jpmorgan chase & co.; rule 14a-8 no-action letter€¦ · jpmorgan chase & co. 270 park...

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549-3010

DIVISION OFCORPORATION FINANCE

March 6, 2009

Anthony 1. HoranCorporate Secretar

Offce of the SecretarJPMorgan Chase & Co.270 Park AvenueNew York, NY 10017-2070

Re: JPMorgan Chase & Co.

Incoming letter dated January 9,2009

Dear Mr. Horan:

Ths is in response to your letters dated Januar 9,2009 and Januar 27,2009concernng the shareholder proposal submitted to JPMorgan Chase by Kenneth Steiner.We also have received letters on the proponent's behalf dated Januar 28, 2009 andFebruar 5, 2009. Our response is attached to the enclosed photocopy of yourcorrespondence. By doing this, we avoid having to recite or sumarize the facts set forthin the correspondence. Copies of all of the correspondence also wil be provided to theproponent.

In connection with this matter, your attention is directed to the enclosure, whichsets fort a brief discussion ofthe Division's informal procedures regarding shareholderproposals.

Sincerely,

Heather L. MaplesSenior Special Counsel

Enclosures

cc: John Chevedden

***FISMA & OMB Memorandum M-07-16***

March 6, 2009

Response of the Office of Chief CounselDivision of Corporation Finance

Re: JPMorgan Chase & Co.

Incoming letter dated Januar 9,2009

The proposal recommends that the board take the steps necessar to adoptcumulative voting.

Weare unable to concur in your view that JPMorgan Chase may exclude theproposal under rule 14a-8(i)(3). Accordingly, we do not believe that JPMorgan Chasemay omit the proposal from its proxy materials in reliance on rule 14a-8(i)(3).

Sincerely, Michael J. ReedichSpecial Counsel

DIVISION OF CORPORATION FINANCE INFORM PROCEDURS REGARING SHAREHOLDER PROPOSALS

The Division of Corporation Finance believes that its responsibility with respect to matters arising under Rule 14a-8 (17 CFR 240. 14a-8), as with other matters under the praxy rules, is to aid those who must comply with the rUle by offering informal advice and suggestions and to determine, initially, whether or not it may be appropriate in a particular matter to recommend enforcement action to the Commission. In connection with a shareholder proposal under Rule 14a-8, the Division's staff considers the infonmition fuished to it by the Company in support of its intention to exclude the proposals from the Company's proxy materials, as well as any information fushed by the proponent or the proponent's representative.

Although Rule 14a-8(k) does not require any communcations from shareholders to the Commission's staff the staffwil always consider information concerning alleged violations of

the statutes administered by the Commission, including arguent as to whether or not activities proposed to be taken would be violative of the statute or rule involved. The receipt by the staff of such information, however, should not be constred as changing the staffs informal

procedures and proxy review into a formal or adversary procedure.

It is important to note that the staffs and Commission's no-action responses to Rule 14a-8G) submissions reflect only informal views. The determItations reached in these noaction letters do not and canot adjudicate the merits of a company's position with respect to the proposal. Only a cour such as a U.S. District Cour can decide whether a company is obligated

to include shareholder proposals in its proxy materials~ Accordinglya discretionar determination not to recommend or take Commission enforcement action, does not preclude a proponent, or any shareholder of a company, from pursuing any rights he or she may have against the company in cour, should the management omit the proposal from the company's proxy materiaL.

JOHN CHEVEDDEN

February 5,2009

Office of Chief CounelDivision of Corporation FinanceSecurities and Exchange Commission100 F Street, NEWashington, DC 20549

# 2 JPMorgan Chase & Co. (JPM)Rule 14a-8 Proposal by Kenneth SteinerCumulative Voting

Ladies and Gentlemen:

This responds to the company Januar 9, 2009 no action request and Januar 27, 2009supplement regarding this rue 14a-8 cumulative voting proposal by Kenneth Steiner.

The attached precedents from the first week in January 2009 appear to have at least someapplication to ths no action request:

Bank of America Corporation (Janua 6, 2008)Motorola, Inc. (January 7, 2008)

Even the company Januar 27, 20091etter, with the benefit of these precedents, does not provideone precedent where a cumulative voting proposal was excluded because it did not discuss theblending of cumulative voting with majority voting.

