|
|
SEC Acceptance of Management Argument to Block Vote on Shareholder Proposal for Independent Board (October 15, 2002) Copied below is the text of an October 15, 2002 response received from the Securities and Exchange Commission ("SEC") to an August 26, 2002 letter from a law firm engaged to represent Farmer Bros.,* after considering a September 12, 2002 reply letter from Mitchell Partners, L.P. As indicated, the SEC staff accepts management's arguments as a basis for excluding the Mitchell Partners shareholder proposal for an independent board from the company's proxy statement for voting at the annual meeting. Specifically, the SEC staff refers to management's argument based on Rule 14a-8(i)(6), which permits excluding a shareholder proposal "[i]f the company would lack the power or authority to implement the proposal." The lack of an explanation is consistent with normal SEC practice for such "no action" letters. This decision in this case, though, would suggest a clarification of the SEC's position concerning the ability of shareholders or others (including Congress and state legislators, the NYSE and Nasdaq, and even the SEC itself) to establish any qualifications for corporate directors, whether for independence, age, criminal records or other commonly applied standards. Preventing a vote on the Mitchell Partners proposal may have little practical effect on the interests of Farmer Bros. shareholders regarding board independence, since the Sarbanes-Oxley Act (passed after the proposal was submitted) and expected Nasdaq listing requirements will establish essentially the same conditions for a majority of independent directors and all-independent committees of the board. The opportunity to restore cumulative voting, however, has been effectively blocked. ------------------- * The August 26, 2002 letter of the Farmer Bros. attorney has not yet been made available in electronic form. Requests for fax copies may be sent to farm@shareholderforum.com.
|
|