General Motors Corp.Mar. 09, 1981 INQUIRY LETTER 1GENERAL MOTORS CORPORATION 767 FIFTH AVENUE NEW YORK, N.Y. 10022 February 02, 1981 Mr. William E. Morley Deputy Chief Counsel Securities and Exchange Commission 320 - 1st Street Room 429 Washington, D.C. 20549 Dear Mr. Morley: Mrs. Marian J. Barnett, whose address is 225 North Rose No. 401, Burbank, California 91505, is a holder of record of General Motors Corporation common stock. With her letter, dated December 17, 1980, Mrs. Barnett enclosed a resolution to be presented at the Corporations forthcoming Annual Meeting of Stockholders together with a supporting statement to be included in the Corporations proxy statement should management oppose this resolution. A copy of this letter, including the resolution and supporting statement, is attached as Exhibit A. Mrs. Barnetts letter and enclosure have been submitted to Mr. Otis M. Smith, General Counsel of General Motors Corporation, and he has given his opinion (copy enclosed as Exhibit B) that this proposal may be omitted from the Corporations proxy soliciting material. The proposal, as submitted by the proponent, reads as follows: "Be it resolved by the stockholders to recommend the following corporate policy be implemented: Prior to making any donation to any school, the corporation shall ascertain the number of avowed Communists, Marxists, Leninists, and Maoists on the faculty and academic administration of the prospective recipient school. This policy shall also apply to such donations by any subsidiary, foundation, or non-profit organization controlled by the corporation.'" The following was submitted as a statement in support of the resolution: "When our corporation gives away funds, they should not go to the detriment of the corporation or the impairment of the free enterprise system. Corporate gifts should be very carefully screened to avoid such gross mistakes. 10,000 Marxist faculty members are active on American campuses, as reported by Business Week magazine. The severity of the problem was emphasized in a lead editorial by that notable business magazine. It is known dogma of the Communist Party to defeat and overthrow the free enterprise system either by violent military action or by gradual economic and political subversion. Our corporation should not help in this process. Prior to making any subsidies to schools, the corporation has a duty to find out how dominated the faculty and administration are by avowed Communists, Marxists, Leninists, and Maoists. No academic freedom issue is involved, since the corporation has the freedom to donate or not, based upon the corporations best interests. Your proxy vote will help in the fight to preserve free enterprise in a free world." Management intends to omit Mrs. Barnetts proposal and supporting statement from the Corporations Proxy and Proxy Statement for the 1981 Annual Meeting of Stockholders on the following grounds: 1. the proposal has been rendered moot (Rule 14a-8(c)(10)). 2. the proposal deals with a matter that is not significantly related to the issuers business (Rule 14a-8(c)(5)); 3. the proposal deals with a matter that is beyond the Corporations power to effectuate (Rule 14a-8(c)(6)); and 4. substantially the same proposal has previously been submitted to security holders in the managements proxy statement, within the last three calendar years, and received less than 3% of the total number of votes cast in regard thereto (Rule 14a-8(c)(12)). General Motors already gives due consideration to the nature and character of educational institutions before making donations. As is made clear by the supporting statement, the purpose of the proposal is to ensure against corporate contributions being subverted to defeat and overthrow the free enterprise system. In fact, General Motors Committee for Educational Grants and Scholarships has adopted a resolution which states, in relevant part, "General Motors will provide support to colleges and universities for programs of academic excellence in concert with the principles of the free enterprise system in the United States and the democratic precepts which form the basis for our society and which do not through their faculties or policies knowingly sanction totalitarian ideologies." Thus, the proposal is moot in light of General Motors existing policy. At the same time, it should be recognized that the proposal deals with matters not significantly related to General Motors business -- the political leanings of faculties and administrations of educational institutions, and the possible effects of such leanings upon the free enterprise system. These are general political and economic causes too remotely related to the Corporations business to be included as a stockholder proposal in the General Motors proxy soliciting material. The proposal provides no