage" in the United States.7
B. Health industry affiliated director conflicts on health care reform are
significant social policy issues.
Health industry affiliated director conflicts of interest are themselves a
significant policy issue in the media and in Congress. During Congressional
consideration of amendments to the Hatch-Waxman Act, for example, directors at
both Verizon and Georgia-Pacific were instrumental in terminating each company's
support for and involvement in Business for Affordable Medicine, a business
coalition supporting federal legislation to strengthen the Act.8 The coalition
had been organized by the governors of 12 states, Verizon, Georgia-Pacific and
other major corporations to reduce expenditures on prescription drugs, a major
problem for business and state Medicaid programs. The Congressional Budget
Office estimated that the legislation would reduce total spending on
prescription drugs by $60 billion, or 1.3 percent, over the next 10 years. An
examination of Verizon's proxy revealed that its CEO, Ivan Seidenberg, the
chairman of its Human Resources Committee, Walter Shipley, John R. Stafford,
retired CEO of Wyeth, and Richard L. Carrion, were each directors of Wyeth,
which successfully lobbied Verizon to end its involvement in the coalition.9
At General Motors, where health care costs have long been a central concern,
three of the eleven independent directors on the board are directors of
pharmaceutical companies. The Company's presiding director, George Fisher, also
serves as a director of Eli Lilly and Company. Percy N. Barnevik, a director
since 1997, retired as CEO of AstraZeneca PLC in 2004 and serves as chairman of
GM's Public Policy Committee. Director Karen Katen retired as executive vice
president of Pfizer in 2007, served as an officer of PhRMA and continues to
serve as chair of the Pfizer Foundation. Each director's holdings in Eli Lilly,
AstraZeneca and Pfizer, respectively, vastly outweigh his or her holdings in GM.
In 2007, The New York Times reported that GM was the only U.S. auto company
purchasing the brand-name drug, Nexium, manufactured by AstraZeneca, at a cost
to GM of $110 million per year. Senior management and labor leaders at GM had
decided to eliminate Nexium from the GM formulary.10 That decision was
overturned, according to senior labor and management leaders at GM, after the GM
board of directors reviewed it. At the same time, and despite its extensive
federal legislative activity, GM failed to take any action to support
legislation to reform the Medicare prescription drug program to require
prescription drug price negotiations between pharmaceutical companies and the
federal government.11
Conflicts of interest among health industry affiliated directors have also been
documented by Chrysler Corporation's former vice president of public policy,
Walter B. Maher. Writing in the American Journal of Public Health, Maher
described how "a representative of the insurance industry" [the CEO of
Prudential Insurance] successfully blocked Chrysler Corporation's efforts to
persuade-Business Roundtable members to support health care reform." 12
At least 21 major companies (Attachment "A"), including Williams, have multiple
health industry affiliated directors serving on their boards of directors.13
1. Companies now recognize health care reform as a significant social policy
issue and have amended their conflicts of interest policies for health industry
affiliated directors accordingly.
At the same time Proponent filed the Proposal at Williams, Proponent filed
virtually identical social policy conflicts of interest proposals for health
industry affiliated directors at the American Express Company, the McGraw-Hill
Companies and Electronic Data Systems (EDS). In addition, proponents filed
proposals calling upon companies to adopt principles on the significant social
policy issue of health care reform at IBM, General Electric and Bristol-Meyers
Squibb. Instead of seeking No-Action Letters from the Commission to exclude
these proposals, American Express, McGraw-Hill, IBM, General Electric and
Bristol-Meyers Squibb each commenced dialogues with proponents and each has
agreed to revise director conflicts of interest policies or issue corporate
statements of principles for health care reform.14 Proponents have agreed to
withdraw the proposals and, in the case of Bristol-Meyers Squibb, the company
has withdrawn its request to the Commission for a No-Action Letter.
Finally, EDS, whose request for a No-Action Letter was granted, Electronic Data
Systems Corporation (January 24, 2008), nevertheless agreed to amend its
conflict of interest policies after dialogue with the Proponent.15
C. The Proposal presents a significant public policy issue that is not addressed
by, but is entirely compatible with, Williams' existing policies on conflicts of
interest.