This proposal has the following resolved statement (emphasis added):

Cumulative VotingRESOLVED: Cumulative Voting. Shareholders recommend that our Board take thesteps necessary to adopt cumulative voting. Cumulative voting means that eachshareholder may cast as many votes as equal to number of shares held, multiplied bythe number of directors to be elected. A shareholder may cast all such cumulated votesfor a single candidate or split votes between multiple candidates. Under cumulativevoting shareholders can withhold votes from certain poor-performing nominees in orderto cast multiple votes for others.

Statement of Kenneth SteinerCumulative voting won 54%-support at Aetna and greater than 51%-support atAlaska Air in 2005 and in 2008. It also received greater than 53%-support atGeneral Motors (GM) in 2006 and in 2008. The Council of Institutional Investorsww.cii.org recommended adoption of this proposal topic. CarPERS also recommend ayes-vote for proposals on this topic.

The above supporting statement from this proposal:

***FISMA & OMB Memorandum M-07-16*** ***FISMA & OMB Memorandum M-07-16***

"Cumulative voting won 54%-support at Aetna and greater than 51 %-support at Alaska Air in 2005 and 2008. It also received greater than 53%-support at General Motors (GM) in 2006 and 2008" ilustrates the strong support for cumulative voting in 2008 at Alaska Air (?51%) and General Motors (?53%) and both companes had majority voting for directors. Plus both General Motors and Alaska Air are incorporated in Delaware, as is JPMorgan.

Shareholders who voted more than 51% in favor of cumulative voting knew that Delaware Corporation Alaska Air had majority voting because' this text was in the management opposition statement (emphasis added):

Moreover, in March 2006, the Board adopted a majority voting policy under which

director nominees must receive a majority of the votes cast in uncontested elections. In any non-contested election of directors, any director nominee who receives a greater number of votes "withheld" from his or her election than votes "fot' such election shall immediately tender his or her resignation. The Board is then required to act on the recommendation of the Governance and Nominating Committee on whether to accept or reject the resignation, or whether other action should be taken. The Board believes that the Company's majority voting standard gives stockholders a meaningful say in the election of directors, making cumulative voting unnecessary.

Shareholders who voted more than 53% in favor of cumulative voting knew that Delaware Corporation General Motors had majority voting because ths text was in the management opposition statement (emphasis added):

GM's Board of Directors believes that cumulative voting would be inconsistent with its recent adoption of majority voting for directors and would not promote

better performance by directors. In 2006, GM's Board amended the Corporation's Bylaws to adopt majority voting in the election of directors. GM's Bylaws provide that, in order to be elected in any uncontested election, nominees for election as directors of the Corporation must receive a majority of the votes cast by the holders of shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. As described elsewhere in this proxy statement, in contested elections directors wil be elected by the vote of a plurality of the shares present in person or by proxy at the meeting and entitled to vote on the election of directors. When cumulative voting is combined with a majority-voting standard, diffcult technical and legal issues can arise. One risk created by combiningcumulatíve voting with. majority voting is that in an uncontested election where a minority of stockholders desire to express their discontent, a small group of stockholders could thwart the wil of themajority by cumulating their votes to force the rejection of one or more nominees supported by a majority of the stockholders.

Each of the above proposals receiving stong support did not have text addressing the blending of cumulative voting with majority voting.

The company letters failed to produce one precedent where a cumulative voting proposal was excluded based on a simlar (i)(3) arguent. If the company is asking for an unprecedented

exclusion the company should acknowledge ths and produce a higher stadard for purorted

support. The company fails to support its argument by claiming that Delaware companies must chose between cumulative voting and a majority voting standard for election of directors.

The company argues that shareholders who gave greater than 50% support to cumulative voting at Delaware companes should simply be ignored and henceforth be prevented from voting on this topic without precedent. The company does not address the number of Delaware companes that curently have cumulative voting and majority voting.

The company did not cite one exple of Institutional Sharholder Servces or RiskMetrics recommending that shareholders reject cumulative voting proposals due to a company's provision for majority votin.

