united states securities and exchange commission · proponent's april is, 2013 letter to the staff,...

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

DIVISION OF' CORPORATION FINANCE

Ken Hall International Brotherhood of Teamsters 25 Louisiana A venue, NW Washington, DC 20001

Re: McKesson Corporation Incoming letter dated May 21, 20 13

Dear Mr. Hall:

May 31,2013

This is in response to your letter dated May 21, 2013 concerning the shareholder proposal that the International Brotherhood of Teamsters General Fund submitted to McKesson. In that letter, you requested that the Commission review the Division of Corporation Finance's April17, 2013 letter granting no-action relief to McKesson's request to exclude the proposal from its 20 13 proxy materials. We also have received a letter from McKesson dated May 29,2013.

Under Part 202.1 (d) of Section 17 of the Code of Federal Regulations, the Division may present a request for Commission review of a Division no-action response relating to Rule 14a-8 under the Exchange Act if it concludes that the request involves "matters of substantial importance and where the issues are novel or highly complex." We have applied this standard to your request and determined not to present your request to the Commission.

Copies of all of the correspondence on which this response is based will be made available on our website at http://www.sec.gov/divisions/corofin/cf-noaction/14a-8.shtml. For your reference, a brief discussion of the Division's informal procedures regarding shareholder proposals is also available at the same website address.

cc: Willie C. Bogan McKesson Corporation [email protected]

Sincerely,

Thomas J. Kim Chief Counsel & Associate Director

RECEIVED M~KESSON

·-------- ---·-······ · ···· · · ····---- ---- ------------- --- ---- ----------- --- ----- -- ------------------- -- --- ----- -------- ------· Willie C. Bogan

May 29,2013

Associate General Cou't'\!\'Jtlffl¥~ PH 3: 35

o==-FICE OF CHIEF COUHSEL ·c oR?ORATIO~! F I HA !~CE

VIA COURIER VIA EMAIL ([email protected])

Elizabeth Murphy, Secretary U.S. Securities and Exchange Commission I 00 F Street, N.E. Washington, D.C. 20549

Re: Appeal of the International Brotherhood of Teamsters General Fund from the April 17,2013 No-Action Letter Issued to McKesson Corporation

Dear Ms. Murphy:

By letter dated Apri l 17, 2013 (the "No-Action Letter"), the staff of the Division of Corporation Finance (the "Staff) of the Securities and Exchange Commission (the "Commission") stated that it would not recommend enforcement action to the Commission if McKesson Corporation, a Delaware corporation (the "Company"), were to omit a stockholder proposal (the "Proposal") submitted by the International Brotherhood of Teamsters General Fund (the "Proponent") from its proxy statement and form of proxy for its 2013 Annual Meeting of Stockholders in reliance on Rule 14a-8(i)(3). The Proposal requests that the Company's board of directors adopt a policy that the board' s chairman be "an independent director according to the definition set forth in the New York Stock Exchange listing standards."

On May 2 1, 2013, the Proponent submitted a letter to you (the "Appeal") requesting that the Commission exercise its discretion under Part 202. 1 (d) of Section 17 of the Code of Federal Regulations to review and reverse the Staff' s determination in the No-Action Letter. The Appeal also requests that the Staff prepare a Staff Legal Bulletin to address stockholder proposals for an independent chairman of the board. The Company does not believe review of the Staffs determination in the No-Action Letter is warranted for the reasons set forth herein, and submits this letter to respond to the Appeal, which is attached hereto as Annex I.

McKesson Corporation One Post Street San Francisco, CA 94104

w·ww.mckcsson.com

Elizabeth Murphy, Secretary U.S. Securities and Exchange Commission M~KESSON Page 2

........ . . .. . ... . ............. . . ... . . ...... . ...... ..... ......... . ........... .. . .. ....... .. .......... . ......... . . ......... . ........ . ...... . . . ..

I. The Appeal Does Not Meet the Standa rd for Commission Review

T he A ppeal does not meet the standard for Commission review. Under Part 202. 1 (d) of Section 17 of the Code of Federal Regulations, the Staff may present a request for Commission review of a Rule l4a-8 no-actio n respo nse if it conc ludes that the request invo lves " matters of substantia l importance and where the issues are novel or hi ghly complex" (emphasis added). If a request does not meet this standard , the Staff may deny the request fo r Commission review. The subj ect matter of the Pro posal relates to the standard of independence for the board chairman by reference to a particu lar set of gu idel ines. As the Pro po nent notes in the Appeal, th is topic has been the subject o f consideration by the Staff for some time, and the Staffs determinatio n in the No-Action Letter is consistent wi th its past determinati ons, made on the basis of c lear and straightforward principles, w ith respect to similar proposals. See, e.g., Chevron Corporation (March 15, 20 13); Ashford Ho spitality Trust, Inc. (March 15, 20 13); Comcast Corporation (March 15, 20 13); The Clorox Company (August 13, 20 12); Harris Corporation (A ug ust 13, 20 12); The Procter & Gamble Company (J uly 6, 201 2, recon. denied September 20, 20 12); Cardinal Health, Inc. (Ju ly 6, 20 12) ; WellPoint, Inc., (February 24, 20 12, recon. denied March 27, 20 12); and Mattei, Inc. (February 9, 20 12). Conseq uently, the Pro posal does not raise any " novel" o r " hi ghly complex" issues, and s ho uld not be s ubmitted for Commission review.