Rule 14a-8(i)(7) permits a company to exclude a proposal if it "deals with a
matter relating to the company's ordinary business operations." The Commission
has stated that a proposal that is otherwise excludable under the ordinary
business exclusion is includable, however, if it raises a significant policy
issue. (Securities Exchange Act Release No. 40,018 (May 21, 1998).)
Williams appears to have ignored the fact that the Proposal specifically states
that the Proposal urges the board to adopt a policy addressing:
conflicts associated with company involvement in public policy issues related to
their [directors'] health industry affiliations and shall be explicitly
integrated with the company's existing policies regarding related party
transactions (emphasis added).
Instead, the Company repeatedly misconstrues the Proposal as a conflicts of
interest policy request that micromanages ordinary business matters of employee
benefits. It does nothing of the kind. The Proposal addresses health care reform
as an external, significant social policy issue facing the Nation and the
Company. The Proposal focuses on health industry affiliated director conflicts
associated with Company involvement in this significant social policy issue.
Williams Companies directors William R. Howell and George A. Lorch each serve as
directors of Pfizer, Inc. Both sit on the Nominating and Governance Committee at
the Company. Mr. Howell is the lead director and also chair of the Compensation
Committee at the Company. Each exercises significant authority over the actions
of the Williams' board of directors, including the power to determine the agenda
for board meetings. As Pfizer directors, however, they must routinely take
positions on the significant social policy issue of health care reform that are
in conflict with the interests of the Williams Companies. For example, Pfizer is
opposed to any amendments to Medicare that would empower the federal government
to negotiate prices of prescription drugs with pharmaceutical companies, or to
establish a Medicare formulary. Apart from pharmaceutical companies like Pfizer,
the Williams Companies and all other businesses would realize significant
savings from such an amendment to Medicare because the prices of prescription
drugs would decline.16
Proponent agrees with the Company that it is not in the business of health care,
nor does its board of directors routinely deal with the significant social
policy issue of health care reform. But it is precisely because health care
reform is a significant social policy issue that Williams' health industry
affiliated directors must recuse themselves from voting on this issue. Williams'
existing policies and practices do not require them to recuse themselves because
the issue is not considered to be one of the personal financial interests
covered by the Company's existing policies and practices. Unless they recuse
themselves from voting, there is at least the appearance of a director conflict
of interest.
The Company cites Westinghouse Electric Corporation. 1997 SEC No-Act. LEXIS 162
(January 28, 1997), in support of its argument to exclude the Proposal as a
matter of ordinary business. The proposal in Westinghouse, however, involved a
proposal that the board of directors "avoid business relationships with
non-management directors." Westinghouse already had policies relating to such
transactions in effect. The Proposal before Williams, however, is a significant
social policy issue that involves a matter not covered by the Company's existing
policies and practices. It is certainly not a matter of ordinary business.
Genetronics Biomedical Corporation, 2003 SEC No-Act. LEXIS 527 (April 4, 2003),
involved a conflicts of interest proposal, but Williams conveniently ignores the
fact that the Commission's decision specifically noted that the proposal before
Genetronics attempted to deal with "all financial conflicts of interest"
involving directors and that it "appears to include matters relating to
non-extraordinary transactions." The Proposal before Williams, however, is
carefully crafted to address only health industry affiliated director conflicts
of interest affecting the significant social policy issue of health care reform.
Verizon Communications, Inc., 2007 SEC No-Act. LEXIS 268 (February 23, 2007),
involved a proposal requesting the formation of a "Corporate Responsibility
Committee" to monitor the extent to which Verizon lives up to its claims
pertaining to integrity, trustworthiness and reliability." The breadth of that
proposal and its obvious involvement in ordinary business is in stark contrast
to the Proposal before Williams, which goes to the matter of a significant
social policy issue and is narrowly targeted to be compatible with existing
procedures and practices at the Company.