For these reasons it is requested that the staf find that this resolution canot be omitted from the company proxy. It is also respectflly requested that the shareholder have the last opportity to submit material in support of including this proposal - since the company had the first opportunty .

Sincerely,

.-l~~. ¿:ohn Chevedden

cc: Kenneth Steiner

Irma Caracciolo .:aracciolo _irma(gjpmorgan.com.

JOHN CHEVEDDEN

Janua 28, 2009

Offce of Chief CounlDivision of Corporaton FinanceSecurties and Exchange Commssion100 F Street, NEWashington, DC 20549

# 1 JPMorgan Chase & Co. (JPM)Rule 14a-8 Proposal by Kenneth SteinerCumulatie Voting

Ladies and Gentlemen:

This responds to the company Januar 9, 2009 no action request regarding ths rule 14a-8cumulatve voting proposal by Keneth Steiner.

The attched precedents from the first week in Januar 2009 appear to have at leas someapplication to ths no action request:

Bank of America Corporation (Januar 6, 2008)Motorola, Inc. (Janua 7, 2008)

It is requested that the stfind that ths resolution canot be omitted from the company proxy.It is also respectfly requested that the shareholder have the las opportty to submit materialin support of including this proposa - since the company had the first opportty.

Sincerely,~:--cc:Kenneth Steiner

Irma Carcciolo 'Caracciolo _ ira~jpmorgan.com?

***FISMA & OMB Memorandum M-07-16*** ***FISMA & OMB Memorandum M-07-16***

I

Janua 6, 200

Response of the Ofce of Chief CounelDWùwn of ComoNtion Fòmnu

Re: Ban of Amenca CorpraonIncomig lettr dated Novembe 26, 2008

The proposal recmmends that the boar tae sts necssa to adopt cumulatve

votig.

We ar unle to concur in your view tht Ban of Amenca may exclude the

proposa uner rue 14a-8(i)(2). Accrdy, we do not believe tht Ban of Amenca

may omit the prposa from its proxy matenals in rellce on rue 14a-8(iX2).

We are. unle to concur in your view th Ban of AIencamay exclude theproposa under rue 14a-8(iX6). 'Accrdgly, we do not believe tht Ba of Amencamay omi the proposa from its proxy matena1 in relice on rue 14a-8(i)(6).

:y: n

Attorney-Advise

,~ I

0:"

Japuar 7, 2009

Response of the Ofce of Chief CounelDivion of Comoration Finance "

Re: Motorola, Inc.Incomig leter da Decmber 1, 2008

The proposal recmmends th the board tae the stes necsar to adopt

cuulatve votig.

We ar unle to concur in your view th Motorola may eKèlude the proposa

. unde rue 14a-8(i)(3). Accrdigly, we do not believe th Motorola may omit the

proposa from its proxy mateals in reliance on rue 14a-8(i)(3).

Sincerely, y ~ght

Attorney-Adviser

¿

JPMQRGANCHAS-e&CO.

lanuar27; Z.öÓ9

AntÎln,ny J'..lløra:n CørpQtatç Sêcr~ta Ofce.øftheSecretu

OffçeafClij~f Ci:ui.Il$eI DivisionofCotpórationFirtáhce . Janii 27,2ll09 . Pãge2

eiectiøn,síttatiøn"'andbecausecuiulative:Ø1ing'.WQuld"frt~e) tlie'very. purase~fniaionty · vøtjg.:'lnçol1tra.t,infueN?- A.9tiø1l1~eqlJê$ tJtdçatipanyreøagn~dfuat fu~' Proposal ëontãti.no limtatioi1önthe circuiancesiÍlwhichdcumuIative'vQt~'wouId.~pplyandthat $harebøiderscøitd.atiptthe~pa~.~thtÌ:int~litìqlltlatit aP'PIYdín aiieiecti()ns~ 'Ie

Goiipay.aigned thatthé .l~ge()ftbe Et():Psålitserfisva~e lld.indefinitei because neither shaehøldersnortheulmpany wo'Ud be able'toascertainWbetbø:i bøth '~:(oë.anad~against'.''. Vøtes

maybe 9:uttlafØtlof Øn1Y'~f'ör'dYQte~ .maYbeêti1Ïiil1å.tç'tidìnêJeëtiOIIsinwlrc~tle M~j()ty

Vöti~PïOYÎsiQns also .ap'glY' . Threfore, we.belie:efhtthe,~~~tsantitheStasdeci$jon nattagl"ant nQ-actIon re1iefin Mqttiroiii¡ Inc. tl~lyare distingiishåble..frm tlie Nö"AÇtQn RetJuest. .

