Company Name: Xcel Energy Inc.
Public Availability Date: February 15, 2008
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
APPENDIX 3
STAFF REPLY LETTER
[INQUIRY LETTER]
January 10, 2008
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Ladies and Gentlemen:
Xcel Energy Inc., a Minnesota corporation ("Xcel Energy"), is submitting this
letter pursuant to rule 14a-8(j) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in reference to its intention to omit the
Shareholder Proposal (the "Proposal") filed by the Sisters of St. Joseph of
Carondelet and the Franciscan Sisters of Rochester (the "Proponents") from its
2008 proxy statement and form of proxy relating to its Annual Meeting of
Shareholders tentatively scheduled for May 21, 2008. The definitive copies of
the 2008 proxy statement and form of proxy are currently scheduled to be filed
pursuant to rule 14a-6 of the Exchange Act on or about April 1, 2008. We hereby
respectfully request that the staff of the Division of Corporation Finance (the
"Staff") not recommend any enforcement action to the Securities and Exchange
Commission (the "Commission") if, in reliance on one or more of the
interpretations of rule 14a-8 of the Exchange Act set forth below, Xcel Energy
excludes the Proposal from its proxy materials.
In accordance with rule 14a-8(j)(2) of the Exchange Act, enclosed herewith are
six copies of the following materials:
1) This letter, which represents Xcel Energy's statement of reasons why omission
of the Proposal from its 2008 proxy statement and form of proxy is appropriate;
2) The Proposal, attached hereto as Exhibit A, which the Proponents submitted;
and
3) Correspondence and materials that Xcel Energy provided to the Proponents
outlining Xcel Energy's current approach and objectives in designing health care
benefits for its employees, which are attached as Exhibit B.
As noted above, Xcel Energy plans to file its definitive copies of the 2008
proxy statement and form of proxy with the Commission on or about April 1, 2008.
Xcel Energy would appreciate the Staff's response to this request on or about
March 1, 2008, which is the date by which Xcel Energy will need to finalize its
proxy materials in order to meet its current timetable.
I. THE PROPOSAL
The Proposal requests that Xcel Energy "adopt principles for comprehensive
health care reform (such as those based upon principles reported by the
Institute of Medicine:
1. Health care coverage should be universal.
2. Health care coverage should be continuous.
3. Health care coverage should be affordable to individuals and families.
4. The health insurance strategy should be affordable and sustainable for
society.
5. Health insurance should enhance health and well being by promoting access to
high-quality care that is effective, efficient, safe, timely, patient-centered,
and equitable)."
II. DISCUSSION OF REASONS FOR EXCLUSION
The Proposal may be omitted pursuant to Rule 14a-8(i)(7) of the Exchange Act,
which permits a company to exclude a shareholder proposal if the proposal deals
with a matter relating to the company's ordinary business operations: i.e., the
health and welfare benefits that Xcel Energy provides to its workforce. The
reasons for Xcel Energy's conclusions are set forth below.
RULE 14a-8(i)(7) - THE PROPOSAL MAY BE OMITTED BECAUSE IT INVOLVES THE COMPANY'S
ORDINARY BUSINESS OPERATIONS.
Rule 14a-8(i)(7) provides that a company may exclude a proposal dealing with a
matter relating to the conduct of the registrant's ordinary business operations.
In Exchange Act Release No. 40018 (May 21, 1998), the Commission explained that
"the general underlying policy of [the ordinary business] exclusion is
consistent with the policy of most state corporate laws: 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." The Commission further
explained that the ordinary business exclusion rests on two principal
considerations. The first consideration is whether the proposal involves tasks
"so fundamental to management's ability to run a company on a day-to-day basis
that they could not, as a practical matter, be subject to shareholder
oversight." Id. The second consideration is the "degree to which the proposal
attempts to micro-manage the company by probing too deeply into matters of a
complex nature upon which shareholders, as a group, would not be in a position
to make an informed judgment." Id.
THE PROPOSAL RELATES TO GENERAL EMPLOYEE BENEFITS MATTERS.