Similarly, Costco Wholesale Corporation, 2003 SEC No-Act. LEXIS 817 (December
11, 2003), involved a proposal requesting that the board develop "a thorough
Code of Ethics that would also address issues of bribery and corruption" as well
as a report on the new code. The breadth and scope of the proposal centered on
the ordinary business of Costco. The Proposal before Williams, however, is
narrowly targeted to the significant social policy issue and in no way impinges
upon the ordinary business of the Company.
Also cited by Williams, Chrysler Corporation, 1998 SEC No-Act. LEXIS 415 (March
18, 1998), had nothing to do with conflicts of interest and, instead, involved
the development of a "comprehensive code of conduct to guide the formulation of
company policies, programs, and practices to address the new challenges...in the
global marketplace." The Chrysler proposal involved ordinary business matters,
unlike the Proposal before Williams, which is centered on a significant social
policy issue.
USX Corporation, 1995 SEC No-Act. LEXIS 1005 (December 28, 1995), is also
inapposite. The proposal before USX involved a wholesale revision of the
company's code of ethics and conduct. That was a matter of ordinary business
before the company. The Proposal before Williams, however, involves nothing of
the kind. It centers on a significant social policy issue that is not now part
of the Company's code of conduct.
McDonald's Corporation, 1990 SEC No-Act. LEXIS 517 (March 19, 1990), cited by
Williams, is yet another case of a proposal involving a wholesale revision of
the company's code of conduct: "[T]he staff has particularly noted that the
proposal appears to be directed at the content and the implementation of
standards on such matters as the conduct of the Company's management, the
Company's employee/employer relations, the Company's customer and business
policies and the Company's relationship with its shareholders. In the Division's
view, these matters involve decisions dealing with the Company's business
operations as illustrated by the Company's existing policies with respect to the
conduct of directors and officers, employment policies on affirmative action and
equal employment opportunity and various other organizational policies
departments, and committees." In contrast, the Proposal before Williams is
targeted to a significant social policy issue that is not addressed by Williams'
existing policies and practices on conflicts of interest. It, however, is
entirely compatible with them.
Transamerica Corporation, 1986 SEC No-Act. LEXIS 1690 (January 22, 1986), was
also a case of a proposal seeking the wholesale adoption of a company-wide code
of conduct. Proponent does not dispute the fact that Williams has a company-wide
code of conduct. The Proposal addresses a significant social policy issue not
addressed by the Company's code of conduct. It is not, therefore, a matter of
ordinary business.
Proponent does not dispute the fact that Williams' management is involved with
ordinary business operations such as the purchase and management of health care
benefits at the Company. This Proposal has little, if anything, to do with those
matters. Instead, it involves the Company's board of directors stating
principles on a significant social policy issue, McDonald's Corporation, 2007
SEC No-Act. LEXIS 378 (March 22, 2007). (Statement on labor and human rights is
not ordinary business.) The Proposal is a matter best addressed, as demonstrated
by other companies, including McGraw-Hill, IBM, EDS and American Express, that
received this same proposal, by amending the Company's code of conduct to deal
with health industry affiliated director conflicts as a significant social
policy issue.
D. The Proposal addresses the significant social policy issue of health care
reform and does not relate to ordinary business matters of employee benefits.
Williams claims that the Proposal pertains to health care costs and is therefore
excludable. Williams' reasoning ignores the fact that significant social policy
issues, at some level, always involve costs. But that does not make them
excludable under Rule 14a-8(i)(7). Just as the significant social policy issue
of labor and human rights pertains to employee wage costs, and is not
excludable, so the significant social policy issue of health care reform
pertains to health benefits costs and is not, therefore, excludable. Framed as
it is in the Proposal before Williams, the issue is one that is an externality,
involving the Company, but more importantly the Nation.
In Ford Motor Company, 2007 SEC No-Act. LEXIS 296 (March 1, 2007), the Staff
agreed that a proposal requesting that the board prepare a report "examining the
implications of rising health care expenses and how Ford is addressing this
issue without compromising the health and productivity of its workforce," could
not be excluded as ordinary business under rule 14a-8(i)(7). The proposal
requested a report focused exclusively on health care costs as a significant
social policy issue. Both the proposal and the supporting statement contained
extensive documentation on health care costs. Both carefully framed the issue as
one that in no way involved reporting on the internal risks posed to Ford's
ordinary business, including its employee benefits operations.