AccØrdî~gly~bas~d.upQnthe .foreg~in~aial~sjs,!Çmd 0iiRr~Çlntss~t f0r'inîle

No~Açti()n'R~qnest)wè. r~iterat.e otï~R~t.thatti-e ~taf:cpiiclltlattneCøïnpaIY' mayexch.lde

tbePîQpósal..iierRtile 14a~Ci)(3)becausetheProiiQSal.i$..impessibiyvâge'and indefinite s.oas.t()db~in~r~ntlr mjsi~aÍ1g. ....Aatltionally tw~..~itei;ate.the'r~qlJÇlsttli~ttheStaconql1.fuåt. the.ç()JlPahy'lÍcir'.exçl'ldeJlie~Ì"opbšâl.be~atìe the PrQPórtentdoesnot sâtisfythe,owïershìp requÌlenieiits oflSule 14a~8tb)fQttle'teaso1lsaQdres$etliílth~ lettel'sub.niitteø. on bel,alfpft1ie Gpmpatyon~llua~~20a~.Pi.ffQRu1e 14ä';R(ì).wehave(;QntJ.~IÏtiy šejita-ênpyóf tbisèorrespórtdêficetO''thePtopønenIà1d.hìitn0rrnal prøpøeit......W:e ."W0uId.be,ha~pyto.provide

YQuwitlraIyataitl()~in0qnatianaíQ~a\Y~ranyqllestlQl1ithatY()ltmay hayeregainingijis subject.. .irWej~à1be öfanyfuer åSsiståceIntliisitàttr,pleäsedo. uotliesitatetocaiirneat

(21gJk70-7122or.Ary t.øoa(Ìan.pt~nsOIl,. J)Ul1 ßtCl'tcletLLp.at. (2(l2)9S5..86SS.

Sinc~rely~

~MA AithgiiyJ. Ho..,....r.an.... ,. _.-..

MfIlmbd

cc:John ,CiieveQaen

K~ethStêiìet

1,Ò9$,gR3.ll().. 3;0tG

JPMORGAj\ CH.\SE & Co.

Anthony J. Horan January 9, 2009 Corporate secretary

Office of the secretary

VIAE-MAIL Office of Chief Counsel Division of Corporation Finance Securities and Exchange Commission 100 F Street, NE Washington, DC 20549

Re: Shareholder Proposal ofJohn Chevedden (Kenneth Sreiner) Exchange Act of /934-Ru/e 140-8

Dear Ladies and Gentlemen:

This lener is to infonD you that IPMorgan Chase & Co. (the "Company") intends to omit from its proxy statement and form of proxy for its 2009 Annual Meeting of Shareholders (collectively. the "2009 Proxy Materials") a shareholder proposal (the "Proposal") and statements in support thereof submitted by John Chevedden (the "Proponent") purportedly in the name of Kenneth Steiner as his nominal proponent.

Pursuant to Rule 14a-80). we have:

• 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 2009 Proxy Materials with the Commission; and

• concurrently sent copies of this correspondence to the Proponent and his nominal proponent.

Rule 14a-8(k) and Staff Legal Bulletin No. 14D (Nov. 7. 2008) ("SLB 14D") provide that shareholder proponents are required to send companies a copy of any correspondence that the proponents elect to submit to the Commission or the stafT 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 be furnished concurrently to the undersigned on behalf of the Company pursuant to Rule 14a-8(k) and SLB 14D.

270 Park Avenue, New York, New York 10017-2070 Telephone 212 270 7122 Facsimile 212 770 4240 anthony.horan'llchase.com

JPMorgan CMse &Co.