The Proposal asks that Xcel Energy adopt five "principles related to health care
reform," which address the cost, availability and goals of health care coverage.
In the supporting statement, the Proponents state that the adoption of these
principles is necessary so that Xcel Energy's "commitment to its employees'
health care coverage can be maintained." The Proponents state further that they
believe rising healthcare costs "results in higher costs for Wendys
International [sic] and other U.S. companies providing health insurance to their
employees" and that the increase in costs "leads companies to shift costs to
employees" which can reduce employee productivity and morale.
The subject matter of the principles in the Proposal involves a matter of Xcel
Energy's ordinary business. One of the most fundamental functions of management
is to attract and retain a talented workforce. To this end, in the ordinary
course of business Xcel Energy management works to develop an integrated
compensation and benefit structure (which includes health care benefits) that
responds to the needs of a changing workforce. Xcel Energy provides a broad
range of health benefits designed to address employees' health issues in a
cohesive fashion, and issues relating to general employee and retiree benefits,
including eligibility requirements and the amount of benefits, are some of the
most important issues that Xcel Energy management deals with on a day-to-day
basis.
The evaluation of the benefits to provide, however, is an inherently complex
exercise. Xcel Energy management in the ordinary course of business consults
with appropriate professionals and monitors the costs of various benefit
programs (including health care benefits) when designing compensation programs.
Xcel Energy participates in organizations that consider and support health and
productivity solutions for employers and employees, and the company evaluates
and takes appropriate action on pending legislation that impacts benefits
(including health care benefits) it provides its employees. Xcel Energy
management considers many factors, including the company's hiring objectives,
the competitive landscape and the costs associated with different benefit
programs, when making decisions about the design of benefit programs. The
complex business considerations that go into the design of employee benefit
programs are not appropriate for direct oversight by shareholders who do not
have the experience and information, as a group, for making an informed
judgment.
The Commission has long recognized that proposals concerning pension, health and
other employee benefits relate to a company's ordinary business operations. In
Knight-Ridder, Inc. (January 23, 1991), the Staff agreed with the company's
position that a shareholder proposal requesting the company to prepare a report
concerning the costs associated with providing health care could be excluded
from the company's proxy materials. Noting that the proposal related to "the
selection and evaluation of employee health and welfare plans," the Staff
concurred with the company's position that the proposal was excludable because
"decisions relating to the selection and evaluation of employee health and
welfare plans are matters involving the Company's ordinary business purpose."
Id. In Sprint Corporation (January 28, 2004), the Staff concurred with Sprint's
position that it could exclude a proposal seeking a report on the recruitment
and retention of employees in light of changes that were made to retiree health
care and life insurance coverage. The Staff concurred that the subject matter of
the proposalgeneral employee benefitsrelated to the company's ordinary
business operations and the proposal was therefore excludable under Rule
14a-8(i)(7). The Staff also concluded in Sprint that a proposal involving a
company's ordinary business operations may be excluded in its entirety even in
situations where only a portion of the proposal relates to ordinary business
operations. Id. More recently, in 3M Company (February 20, 2007), the Staff
agreed that a proposal requesting the board to prepare a report examining the
implications of rising health care expenses and how the company planned to deal
with these issues could be excluded under Rule 14a-8(i)(7) as relating to 3M's
ordinary business operations.
Like the subject matter of the Knight Ridder, Sprint Corporation and 3M
proposals, the Proposal here relates to Xcel Energy's employee benefit matters
and should be excluded because it involves ordinary business operations. The
health care coverage principles contained in the Proposal relate to subject
matteremployee benefitsand judgments that management makes about benefits that
are fundamentally managerial in nature and that are not appropriate for direct
oversight by the shareholders.
THE PROPOSAL RELATES TO ORDINARY BUSINESS OPERATIONS DESPITE THE PROPONENTS'
CHARACTERIZATION AS A PUBLIC POLICY ISSUE.