The Company, however, cites Staff decisions on proposals that centered on
matters of internal risk assessment and company finances relating to employee
benefits plans. General Motors Corporation, 2007 SEC No-Act. LEXIS 446 (April
11, 2007), involved a report on GM's health care costs for GM employees and
retirees and their dependents and their implication for various policy
developments in health care. Target Corporation, 2007 SEC No-Act. LEXIS 290
(February 27, 2007), also involved reporting on health care costs, a matter the
company dealt with in the ordinary course of business. Unlike the Proponent's
Proposal, which calls for the adoption of amendments to conflicts of interest
policies regarding a significant social policy issue, the health care reports
called for by the proposals in General Motors Corporation and Target Corporation
would have required each company to conduct internal risk assessments.
Commission decisions in both McDonald's Corporation, 2007 SEC No-Act. LEXIS 378
(March 22, 2007), and Costco Wholesale Corporation, 2004 SEC No-Act. LEXIS 806
(October 26, 2004), are relevant to the Proposal before Williams. Like Williams,
McDonald's and Costco each cited "ordinary business operations," to exclude
proposals on significant social policy issues that called for the adoption of a
company code of conduct. The Staff denied each company's request.
Williams also argues that the Proposal deals with ordinary conflicts of interest
matters that are routine business before the board of directors. The plain
language of the Proposal reveals that it is designed to deal with a significant
social policy issue affecting health industry affiliated directors. The
Commission decisions cited by Willams do not support the exclusion of a Proposal
whose sole purpose is to address a significant social policy issue.
III. Williams has failed to demonstrate that it has substantially implemented
the Proposal because health industry affiliated conflicts of interest on
significant social policy issues are completely unaffected by the Company's
existing policies and its compliance with statutory and regulatory authorities.
The Company would have the Commission believe it has substantially implemented
the Proposal, thereby permitting its exclusion under Rule 14a-8(i)(10). Williams
cites Exchange Act Release No.12598 (July 7, 1976) to the effect that it has
"already taken actions to address each element" of the Proposal. A comparison of
the Proposal and Williams' Code of Conduct clearly shows that the Company has
not adopted what the Proposal calls for, namely, a policy addressing conflicts
associated with company involvement in significant social policy issues related
to directors' health industry affiliations. Citing Exchange Act Release No.
20091 at II.E.6. (August 16, 1983), 1998 Release at n.30 and accompanying text,
and Texaco, Incorporated 1991 SEC No-Act. LEXIS 500 (March 28, 1991) the Company
then appears to claim that its "'particular policies, practices and procedures
compare favorably with the guidelines of the proposal.'" They do not. The
Proposal does not deal with the personal financial conflicts or related
transactions addressed by the Company's existing policies and procedures.
Instead, the Proposal deals with a significant social policy issue and the
conflicts that arise when health industry affiliated directors address this
issue.
Williams cites Texaco, Inc., 1991 SEC No-Act. LEXIS 500 (March 28, 1991), in
support of its claim that it had satisfactorily addressed the underlying
concerns of the Proposal. But Texaco involved a proposal calling for the
adoption of the Valdez environmental standards at the time the company had taken
environmental actions to address the very issues raised by the proposal.
Williams is in no position to make such a claim because it has taken no action
at all. Unlike American Express, McGraw-Hill and EDS, each of which took action
after receiving this identical proposal, Williams has done absolutely nothing.
Williams also cites Masco Corporation, 1999 SEC No-Act. LEXIS 390 (March 29,
1999), in support of its request to exclude the Proposal. Yet a review of that
decision reveals that Masco's board of directors had announced its intention to
approve a resolution in substantially the form submitted by the proponent.
Williams proposes to take no action whatsoever. Indeed, Williams contends that
it has already taken the actions requested by the Proposal, when the Company's
own Code demonstrates that it has not done so.