Office of Chief Counsel Division of Corporation Finance January 9, 2009 Page 2

THE PROPOSAL

The Proposal states:

RESOLVED: Cumulative Voting. Shareholders recommend that our Board take the steps necessary to adopt cumulative voting. Cumulative voting means that each shareholder may cast as many votes as equal to number of shares held, multiplied by the number of directors to be elected. A shareholder may cast all such cumulated votes for a single candidate or split votes between multiple candidates. Under cumulative voting shareholders can withhold votes from certain poor-performing nominees in order to cast multiple votes for others.

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 believe that the Proponent does not satisfy the ownership requirements of Rule 14a-8(b) for the reasons addressed in a separate no-action request and. accordingly, that the Proposal is excludable on that basis. In addition, we believe that the Proposal may be excluded from the 2009 Proxy Materials pursuant to Rule 14a-8(i)(3) because the Proposal is impennissibly vague and indefinite so as to be inherently misleading.

ANALYSIS

The Proposal May Be Excluded under Rule J4a-8(i)(3) Because the Proposal Is Impermissibly Vague and Indefmite so as to Be Inherently Misleading.

Rule 14a-8(i)(3) permits the exclusion ofa shareholder proposal if the proposal or supporting statement is contrary to any of the Commission's proxy rules or regulations, including Rule 14a-9, which prohibits materially false or misleading statements in proxy soliciting materials. For the reasons discussed below, the Proposal is so vague and indefinite as to be misleading and, therefore, is excludable under Rule 14a-8(i)(3).

The Staff consistently has taken the position that shareholder proposals are misleading and therefore excludable under Rule 14a-8(i)(3) when "the resolution contained in the proposal is so inherently vague or indefinite that neither the stockholders voting on the proposal, nor the company in implementing the proposal (if adopted), would be able to detennine with any reasonable certainty exactly what actions or measures the proposal requires." Staff Legal

Office of Chief CounselDivision of Corporation FinanceJanuary 9, 2009Page 3

Bulletin No. 14B (Sept. 15,2004) ("SLB 14B"); see also Dyer v. SEC, 287 F.2d 773, 781 (8thCir. 1961) ("'[1]1 appears to us that the proposal, as drafted and submitted to the company, is sovague and indefinite as to make it impossible for either the board of directors or the stockholdersat large to comprehend precisely what the proposal would entail."); Fuqua Industries, Inc. (avail.Mar. 12, 1991) (concurring with the exclusion of a proposal so vague that "any action ultimatelytaken by the [c]ompany upon implementation [of the proposal] could be significantly differentfrom the actions envisioned by shareholders voting on the proposal"). In this regard, the Staffhas pennitted the exclusion of a variety of shareholder proposals, including proposals requestingchanges to the procedures used for the election of directors. See, e.g., Dow Jones & Company,Inc. (Mar. 9,2000) (concurring 'with the exclusion of a proposal requesting the adoption of anovel method for electing directors as vague and indefinite under Rule 14a-8(i)(3».

In the instant case, neither the Company nor its shareholders can detennine the measuresrequested by the Proposal because it is unclear how the Proposal is intended to operate withrespect to provisions in the Company's existing By-laws providing for majority voting in noncontested director elections (i.e., elections where the number of nominees equals the number ofpositions on the Board of Directors to be filled). Section 2.09 of the Company's By-laws (the"Majority Voting Provisions") states:

The vote required for election of a director by the stockholders shall,except in a contested election, be the affinnative vote ofa majority of thevotes cast in favor of or withheld from the election of a nominee at ameeting of stockholders. For the purposes of Section 2.09, a "majority ofthe votes cast" shall mean that the number of votes cast "for" a director'selection exceeds the number of votes cast "against" that director'selection, with "abstentions" and "broker noovotes" (or other shares ofstock of the Corporation similarly not entitled to vote on such election) notcounted as votes cast either "for" or "against" that director's election ....