The Proponents may argue that the Proposal is not excludable from Xcel Energy's
proxy materials because it concerns a "significant public policy issue." That is
not the case. The Staff has previously determined that "the mere assertion that
a matter involving employee health care benefits touches upon larger societal
issues does not alter the basic nature of how the proposal impacts the
registrant, i.e., its employee benefit plans which are matters dealing with
ordinary business operations." International Business Machines Corporation
(February 10, 1987).
Through a number of no-action letters, the Staff has consistently disagreed with
proponents who attempted to characterize proposals relating to health care
reform as something other than ordinary business. For example, in Minnesota
Mining and Manufacturing Company (February 10, 1992), a proposal requested the
company to evaluate the impact of various health care reform proposals on the
company. The Staff concurred with the company's position that to the extent that
issues of national health care reform "relate in any manner to 3M and its
operations, the relationship focuses on the employee benefits extended under
plans adopted by 3M as an employer and health care provider." Id. The Staff
permitted the exclusion of the proposal under ordinary business grounds as the
proposal was directed at involving the company in the political or legislative
process relating to an aspect of the company's operations. Id. Similarly, in
International Business Machines Corporation (January 21, 2002) the Staff
concurred with IBM's position that a proposal that sought to require the company
to evaluate the cost of providing employee health benefits and "[j]oin with
other corporations in support of the establishment of a properly financed
national health insurance system" did not implicate a significant policy issue
and was excludable under Rule 14a-8(i)(7). In its no action response, the Staff
wrote, "We note that the proposal "appear[s] directed at involving IBM in the
political or legislative process involving an aspect of IBM's [ordinary
business] operations." Id.
The same results should apply here. To the extent that the principles outlined
in the Proposal relate to Xcel Energy and its operations, it is to the employee
benefits offered to Xcel Energy's employees under plans adopted by Xcel Energy
as an employer. The Staff has recently concurred that a proposal did not raise a
significant public policy issue and could be excluded as relating to a company's
ordinary business despite the proponent's reference in its supporting statement
to "various legislative activities" and "news media reports, trade association
studies and business leaders [commenting that] soaring health care costs are
making it difficult for American companies to compete." See 3M Company (February
20, 2007) (proposal was excludable under Rule 14a-8(i)(7) since it involved a
matter of ordinary business operations (i.e. employee benefits)). The Proponents
here make similar statements about news media reports, business organization
studies and statements by business leaders about the rising cost of health care
in an attempt to characterize the Proposal as involving a significant public
policy issue. As in 3M Company, those references do not change the thrust of the
Proposal - the health care benefits Xcel Energy provides its employees - a
matter of Xcel Energy's ordinary business operations. That the Proponents are
attempting to involve Xcel Energy in the political or legislative process
involving an aspect of its ordinary business operations is evidenced by their
accompanying correspondence to the Proposal in which they state that they will
withdraw the Proposal if they are satisfied that Xcel Energy "is or will be
engaging in the national debate on access to health care coverage."
III. CONCLUSION
For the reasons given above, we respectfully request that the Staff not
recommend any enforcement action from the Commission if Xcel Energy omits the
Proposal from its 2008 proxy materials. If the Staff disagrees with Xcel
Energy's conclusion to omit the Proposal, we request the opportunity to confer
with the Staff prior to the final determination of the Staff's position.
Notification and a copy of this letter are simultaneously being forwarded to the
Proponents.
Sincerely,
/s/
Michael C. Connelly
Vice President and General Counsel
cc: Joanne Tromiczak-Neid, Justice Coordinator, Sisters of St. Joseph of
Carondelet
Zoa Braunwarth, OSF, Franciscan Sister of Rochester, Minnesota
1884 Randolph Avenue
St. Paul, Minnesota 55105-1700
Fax: 651-690-7039
Sister Jean Keniry, OSF, Academy of our Lady of Lourdes
Franciscan Sisters of Rochester Minnesota
1001 14\th/ Street N.W.
Assisi Heights
Rochester, Minnesota 55901-2525
Fax: 507-282-7762
[APPENDIX 1]
Richard C. Kelly, CEO
Xcel Energy, Inc.