NYSE Corporate Governance Standard 303A. 10, which Williams cites as evidence of
its substantial implementation of the Proposal, addresses the "private interest"
of a director that may appear to be in conflict with the interests of the
corporation as a whole. The conflicts presented by health industry affiliated
directors who deal with the significant social policy issue of health care
reform, however, are not private transactional interests. The very nature of a
significant social policy issue is its public character. There is no personal
financial stake involved. While it is true, for example, that the market share
of pharmaceutical companies rose as a result of the Medicare Modernization Act,
the personal, transactional matters framed by NYSE 303A. 10 would not pick up
the conflict for a Williams director like Pfizer directors William R. Howell and
George A. Lorch. Yet as Williams directors, they have a conflict of interest if
they fail to advise Williams or vote to oppose amendments to the Medicare
Modernization Act that would empower the federal government to negotiate
prescription drug prices directly with Pfizer.
The same observations apply to Williams' contention that Item 404(b) of
Regulation S-K substantially implements the Proposal. Indeed, Item 404(b) is
explicitly titled "Review, approval or ratification of transactions with related
persons" (emphasis added). There is no transaction involved with Williams'
adoption or rejection of matters relating to the significant social policy issue
of health care reform. There is no financial transaction. Regulation S-K simply
does not apply and, like NYSE Standard 303A.10, Williams' claim that it has
substantially implemented the Proposal falls far short of implementation.
Finally, the Company describes the director "duty of loyalty" under the Delaware
General Corporation Law ("DGCL") as yet another basis for its claim of
substantial implementation of the Proposal. The DGCL and the cases cited by
Williams, however, do not stand for the principle that the DGCL applies to
director conflicts involving a significant social policy issue. In re The Walt
Disney Co. Derivative Litigation, 2004 Del. Ch. LEXIS 132, involved the board's
consideration of executive compensation. In re Tri-Star Pictures, Inc. Litig.,
1995 Del. Ch. LEXIS 27, involved a proposed corporate transaction. Indeed, the
very language of the DGCL cited by Williams applies only to "transactions
between a corporation and another organization where one of the corporation's
directors serves as a director or officer, and contracts or transactions in
which a director has a financial interest."
Williams' claim of substantial implementation is further undermined by its
reliance upon Intel Corporation, 2005 SEC No-Act. LEXIS 215 (February 14, 2005).
Intel's adoption of the Financial Accounting Standards Board Statement 123(R),
requiring the expensing of stock options was, in fact, a substantial
implementation of the proposal's request for a company policy requiring the very
same thing. Williams, unlike Intel, cannot show it has any policy, procedure or
applicable regulation or statute that applies to director conflicts on
significant social policy issues.
IV. Conclusion
Wiliams has failed to meet its burden of demonstrating that it is entitled to
exclude the Proposal under Rule 14a-8(g).
The Proposal presents a significant social policy issue that transcends
day-to-day business matters at Williams. It is, therefore, not excludable under
Rules 14a-(i)(7) and 14a-8(j).
A review of the Williams' Code of Conduct with respect to director involvement
in significant social policy issues clearly shows that Willams has not
substantially implemented the Proposal. It may not be excluded under Rules
14a-8(i)(10) and 14a-8(j).
Consequently, since Williams has failed to meet its burden of demonstrating that
it is entitled to exclude the Proposal under Rule 14a-8(g), the Proposal should
come before Williams' shareholders at the 2008 annual meeting.
If you have any questions or need additional information, please do not hesitate
to call me at 202-637-5335. I have enclosed six copies of this letter for the
Staff, and I am sending a copy to Counsel for the Company.
Sincerely,
/s/
Robert E. McGarrah, Jr.
Counsel
Office of Investment
REM/ms
opeiu, #2, afl-cio
cc: Elizabeth A. Ising, Gibson, Dunn & Crutcher LLP
Attachments
-----FOOTNOTES-----
1 The Wall Street Journal, December 4, 2007, p A1.
2 "Business Roundtable Unveils Principles for Health Care Reform," Press
Release, June 6, 2007, http://www.businessroundtable.org//newsroom/document.aspx?qs=5886BF807822B0F19D5448322FB51711FCF50C8.