guidance as to how the Corporation is to determine the number of avowed Communists, Marxists, Leninists and Maoists on the faculty or academic administration of a given school. It is doubtful that the individual employes would be willing to respond, and it may be within the schools prerogative to withhold such information. Moreover, it is likely that any attempt to gather such information would be met with vigorous opposition from the academic community, even beyond the groups which are the focus of the proposal. Although the identity of the persons employed on the faculty or in the administration of a particular school might be ascertained, for General Motors then to determine which of those people are Communists, Marxists, Leninists or Maoists -- much less "avowed" subscribers to such doctrines -- would not be feasible. It would also seem reasonable to predict that any attempt to gather such information indirectly would likely be inconclusive and unavailing. Accordingly, as a practical matter, it is beyond the Corporations power to ascertain the information necessary to effectuate the proposal. Finally, substantially the same proposal was previously submitted to General Motors stockholders last year. As set forth in the 1980 Proxy Statement, Mrs. Barnetts prior proposal and supporting statement read as follows: "RESOLVED, that the shareholders recommend that the Corporation make no contributions to schools which to the knowledge of the President, any Vice-President, or the Secretary, employ any avowed Communist, Marxist, Leninist or Maoist, for as long as such employment continues." The instant proposal recommends that the number of Communists, Marxists, Leninists and Maoists on the faculty or in academic administration of a school be ascertained prior to making any donation to that school. The supporting statement makes it clear that the purpose of that determination would be to prompt a decision to not contribute to particular schools. Thus, the instant proposal is substantially the same as the proposal submitted by Mrs. Barnett and included in the 1980 Proxy Statement. Therefore, the management intends to omit Mrs. Barnetts proposal and her supporting statement from the Corporations proxy soliciting material for the 1981 Annual Meeting. Concurrently with the mailing of this letter, Mrs. Barnett is being notified of this intention and copies of this letter and the opinion of the General Counsel are being forwarded to her. It is contemplated that preliminary copies of the form of proxy will be filed with the Securities and Exchange Commission pursuant to Proxy Rule 14a-6(a) on or about March 13, 1981 and preliminary copies of all proxy soliciting material including in the proxy statement will be filed with the Commission on or about March 24, 1981. Very truly yours, Carol M. Conklin cc: Mr. John C. Roycroft Branch Chief Securities and Exchange Commission Mrs. Marian J. Barnett 225 North Rose No. 401 Burbank, California 91505 INQUIRY LETTER 2GENERAL MOTORS CORPORATION GENERAL MOTORS BUILDING DETROIT, MICHIGAN 48202 EXHIBIT B General Motors Corporation 767 Fifth Avenue New York, New York 10153 Gentlemen: You have requested my opinion on the question of whether the management of General Motors Corporation may properly omit from the Corporations Proxy Statement and form of Proxy for its 1981 Annual Meeting of Stockholders the proposal submitted by Mrs. Marian J. Barnett recommending that, prior to making a donation to any school, the Corporation ascertain the number of avowed Communists, Marxists, Leninists and Maoists employed on its faculty or in its academic administration. I have received and reviewed the Secretarys letter to the Securities and Exchange Commission, including the attachments thereto. To the extent that the reasons for omission of the proposal, as set forth in the Secretarys letter, are based upon matters of law, it is my opinion that such reasons are fully supported by applicable legal authorities. Very truly yours, Otis M. Smith INQUIRY LETTER 3Carl Olson 4623 San Feliciano Drive Woodland Hills, CA. 91364 February 19, 1981 Stockholder Proposals Office Division on Corporate Finance Securities and Exchange Commission Washington, D.C. 20549 RE: General Motors Corporation Dear Sir: This letter is in regard to two letters to you dated 2 February 1981 from Carol M. Conklin, Secretary of General Motors Corporation, in which she expresses the intention of management to omit two proposals submitted by Mrs. Marian Barnett for inclusion in the proxy materials for the upcoming annual meeting. Mrs. Barnett has asked me to respond to the points brought up by Ms. Conklins letters. Upon reviewing these points and their rebuttals, I am hopeful that you will not allow the intended omissions. Resolution on Donations to Schools