414 Nicollet Mall, 5\th/ Floor
Minneapolis, MN. 55401-1993
December 19, 2007
Dear Mr. Kelly,
Since we began late in the process regarding dialogue with Xcel through our
conversations with Barbara Hartwick, we are filing the enclosed shareholder
resolution. We do this in order to meet your filing due date of December 20,
2007.
Therefore, I am writing on behalf of the Sisters of St. Joseph of Carondelet. We
have owned at least $2,000 of Xcel Energy, Inc. common stock for at least one
year. We intend to hold the stock at least through the date of the next Xcel
Energy, Inc. Annual Meeting in 2008. Verification of ownership will follow from
UBS Financial Services: Advisory& Brokerage Services.
I am hereby authorized to notify you of our intention to submit this shareholder
proposal for inclusion in the proxy statement for consideration and action by
the shareholders at the 2007 annual meeting in accordance with Rule 14-a 8 of
the General Rules and Regulations of the Securities and Exchange Act of 1934. A
representative of the primary filers will attend the shareholders' meeting to
move the resolution.
It is my understanding that Sister Jean Keniry, OSF representing the Academy of
Our Lady of Lourdes (Franciscan Sisters of Rochester, MN) has sent verification
of their Xcel stock holdings (December 1, 2007). They, too, wish to file the
enclosed resolution.
In the event that we are satisfied through future communications that Xcel is or
will be engaging in the national debate on access to health care coverage OR has
or will be adopting principles for comprehensive health care reform, we can at
that time withdraw the resolution.
Sincerely,
/s/
Jo|pi|eanne Tromiczak-Neid
Justice Coordinator
/s/
Zoa Braunwarth, OSF
Franciscan Sisters of Rochester, MN.
[APPENDIX 2]
HEALTH CARE REFORM PRINCIPLES
RESOLVED: shareholders urge the Board of Directors to adopt principles for
comprehensive health care reform (such as those based upon principles reported
by the Institute of Medicine:
1. Health care coverage should be universal.
2. Health care coverage should be continuous.
3. Health care coverage should be affordable to individuals and families.
4. The health insurance strategy should be affordable and sustainable for
society.
5. Health insurance should enhance health and well being by promoting access to
high-quality care that is effective, efficient, safe, timely, patient-centered,
and equitable).
Consistently polls show that access to affordable, comprehensive health care
insurance is the most significant social policy issue in America (NBC News/Wall
Street Journal, the Kaiser Foundation and The New York Times/CBS News). Health
care reform also has become a core issue in the 2008 presidential campaign.
Many national organizations have made health care reform a priority. In 2007,
representing "a stark departure from past practice," the American Cancer Society
redirected its entire $15 million advertising budget "to the consequences of
inadequate health coverage" in the United States (New York Times, 8/31/07).
John Castellani, president of the Business Roundtable (representing 160 of the
country's largest companies), states that 52% of the Business Roundtable's
members say health costs represent their biggest economic challenge. "The cost
of health care has put a tremendous weight on the U.S. economy," according to
Castellani, "The current situation is not sustainable in a global, competitive
workplace." (BusinessWeek, July 3, 2007). The National Coalition on Health Care
(whose members include 75 of the United States' largest publicly-held companies,
institutional investors and labor unions), also has created principles for
health insurance reform. According to the National Coalition on Health Care,
implementing its principles would save employers presently providing health
insurance coverage an estimated $595-$848 billion in the first 10 years of
implementation.
Annual surcharges as high as $1160 for the uninsured are added to the total cost
of each employee's health insurance, according to Kenneth Thorpe, a leading
health economist at Emory University. Consequently, we shareholders believe that
the 47 million Americans without health insurance results in higher costs for
Wendys International and other U.S. companies providing health insurance to
their employees.
In our view, increasing health care costs have focused growing public awareness
and media coverage on the plight of active and retired workers struggling to pay
for medical care. Increasing health care costs leads companies to shift costs to
employees. This can reduce employee productivity, health and morale. We also
believe rising healthcare costs borne by the company have an adverse affect on
shareholder value.