Accessed December 4, 2007.
3 Presentations by Carl Camden, CEO, Kelly Services; Michael Critelli. Chairman
and CEO, Pitney Bowes, Inc.; and Robert Galvin, M.D., Director, Global Health,
General Electric Corporation, at Conference on Business and National Health Care
Reform, sponsored by the Century Foundation and the Commonwealth Fund,
Washington, DC, September 14, 2007.
4 "National Health Care Reform: The Position of the National Business Group on
Health," National Business Group on Health, Washington, DC (July, 2006), http://www.businessgrouphealth.org/pdfs/nationalhealthcarereformpositionstatement.pdf.
(Accessed December 4, 2007).
5 The Wall Street Journal, November 13, 2007, p. B4.
6 The New York Times, February 7, 2007.
7 The New York Times, August 31, 2007.
8 The New York Times, September 4, 2002.
9 Verizon Communications, SEC Def. 14A, 2003.
10 The New York Times, October 5, 2007.
11 Correspondence: John J. Sweeney, President, AFL-CIO, and G. Richard Wagoner,
CEO, General Motors Corporation. June 14, 2007 and August 8, 2007.
12 Maher, W.B., "Rekindling ReformHow Goes Business?" 93 Am J Pub Health 92
(2003).
13 Letter and Report to SEC Chairman Christopher Cox from AFL-CIO Office of
Investment Director Daniel F. Pedrotty. October 4, 2007.
14 The McGraw-Hill Companies: http://media.corporateir.net/media files/irol/96/96562/Director
Code Ethics 2008.pdf (accessed January 30, 2008); American Express Company:
email correspondence between Stephen P. Norman, Corporate Governance Officer and
Secretary, The American Express Company, and Daniel F. Pedrotly, Director,
AFL-CIO Office of Investment, January 3, 2008; Bristol-Meyers Squibb website
posting: http://www.bms.com/sr/key issues/concent/date/reform,html; Letter from
Heather L. Maples, Special Counsel, Division of Corporation Finance, U.S.
Securities and Exchange Commission, to Amy L. Goodman, Gibson, Dunn and Crutcher
LLP, January 10, 2008; IBM: Letter from Randy MacDonald, Senior Vice President,
Human Resources, IBM Corporation, to Dan Pedrotty, Director, AFL-CIO Office of
Investment, December 12, 2007 (attached); GE: Letter from David N. Stewart,
Senior Counsel. Investigations/Regulatory, General Electric, to Sister Barbara
Kraemer, President, School Sisters of St. Francis of St. Joseph's Convent.
January 25, 2008.
15 Email from David B. Hollander, Legal Manager-Corporate Acquisitions and
Finance, EDS, to Robert E. McGarrah, Jr., Counsel, AFL-CIO Office of Investment,
February 1, 2008.
16 House Commitree on Oversight and Government Reform, "Private Medicare Drug
Plans: High Expenses and Low Rebates Increase the Cost of Medicare Drug
Coverage," Washington, DC, October 2007, p.1.
[STAFF REPLY LETTER]
February 6, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: The Williams Companies, Inc. Incoming letter dated January 15, 2008
The proposal requests that the board adopt a policy
addressing conflicts of interest involving board members with health industry
affiliations, including conflicts associated with company involvement in public
policy issues related to these affiliations.
There appears to be some basis for your view that The Williams Companies may
exclude the proposal under rule 14a-8(i)(7), as relating to The Williams
Companies' ordinary business operations (i.e., terms of its conflicts of
interest policy). Accordingly, we will not recommend enforcement action to the
Commission if The Williams Companies omits the proposal from its proxy materials
in reliance on rule 14a-8(i)(7). In reaching this position, we have not found it
necessary to address the alternative basis for omission upon which The Williams
Companies relies.
Sincerely,
/s/
Craig Slivka
Attorney-Adviser
|