The committees statement does not cover the action requested in the resolution. As a matter of fact, in discussions with representatives of GM, I have not been told (even after direct inquiry) that GM takes any positive steps to ascertain the "totalitarian ideologies" of any faculty members of any schools it contemplates giving money to. The only thing I was told that GM does is to have its representative read this statement to the representative of the receiving school. 2. Ms. Conklin asserts that the proposal does not significantly relate to the business of the company. This is not so. The donation of funds to educational institutions is something that GM is very heavily involved with, and thus the policies regarding those donations are significantly related to GM. The resolution does not go further than what GM is already committed to. 3. Ms. Conklin asserts that the proposal would be impossible to effectuate. It is perfectly within the power of GM to avoid making donations (for which, by definition, there is no contractual obligation). There should be no question about this. As to how the schools will go about ascertaining the numbers of Communist etc. faculty and staff is up to the school involved. It would not be impossible to survey these individuals as to their "avowed" status--since that is their self-proclaimed description of themselves. If the faculty or staff want to stop their schools from receiving donations from GM, then that is their prerogative. 4. Ms. Conklin asserts that the current proposal is substantially identical to the resolution presented by Mrs. Barnett last year--which would have prohibited donations to any school with any Communists etc. on their payrolls. Obviously the scope and effect of the current resolution differ substantially from the previous one. For one thing, the current resolution includes only faculty and academic staff; and for another thing, there is no across-the-board prohibition included. Resolution to Discourage U.S. Savings Bonds
2. Ms. Conklin asserts that the proposal does not significantly relate to the business of GM. This is nonsense. By her own admission, Ms. Conklin states that GM participates actively in the U.S. Savings Bonds payroll deduction program. If the corporation did not participate and had no plans to participate, then the argument of "not significantly related" might have some plausibility. There used to be an informal "1% rule" regarding how significantly related a resolution was to the business of the corporation. First of all, the resolution does not relate to the customer-oriented part of the business, but rather to the employee relations part of corporate life; and thus the "1% rule" would not be able to be applied. Secondly, the "1% rule" was abandoned a couple years ago in favor of relying on other intangible factors. In the past couple years, resolutions on trade with South Africa, environmental reports, total taxes paid, infant formulas, labor relations, and so on have been found perfectly satisfactory for inclusion in proxy materials--so long as they related to the corporations actual or intended activities. 3. Ms. Conklin asserts that the resolution deals with the ordinary business of the corporation. This is not so. (Is this an admission that the resolution does indeed substantially relate to the business of the company?) This resolution does not relate to the ordinary business of the company. GM presents many lines of products and services to many types of customers--thus making up the ordinary business of the company. This resolution, however, does not impinge upon any part of the companys behavior relating to its customers, products, or services. The resolution has a two-part impact--on the companys employee relations and its governmental relations. The promotion of U.S. Savings Bonds lends itself to special consideration as being not "ordinary business", because it occupies a unique and protected niche in the companys existence. No other investment company is permitted similar payroll deduction check-offs and annual solicitations on an equal basis with U.S. Savings Bonds. Even the GM "Company-sponsored savings plans" mentioned by Ms. Conklin do not offer outside investment companies the same privileges as afforded to the U.S. Savings Bonds plan. 4. Ms. Conklin asserts that the proposal and supporting statement are false and misleading, since they concentrate solely upon the interest rate yield of U.S. Savings Bonds as opposed to other financial investments. There is nothing false or misleading about this measure. If Ms. Conklin wants to argue the merits of other aspects of U.S. Savings Bonds, then she should put them into the board of directors statement in opposition. It is hard to pin down exactly what other asserted false and misleading statements are being objected to by Ms. Conklin, since she does not