Because the Proposal contains no limitation on the circumstances in which cumulative voting isto apply, the Company must conclude that the Proposal requests the implementation ofcumulative voting for all elections ofdirectors, both non-contested elections of directors inwhich the Majority Voting Provisions apply as well as contested elections. I Therefore, in order

Under Section 214 of the Delaware General Corporation Law, the law under which theCompany is incorporated, a company's certificate of incorporation may provide thatcumulative voting is available "at all elections of directors of the corporation, or at electionsheld under specified circumstances." Many commentators have suggested that cumulativevoting makes the most sense in the context of contested elections. See, e.g., Edward J.Durkin, "Effects of Contested Elections and Cumulative Voting on Companies ElectingDirectors by Majority Vote," available at http://cii.org.previewyoursite.com/majority/pdfJEd

[Footnote continued on next page]


to implement the Proposal, the Company would need to reconcile the operation of the Proposaland the Majority Voting Provisions. However, any attempt to do so results in nwnerous,conflicting interpretations of the Proposal because the Proposal is vague and indefinite as towhich votes may be cumulated.

Specifically, it is impossible to ascertain from the Proposal whether it permits both "for"and "against" votes to be cumulated, or whether it permits only "for" votes to be cumulated.Under the Majority Voting Provisions, in a non-contested election, shareholders may cast one oftwo kinds of votes in the election ofa director: "for" or "against." The Majority VotingProvisions specifically state that "votes cast" consist of votes "for" and votes "against" (whereas"abstentions" and "broker nonvotes" are not counted as votes cast). The Proposal is ambiguousas to whethe-r it provides that only "for" votes may be cwnulated, or that both "for" and '''against''votes may be cwnulated. The Proposal states that "[a] shareholder may cast all such cumulatedvotes/or a single candidate or split votes between multiple candidates" and "shareholders canwithhold votes from certain poor performing nominees in order to cast multiple votes/or others"(emphasis added). This language is susceptible to at least two interpretations, depending uponthe meaning attributed to the word "for." The word "for" can mean, among other things, "infavor of' or "with regard to." Webster's New World Dictionary 190 (Modem Desk ed. 1979). If"for" means "'in favor of," the Proposal refers to shareholders cumulating one of the two kinds ofvotes that can be cast. That is, "for" votes (and not "against" votes) can be "cumulated" and"cast" for candidates. Alternatively, if the word "for" means '"with regard to," the Proposalimposes no limitation on the kind of vote that can be cumulated, and a shareholder could chooseto cumulate both "for" and "against" votes and cast all of his or her cumulated votes "with regardto" one or several candidates.2

[Footnote continued from previous page]

%20Durkin's%20Responses%20to%20Majority%20Voting%20Questions.pdf (last visitedJan. 5,2009). However, the Proposal does nOl state that it is requesting that cumulativevoting apply only in contested elections, and this letter does not challenge the merits of theProposal. See Staff Legal Bulletin No. 14 (Jul. 13,2001) ("SLB 14") (noting that the Staffhas "'no interest in the merits ofa particular proposal"). If the Proponent intends for theProposal to apply only in the context of contested elections, the failure of the Proposal 10state that fact clearly is a further justification for excluding the Proposal as vague andtherefore misleading.

2 There appears to be some question as to whether under Delaware state law "against" votescan be cumulated. We are not aware of any legislative guidance or judicial case law thatdefinitively addresses the issue, reiterating the need for the Proposal to be clear as to what itprovides for on this point. Nevertheless, the possibility that certain interpretations couldviolate state law does not affect the ambiguity inherent in the language of the Proposal:



The consequences of this ambiguity as to what voting arrangement the Proposal providesfor are significant, as demonstrated by a simple example. Suppose a company with by-lawprovisions identical to the Majority Voting Provisions has 300 shares outstanding and has threeshareholders, each holding 100 shares. The company proposes a slate of three nominees forthree available director scats, so the election is not contested. As provided in the Proposal, "eachshareholder may cast as many votes as equal to number of shares held, multiplied by the numberof directors to be elected" or 300 votes. Two shareholders support the slate and cast their votes"for" each of the nominees equally (for a total of200 "for" votes with respect to each of the threenominees). The third shareholder opposes one of the nominees. If the Proposal allows onlyvotes "for" a nominee to be cumulated, then all three directors will be elected. Although thethird shareholder could cast 100 votes "against" the undesired nominee, the number of votes cast"for" the nominee (200) would exceed the number of votes "against" (100). However, if theProposal allows any kind of vote to be cumulated, the third shareholder could cast 300 votes"against" the undesired nominee, and such nominee would not be elected.3