Supporting Statement
The Institute of Medicine, established by Congress as part of the National
Academy of Sciences, issued its principles for reforming health insurance
coverage in Insuring America's Health: Principles and Recommendations (2004). We
believe principles for health care reform, such as the IOM's, are essential if
public confidence in our company's commitment to its employees' health care
coverage is to be maintained. We ask shareholders to support this resolution.
[APPENDIX 3]
February 11. 2008
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Xcel Energy's Request to Exclude Proposal Submitted by Sisters of St. Joseph
of Carondelet / St. Paul Province and Franciscan Sisters of Rochester
Dear Sir/Madam:
This letter is submitted in response to a letter to the Commission from Xcel
Energy ("Xcel" or the "Company"), dated January 10, 2008, claiming that the
Company may exclude the shareholder proposal ("Proposal") of Sisters of St.
Joseph of Carondelet / St. Paul Province and Franciscan Sisters of Rochester
(the "Proponents") from its 2008 proxy materials.
I. Introduction
Proponent's shareholder proposal to Xcel urges:
the Board of Directors to adopt principles for comprehensive health care reform
(such as those based upon principles reported by the Institute of Medicine:
1. Health care coverage should be universal.
2. Health care coverage should be continuous.
3. Health care coverage should be affordable to individuals and families.
4. The health insurance strategy should be affordable and sustainable for
society.
5. Health insurance should enhance health and well being by promoting access to
high quality care that is effective, efficient, safe, timely, patient-centered,
and equitable).
Xcel argues that the Proposal is excludable "because it involves the Company's
ordinary business operations." [Rule 14a-8(i)(7)]
The Proposal, in fact, is a clearly stated request to the Xcel Board of
Directors to adopt principles on the significant social policy issue of health
care reform. Citing past staff decisions involving IBM, however, Xcel seeks to
exclude this Proposal. Yet IBM, Bristol-Meyers Squibb, General Electric and
Medco, which each received the same shareholder proposal for 2008 that Xcel now
opposes, recently adopted principles for health care reform.1
As outlined in detail below, the decisions of the Staff do not support Xcel's
argument. A careful reading of the Proposal demonstrates that its terms are
clear and that it urges the Board of Directors to adopt Xcel's own principles on
a significant social policy issue, just as other proposals have done on another
significant public issue: labor and human rights. In sum, the Proposal carefully
focuses on a significant social policy issue and it belongs on the Xcel proxy
for 2008.
II. The Proposal is not excludable under Rule 14a-8(i)(7), as an ordinary
business matter, because it focuses on a significant social policy issue that
transcends the day-to-day business matters of the Company.
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 Xcel is just
such a proposal. It urges the Board of Directors to adopt principles for health
care reform based upon principles reported by the nation's leading authority on
health care issues, the Institute of Medicine. The Proposal does not ask the
Company to provide any information or reports on its internal operations.
Instead, it asks the Company to focus externally on health care reform as a
significant social policy issue affecting the Company and the public's health.
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,
the Associated Press,2 the Commonwealth Fund3 and The New York Times all
document its significance. The November 2007 Wall Street Journal/NBC News poll,
for example, reported 52% of Americans "say the economy and health care are most
important to them in choosing a president, compared with 34% 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." 4
Many businesses now cite health care costs as their biggest economic challenge.,
John Castellani, president of the Business Roundtable, has called health care
reform a top priority for business and Congressional action. "5 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.6 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 100.7 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." 8 In addition, Wal-Mart has joined with SEIU,
calling on Congress to enact health care reform.9
Underscoring the significance of health care reform as a major social policy
issue in 2007, 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.10
B. The Proposal focuses on principles for health care reform as a significant
social policy issue, not as a matter of internal risk assessment.