II. The Appeal Offers No New Arguments

If the Appeal is not presented to the Commission for its review, we do not believe that the Staff should otherwise reconsider its determinatio n in the No-Action Lette r. Although the Staff has not artic ulated the standard for reconsideration, we understa nd that in practice, the Staff w ill not grant a recons ideration request where the pro po nent does nothi ng mo re than reiterate argume nts made in previo us submi ss ions to the Staff in support of its pro posal. See, e.g. WalMart Stores, Inc. (March 27, 20 13; recon. and review denied April II , 20 13); Pfizer Inc. (January 11 , 20 13; recon. and review denied March I , 20 13); and Xilinx, Inc. (M ay 3, 20 12, recon. and review denied June 26, 20 12). The Proponent not only offers no new arguments to support its Appeal, but in fact admits, as discussed in Section I above, that the No-Action Letter is consistent with recent Staff no-action letters and presents no facts that differentiate the Proposal from the cited precedent. While the Company does not be lieve it is necessary to reiterate a ll arguments m ade in its Apri l 2, 20 13 no-actio n request to the Staff, the Company would like to point o ut that the Staff's position in these mo re recent no-actio n letters is consistent with its historical approach to s ituatio ns where reference in the proposal to an external standard renders the proposal so vague a nd indefi nite that neither stockho lders voting o n the proposal, nor the co mpany in implement ing the proposal (if adopted), would be able to determine with any reasonable certainty exactly what actions o r measures the proposa l requires. See, e.g. , The Boeing Company (Feb ru ary 10, 2004); PG&E C01poration (March 7, 2008); Schering-Plough

Elizabeth Murphy, Secretary U.S. Securities and Exchange Commission Page 3

M§;KESSON . ............................ ... ...... ·- ---- .................. -- ... -.. -- ...... ... .......... -... -- ....... -............. -- ----- .. ...... ..... -- ........ .... ........ -... ........................................ .. ---- ..... ...... ... ................. ..... ........... -...... .

Corporation (March 7, 2008); and JPMorgan Chase & Co. (March 5, 2008). Accordingly, the Company believes that the Proponent presents no basis for the Staff to reconsider its position. 1

III. The Proponent's Request That the Staff Prepare a Legal Bulletin Should Not Affect the Stafrs Determination in the No-Action Letter

The Company will not weigh in on the Proponent 's request that the Staff prepare a Staff Legal Bulletin addressing stockholder proposals for an independent chairman of the board. The Company respectfully submits that the decision of whether to prepare a Staff Legal Bulletin rests with the Staff who administers Rule 14a-8. The Company requests, however, that if the Staff determines to prepare a Staff Legal Bulletin, then, consistent with past practice, the guidance in such Legal Bulletin would apply on a prospective basis only. See, e.g., Staff Legal Bulletin No. l4F (October 18, 2011) (decision to "no longer fol low" the position in The Hain Celestial Group, Inc. (October I, 2008) to be applied "going forward") and Staff Legal Bulletin No. l4E (October 27, 2009) (position that a company generally may not rely on Rule 14a-8(i)(7) to exclude a proposal that focuses on CEO succession planning to be applied "going forward").

IV. Conclusion

For the reasons stated above, the Company respectfully requests that the Appeal not be presented to the Commission for its review, and that the Staff not otherwise reconsider its determination in the No-Action Letter.

The Company is in the process of finalizing its 2013 proxy materials and expects to file its preliminary proxy materials early during the week of June 9, 201 3 and its definitive proxy materials during the week of June 16, 2013 . Given this timing, the Company respectfully requests that this matter be addressed on an expedited basis.

1 In the Appeal, the Proponent refers to its earlier request to amend the Proposal. This request was made in the Proponent 's April IS, 2013 letter to the Staff, and the No-Action Letter permitted the Company to exclude the Proposal and did not allow the Proponent to make the proposed amendment. A revision to the Proposal of the nature proposed by Proponent is not permined because it would alter the substance of the Proposal in a manner that is inconsistent with Staff guidance. See Staff Legal Bulletin o. 14B (Sept. 15, 2004) (stating that "there is no provision in rule 14a-8 that allows a shareholder to revise his or her proposal" and noting that the Staff wi ll permit "revisions that are minor in nature and do not alter the substance of the proposaf' (emphasis added)) and Staff Legal Bulletin No . 14 (July 13, 2001 ) (same).