The Staff previously has recognized that when implementation of a shareholder proposalwould require reconciliation with the operation of existing policies but is ambiguous as to howthe proposal is to be implemented, the proposal is vague and indefinite and therefore may beexcluded under Rule 14a-8(i)(3). For example. in Pinnacle West Capital Corp. (avail.Mar. 11,2008, reconsideration denied Mar. 28, 2008), the proposal requested that the companyadopt majority voting for directors, such that "director nominees shall be elected by theaflinnative vote of the majority of votes cast." The company already provided for cumulativevoting in the election of directors because it was required to do so under Arizona law. Thecompany noted that there were multiple interpretations of what constituted a "majority of votescast" under a cumulative voting system, and therefore, neither the company nor its shareholders


under one reading only "for" votes may be cumuJated, while under another reading both'''for'' and "against" votes may be cumulated. See Pinnacle West Capital Corp. (avail.Mar. 11,2008, reconsideration denied Mar. 28, 2008) (concurring with the exclusion ofaproposal under Rule 14a-8(i)(3) as vague and indefinite when the company argued that someof the possible interpretations of the proposal could violate Arizona law).

3 Significantly, this issue does not arise in a plurality voting system. Under plurality voting, allthat matters is that a director nominee receive more votes than other nominees. Thus, even ifcumulative voting applied in a non-contested election, "against" votes are not provided for,as they have no effect. As long as one shareholder votes for a candidate (whether or not thatshareholder cumulates its votes) the candidate will be elected. In contrast, as demonstratedby the foregoing example, whether "against" votes can be cumulated is of criticalsignificance under a majority voting regime.

Office of Chief COWlselDivision of Corporation FinanceJanuary 9, 2009Page 6

could determine what actions would be taken under the proposal. In denying the proponent'srequest for reconsideration, the Staff reiterated its view that the proposal was excludable underRule 14a-8(i)(3), noting that "the proposal does not indicate how a 'majority of votes cast' wouldbe determined." Pinnacle West Capital Corp. (Recon.) (avail. Mar. 28, 2008). See alsoJPMorgan Chase & Co. (avail. Jan. 31, 2008) (concurring with the exclusion ofa proposalseeking to amend the "bylaws and any other appropriate governing documents in order that thereis no restriction on the shareholder right to call special meeting compared to the standard allowedby applicable law on calling a special meeting" as vague and indefinite where it was unclear howthe proposal was intended to operate in the context of applicable Delaware law); PrudentialFinancial, Inc. (avail. Feb. 16,2007) (concurring with the exclusion under Rule 14a-8(i)(3) as"vague and ambiguous" of a proposal that failed to define "senior management incentivecompensation programs" in light of the company's variety of existing compensation plans);Safescript Pharmacies, Inc. (avail. Feb. 27, 2004) (concurring with the exclusion ofa proposalthat requested that options be expensed according to "FASS guidelines" but did not determinewhich of the methods provided in such guidelines should be used).

In the instant case. to implement the Proposal, the Company must reconcile therequirements of the Proposal with the existing Majority Voting Provisions. As noted incorrespondence to the StatT dated March 25, 2008 in Pinnacle West Capital Corp., "thecompatibility of majority voting and cwnulative voting is far from clear," with the result thatthere are many uncertainties as to how cumulative voting would operate under a majority votingregime, and there is no uniform or commonly accepted approach to resolving this issue.4 The

4 Many experts view cumulative voting as inconsistent with the objectives ofa majority votingregime. For example, an Institutional Shareholder Services White Paper notes that"[c]umulative voting implies plurality voting, since the former only makes sense with thelatter." Stephen Deane. Majority Voting in Director Elections: From the Symbolic to theDemocratic, ISS Institute for Corporate Governance, J543 PLIICorp, 33 J, 338 n.2 (2005).The Proposal does not request that the Company eliminate the Majority Voting Provisions.(If the Proponent's intention is that the Company both adopt cwnulative voting and eliminatethe Majority Voting Provisions, the Proposal's failure to state that fact clearly is a furtherjustification for excluding the Proposal as vague and therefore misleading.) However. thefact that it may not be advisable to apply the two voting regimes at the same time goes to themerits of the Proposal and is not relevant for this analysis. See SLB 14.