The Proposal urges the Company to adopt a statement of principles for health
care reform. It does not, however, require any assessment of internal matters of
risk affecting the Company. The Proposal, in fact, is more akin to proposals
that have called upon companies to adopt a code of conduct dealing with human
rights. Such codes are statements of principles that guide a company in dealing
with the significant social policy issue of human rights. The Staff has decided
that such proposals are not excludable as matters relating to ordinary business
operations under Rule 14a-8(i)(7). 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), companies cited "ordinary business
operations," to exclude proposals calling for the adoption of a company code of
conduct. The Staff denied each company's request.
Xcel narrowly characterizes the Proposal here as one dealing with its employee
benefits. But the plain language of the Proposal and the Supporting Statement
describe "health care reform" in the context of a significant social policy
affecting the Company and the nation. The Proposal describes "universal"
coverage of all Americans.
Just as the human rights proposals in McDonald's Corporation and Costco
Wholesale Corporation involved companies in the U.S. and the global economy and
the significant social policy issue of human rights, the Proposal here focuses
on the Company in the U.S. and the global economy and health care as a
significant social policy issue.
B. While proposals calling for reports on health care have generally been
excluded as matters involving an analysis of internal risk, Proponents' Proposal
calls for an entirely different measure: the adoption of principles for health
care reformon a matter of significant social policy.
The Company cites International Business Machines Corporation, 2002 SEC No-Act.
LEXIS 85 (January 21, 2002), in support of its request to exclude the Proposal.
IBM, in fact, received a nearly identical proposal for inclusion in its 2008
proxy. Unlike Xcel, however, IBM chose not to file a No-Action Letter with the
Commission. Instead, IBM began a dialogue with proponents. IBM and the
proponents reached an agreement on the text of a letter that IBM sent to the
proponents (Attachment "A"), describing its principles for health care reform.11
Bristol-Meyers Squibb ("Bristol-Meyers") received a nearly identical proposal to
Proponent's, calling for the adoption of principles for health care reform.
After a dialogue with proponents of the resolution, Bristol-Meyers withdrew its
request to the Commission for a No-Action Letter to exclude the Proposal, citing
Rule 14a-8(i)(7).12 Bristol-Meyers has now posted its statement of principles
for health care reform on its website.13 General Electric, which also received
this same proposal, adopted and endorsed the Institute of Medicine's
Principles.14 On November 5, 2007 virtually the same resolution was filed with
Medco. On January 11, Medco called the main proponent of the resolution sharing
the results of a Board meeting of Medco earlier in the day:
Medco Health Solution, Inc. ("Medco") has received your stockholder proposals
for the 2008 Annual Meeting of Stockholders relating to your support for the
adoption of universal healthcare principles.
It is with pleasure that I can advise you that on January 11, 2008, Medco's
Board of Directors adopted the following resolutions:
WHEREAS, the Board of Directors of the Corporation has determined that it is in
the best interests of the Corporation to adopt health care principles as
outlined by the Institute of Medicine ...
RESOLVED, that the Board of Directors determines that it is in the best
interests of the Corporation to adopt the following principles: 1. Health care
coverage should be universal. 2. Health care coverage should be continuous. 3.
Health care coverage should be affordable to individuals and families. 4. The
health insurance strategy should be affordable and sustainable for society. 5.
Health insurance should enhance health and well-being by promoting access to
high-quality care that is effective, efficient, safe, timely, patient-centered
and equitable.15
Knight-Ridder, 1991 SEC No-Act. LEXIS 65 (January 23, 1001), cited by Xcel,
involved a proposal calling for "a report concerning determinations made by the
Company with respect to health-care benefits." The Proposal before Xcel makes no
such request. Instead, it focuses upon the Company, looking outward to the
entire nation and the global economy in which Xcel does business.
Sprint Corporation, 2004 SEC No-Act. LEXIS 199 (January 28, 2004), also cited by
Xcel, dealt with another request for a report that focused, unlike the Proposal
before Xcel, on the Company's recruitment and retention of Sprint employees due
to changes to retiree health care and life insurance coverage by Sprint."
Proponents seek no information on Xcel's employees benefits operations. Instead,
they ask the Company to focus externally upon the significant social policy
issue of health care reform.