explicitly state the sentences or clauses under question. By the above arguments, it would be clear that the two resolutions do not suffer any substantial defect which would warrant their omission. I would urge you not to allow the intended omissions. Sincerely, Carl Olson cc: Mrs. Marian Barnett STAFF REPLY LETTERMarch 9, 1981 Carol M. Conklin, Secretary General Motors Corporation 767 Fifth Avenue New York, New York 10022 Re: General Motors Corporation Dear Ms. Conklin: This is in regard to your letter dated February 2, 1981, concerning a request made to General Motors Corporation ("Company") by Mrs. Marion J. Barnett ("Proponent") to include one shareholder proposal in the Companys proxy soliciting material for its 1981 annual meeting of security holders. Pursuant to Rule 14a-8(d) under the Securities Exchange Act of 1934, your letter indicated the managements intention to exclude this proposal from the Companys proxy material. Your submission included an opinion of counsel on certain legal questions encompassed by the managements position on the proposal. Subsequently, we received a letter dated February 19, 1981 from Mr. Carl Olson, a representative of the Proponent, suggesting that the managements determination to omit the proposal was erroneous. The proposal, the text of which is set forth on the first and second pages of your letter, relates to a request that prior to making any donation to a school, the Company ascertain the number of avowed Communists, Marxists, Leninists and Maoists on the faculty and administration of the prospective recipient school. In your letter and the attached opinion of counsel the view has been expressed that the proposal is excludable from the Companys proxy material under paragraphs (c)(5), (c)(6), (c)(10) and (c)(12) of Rule 14a-8 and certain reasons are cited in support of that opinion. The Proponents representative, however, for the reasons stated in his letter, has indicated that the Proponent does not agree with your position. This Division does not share your view and that of your counsel that the proposal may be omitted in reliance upon Rule 14a-8(c)(5) on the ground that the proposal deals with a matter that is not significantly related to the Companys business. It is our view that the proposal relates to a matter of corporate policy, the selection of potential donees for the Companys charitable contributions. We are unable to conclude that you have met your burden of establishing that the proposal is not significantly related to the Companys business. Under the circumstances, we do not believe that the Company may rely on Rule 14a-8(c)(5) for omission of the proposal. There appears to be some basis for your view that the proposal may be excluded from the Companys proxy material under Rule 14a-8(c)(6). That provision allows the omission of a proposal if it "deals with a matter which is beyond the issuers power to effectuate." In this regard, you state that as a practical matter, the Company could not comply with the action requested by the proposal, since the proposal does not provide any guidance as to how to determine which persons are "avowed Communists, Marxists, Leninists and Maoists." However, we believe that the Proponent should have the opportunity to cure this defect. Accordingly, assuming that the Proponent promptly revises the proposal to set forth how the Company is to determine if a person is an avowed Communists, Marxists, Leninists or Maoist, this Division does not believe that Rule 14a-8(c)(6) provides a basis for omitting the proposal. Further, we do not concur in your opinion that the proposal may be excluded under Rule 14a-8(c)(10), which permits the omission of a proposal from the Companys proxy statement if the proposal has been rendered moot. In our view, the action already taken by the Company does not exactly encompass the action requested by the proposal. Under the circumstances, we do not believe that the Company may rely on Rule 14a-8(c)(10) as a basis for omitting the proposal. This Division is unable to concur in your view that the proposal may be omitted pursuant to Rule 14a-8(c)(12). Although the proposals may reflect similar concerns of the Proponent, we believe that the scope and effect of the present proposal is different from that of the 1980 proposal. Accordingly, we do not believe that management may rely on Rule 14a-8(c)(12) as a basis for omitting the proposal. In connection with the foregoing, your attention is directed to the enclosure, which sets forth a brief discussion of the Divisions informal procedures regarding shareholder proposals. Sincerely, Michael R. Kargula Attorney Adviser Enclosure cc: Mrs. Marion J. Barnett 225 North Rose #401 Burbank, CA 91505 Mr. Carl Olson 4623 San Feliciano Drive, Woodland Hills, CA 91364 |
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