Thus, it is of no consequence for this purpose that the Company's Majority VotingProvisions are not mandated by state law, as was the case with cumulative voting in PinnacleWest Capital Corp.• because the Proposal does not ask that the Company eliminate itsMajority Voting Provisions and, as addressed in the text above, there are a variety ofmethods by which cumulative voting could be implemented while retaining the Majority



Proposal does not indicate whether the Company is to resolve this issue by providing that both"for" and "against" votes may be cumulated, or that only "for" votes may be cumulated. Instead,the Proposal can be interpreted to provide for each of these approaches, depending upon themeaning attributed to the word "for" in the Proposal.

The Staff frequently has concurred with the exclusion under Rule 14a-8(i)(3) of proposalsin which certain words or phrases were similarly susceptible to multiple interpretations as vagueand indefinite. For example, in International Business Machines Corp. (avail. Jan. 10,2003), theproposal requested that there be two nominees for each "new member" of the company's boardof directors. The proposal was susceptible to multiple interpretations depending upon themeaning attributed to the phrase "new member." Under one interpretation. the proposal wouldnot apply to any incumbent director nominees because they would not be "new." However,under another interpretation, the proposal would apply to all nominees in the next electionbecause they all seek a new term of membership. The Staff concurred with the exclusion of theproposal as vague and indefinite under Rule 14a-8(iX3). See also International BusinessMachines Corp. (avail. Feb. 2, 2005) (concurring with the exclusion ofa proposal seeking toreduce the compensation of the executives "responsible" for the reduction in the dividend paid toshareholders as vague and indefinite where multiple possible interpretations of responsibilitywould result in different executive being affected); Bank Mutual Corp. (avail. Jan. II, 2005)(concurring with the exclusion of a proposal seeking to establish "'a mandatory retirement age ...for all directors upon attaining the age of 72 years" as vague and indefinite where such phrasecould be interpreted as setting the retirement age at 72 or as requiring that a retirement age bechosen for each director on his or her 72nd birthday). Similarly, as explained above,implementation of the Proposal would result in substantially different effects upon the MajorityVoting Provisions depending upon the meaning attributed to the word "for." Because theProposal is susceptible to such different interpretations, it may be excluded underRule 14a-8(i)(3) as vague and indefinite.

Consistent with Staff precedent, the Company's stockholders cannot be expected to makean informed decision on the merits of the Proposal if they are unable "to determine with anyreasonable certainty exactly what actions or measures the proposal requires." SLB 14B; see alsoBoeing Corp. (avail. Feb. 10,2004); Capital One Financial Carp. (avail. Feb. 7, 2003)(excluding a proposal under Rule 14a-8(iX3) where the company argued that its stockholders"would not know with any certainty what they are voting either for or against"). Here. theProposal is subject to alternative interpretations with respect to which kinds of votes can becumulated. Moreover, neither the Company's shareholders nor its Board would be able to


Voting Provisions. However, because those alternatives have significantly different effects,neither the Company nor its stockholders can tell what approach is required by the Proposal.

Office of Chief Counsel Division of Corporation Finance January 9, 2009 Page 8

detennine with any certainty what actions the Company would be required to take in order to comply with the Proposal. Accordingly, we believe that as a result of the vague and indefinite nature of the Proposal, the Proposal is impermissibly misleading and, thus, excludable in its entirety under Rule 14a-8(i)(3).

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 2009 Proxy Materials. We would be happy to provide you with any additional information and answer any questions that you may have regarding this subject.

Ifwe can be of any further assistance in this maner, please do not hesitate to call me at (212) 270-7122 or Amy L. Goodman of Gibson, Dunn & Crutcher LLP at (202) 955-8653.

Sincerely,

Anthony J. Horan

AJHJmbd Enclosures

cc: John Chevedden Kenneth Steiner

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