3M Company, 2007 SEC No-Act. LEXIS (February 20, 2007) involved a proposal that
called for a report on health care costs at the company. Unlike the Proponent's
proposal, which calls for the adoption of principles on a significant social
policy issue, the health care reports called for by the proposals in 3M Company
would have required the company to conduct internal risk assessments.
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.
United Technologies Corporation, 2008 SEC No-Act. LEXIS ___ (January 31, 2008,
like the Proposal before CVS, also involved a proposal urging the Board of
Directors to adopt principles on the significant social policy issue of health
care reform. The Commission rejected the company's argument that the proposal
could be excluded on ordinary business grounds.
IV. Conclusion
Xcel has failed to meet its burden of demonstrating that it is entitled to
exclude the Proposal under Rule 14a-8(g).
The Proposal is inherently a significant social policy issue that transcends
day-to-day business matters at Xcel. It is, therefore, not excludable under
Rules 14a-(i)(7) and 14a-8(j).
Consequently, since Xcel 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 Xcel's shareholders at the 2008 Annual Meeting.
If you have any questions or need additional information, please do not hesitate
to call my designee, Michael Crosby at 414-406-1265.
I have enclosed six copies of this letter for the Staff, and I am sending a copy
to Counsel for the Company.
Respectfully submitted,
/s/
Joanne Tromiczak-Neid
Justice Coordinator
Attachments
-----FOOTNOTES-----
1 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. Bristol-Meyers Squibb website posting:
http://www.bms.com/sr/key_issues/content/data/reform.html; \1/ 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.
2 Associated Press, December 28, 2007, "Issues rated as `extremely important' in
November [2007], and how that sentiment has changed [in December 2007]: Health
care: 48 percent then, 53 percent now." Associated Press-Yahoo News survey of
1,821 adults was conducted Dec. 14-20, 2007; overall margin of sampling error of
plus or minus 2.3 percentage points
3 Commonwealth Fund, "The Public's Views on Health Care Reform in the 2008
Presidential Election," January 15, 2008: 86% of Americans surveyed say health
care reform will be "somewhat important" (24%) or "very important" (62%).
4 The Wall Street Journal, December 4, 2007, p Al.
5 "Business Roundtable Unveils Principles for Health Care Reform," Press
Release, June 6, 2007,
http://www.businessroundtable.org//newsroom/document.aspx?qs=5886BF807822BOF19D5448322FB51711FCF50C8.
Accessed December 4, 2007.
6 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.
7 "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).
8 The Wall Street Journal, November 13, 2007, p. B4.
9 The New York Times, February 7, 2007.
10 The New York Times, August 31, 2007.
11 Letter from Randy MacDonald, Senior Vice President, Human Resources, IBM, to
Daniel F. Pedrotty, Director, Office of Investment, AFL-CIO, December 12, 2007.
12 Letter from Heather L. Maples, Special Counsel, Division of Corporation
Finance, US Securities and Exchange Commission, to Amy L. Goodman, Gibson, Dunn
and Crutcher LLP, January 10, 2008. Bristol-Meyers also cited Rule 14a-8(i)(3)
and Rule 14a-8(i)(10).
13 Bristol-Meyers Squibb website posting:
http://www.bms.com/sr/key_issues/content/data/reform.html (Accessed January 18,
2008).
14 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 Medco: Letter from Lori B. Barino, Vice President & Counsel, Corporate Law to
Mike Crosby, Province of St. Joseph of the Capuchin Order, January 14, 2008.
[STAFF REPLY LETTER]
February 15, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Xcel Energy Inc. Incoming letter dated January 10, 2008
The proposal urges the board of directors to adopt principles for health care
reform, such as those based upon principles specified in the proposal.
We are unable to concur in your view that Xcel Energy may exclude the proposal
under rule 14a-8(i)(7). Accordingly, we do not believe that Xcel Energy may omit
the proposal from its proxy materials in reliance on rule 14a-8(i)(7).
Sincerely,
/s/
Eduardo Aleman
Attorney-Adviser |