Elizabeth Murphy, Secretary U.S. Securities and Exchange Commission M~KESSON Page4

If you have any questions or require any additiona l information, please do not hesitate to call me at (415) 983 -9007, or David Lynn ofMorrison & Foerster LLP at (202) 887-1 563.

Sincerely,

£~(]. ~ Willie C. Bogan

Associate General Counsel and Secretary

Enclosures

cc: Thomas J . Kim, Division of Corporation Finance

Jonathan A. Ingram, Divi sion of Corpo ration Finance

International Brotherhood of Teamsters General Fund

ANNEX I

ANNEX I Page 1 of 35

INTERNATIONAL BROTHERHOOD OF TEAMSTERS JAM E S P. H 0 F FA General President

25 Louisiana Avenue. NW Washington. DC 20001

Via First-Class Mail

May 2L 20 13

Via Electronic Mail ([email protected])

The Honorable Elizabeth Murphy, Secretary U.S. Securities and Exchange Commission Oftice of the Chief Counsel I 00 F. Street. N.E. Washington. D.C. 20549

KEN HALL General Secretary-Treasurer

202.624.6800 www. teamster org

RE : Appeal of the International Brotherhood of Teamsters General Fund From No-Action Determination Regarding Shareholder Proposal Submitted by the Fund to McKesson Corporation and Request for a Legal Bulletin to Provide Guidelines on Filing Future Shareholder Proposals for an Independent Chairman of the Board

Dear Secretary Murphy:

On behalf of the lntemational Brotherhood of Teamsters General f und (the .. Fund .. ). r request that the Commission exercises its discretion under 17 C.f.R .. Sect ion 202. 1 (d) to review and reverse a determination by the Division of Corporation Finance (the ··staff') that McKesson Corporation ( .. McKesson .. ) may exclude from its 2013 proxy materials a shareholder proposal (the ·'Proposal .. ) seeking an independent chairman of the hoard of directors. The Fund 's proposal on this same issue received a majority vote of shareholders at McKesson ·s 20 12 annual meeting. To deny investors the opportunity to reinforce their support for this important governance reform is unwarran ted and unjust.

r also request that the Commission directs the Staff to prepare a Legal Bulletin. after so liciting comment t"rom both companies and shareholders. to provide guidelines to all interested parties- Start: compan ies and shareholders- on the filing of future shareholder proposals l(>r an independent chairn1an of the board. We believe such a Legal Bulletin is necessary for the Commission to restore darity. certainty and l~tirncss to a vita l

The Honorable Elizabeth Murphy May 2L 2013 Page 2

ANNEX I Page 2 of35

issue that has been cotnpromised by a recent string of confusing and contradictory noaction determinations.

Grounds for Review and Need for Legal Bulletin:

I respecttully subtnit that these requests are \Varranted because the Staffs no-action determination regarding the Fund's Proposal for an independent chairman of the board at McKesson, and the recent string of no-action determinations on similar proposals~ represent questions of:

Novelty - In 2012 the Fund tiled a shareholder proposal for an independent chairman of the board of directors at McKesson. It contained no reference to any definition of an independent director. McKesson did not seek any no-action relief from the 2012 proposal. The 2012 proposal received support of 52 percent of the voting shareholders. McKesson's 2012 proxy statetnent't pages 13-14, discussed at length how its standards tor independence are consistent with those of the New York Stock Exchange.

When the Fund re-filed the Proposal in 20 13~ it incorporated a reference to the Ne\v York Stock Exchange definition of independent director in an effort to assure voting shareholders that it was not seeking to have McKesson adopt some different exotic definition of independence from that which McKesson uses and is expected to discuss at length in its proxy statement. This simple and clear addition was provided to enhance the specificity and definiteness of the proposal. Yet~ Staff found incorporating a widely used and comtnonly accepted point of reference to which McKesson itself adheres't and which has been incorporated in more than two dozen other independent board chair shareholder proposals voted on between 2010-2012, to be vague and indefinite and therefore impermissible. In so doing, the Staff discarded the long established test for vague and indefinite (to determine with any reasonable certainty exactly what actions or measures a proposal requires) and substituted its own new test (do shareholders know what the New York Stock Exchange's definition of independence tneans?).

The Staff has created a controversy over an issue that is not in dispute. Both the Proponent and McKesson agree that the detinition to be used for independent director is that of the New York Stock Exchange. If there was a dispute between the two parties over the detinition .. or if the use of that detinition was not a legal requirement the Staff's concern over whether shareholders know what the New York Stock Exchange means would be understandable. But absent a dispute and because it is a legal requirement the Staffs insistence on shareholders knowing the tneaning is arbitrary and capricious~ and novel.

The Honorable Elizabeth Murphy May 21" 2013 Page 3

ANNEX I Page 3 of35

Another novel element of this case is that the Fund otlered, in the alternative to its argument that the Proposal was not impermissibly vague or indefinite .. to claritY the Proposal either by:

• Adding the words - -"who had not previously served as an executive otlicer of the company, which would provide the partial definition that Staff has previously allowed in General Electric Company (January 10" 2012, recon. denied February 1 .. 2012); PepsiCo, Inc., (February 2 .. 2012)~ Reliance Steel & Aluminum (February 2, 2012); and .. Sempra Energy (February 2, 2012); or,

• Deleting the reference to the New York Stock Exchange definition of independent director and thus returning to the no definition version from 20 J 2 that won majority support at McKesson, and is a format the Staff found acceptable tn Comcast Corporation (March 5, 2010); and .. Dean Foods (March 7, 2013).

This ofter was pursuant to the long established procedure in Section E of SEC StatJ Legal Bulletin 14, dated July 31., 200 I, \vhich provides that •"if the proposal or supporting statement contains vague terms, we may, in rare circumstances., permit the shareholder to clarifY those terms."" The Fund respectfully submits that given the tnajority vote its Proposal received in 20 12 and the confusion caused by the Staff in issuing its recent noaction determinations on the independent chairman proposals, the circumstances are rare enough to warrant the Staff granting the Fund permission to make the clarification. The Staff arbitrarily and capriciously refused to grant permission. Thus, if allowed to stand .. the Staffs determination \viii deprive McKesson shareholders the opportunity to renew their support for the Proposal they supported so strongly in 2012.

McKesson's 2013 annual meeting of shareholders will not be held until midsumtner .. so there is plenty of time for the Commission to revie\v and reverse the Staffs no-action determination in the present case.

High Complexity - Until the recent string of no-action determinations by the Stan: a \vide cross-section of investors could feel secure that companies would routinely accept shareholder proposals seeking an independent chairman of the board that referred to the relevant definition of independent director by the stock exchange at which the cotnpanies \Vere listed. Enclosed, as Exhibit A, hereto is a list of such proposals from It different investors that were filed and went to a vote at 26 company meetings in 2010, 201 l and 2012. What definition could be more reassuring to voting shareholders than the very definition and standard that the cotnpanies themselves employ and reference in their O\Vn regulatory filings and shareholder cotnmunications? Therefore~ \ve \vere distnayed by the recent string of no-action determinations where the Staff construed this least controversial definition as being impermissibly vague and indefinite and inherently

The Honorable Elizabeth Murphy May 21,2013 Page 4


tnisleading. See e.g ... : Matte/, Inc., (February 9., 2012)~ Wei/Point, Inc ... (February 24, 2012, recon. denied March 27. 2012)~ The Clorox Company (August 13, 2012): Harris Corporation (August 13 .. 20 12); The Procter & Gamble C'ompany (July 6. 20 12 .. recon. denied September 20, 2012)~ Cardinal Health, Inc .• (July 6, 2012); Chevron Corporation (March 15, 2013); and, Corneas! Corporation (March 15., 2013).

We believe the Staff's recent string of no-action determinations regarding references to relevant stock exchange definitions of independence has unnecessarily denied investors an opportunity to vote on a governance issue of substantial importance over a definition that both the companies and proponents agree upon. In fact .. the definition of independent director provided by the Company's governing exchange is the only commonly accepted definition of independent directors that exists for investors.

Karen Garnett of the SEC's Division of Corporate Finance said that in making the determinations, ··we focused on the definition of independence as described in the proposal,"' because the term was '"'key to understanding what the proposal was tneant to implement. We consider only the information in the proposal itself or in a supporting statement that the proposal provides. (""In-depth compliance review is under way for 2009 disclosure rule, SEC official says,'" Mary Hughes, BNA. Daily Report for Executives, May 13., 2013., page EE-14.)

The Staff's rationale would make sense if the external reference was to another company's definition, or that of some other group., agency or organization. But how can anyone logically and fairly claim that referring to a stock exchange definition of independent director, which a company is legally compelled to comply \Vith and which is repeatedly referenced by the company in the same proxy materials sent to the same investors in order to qualify directors nominated for election on the same ballot. be considered vague? To apply the same definition and standard that the company uses make clear that the proponent is only asking the company to apply the same standard for the chairman position as they do tor other positions on the board that must be tilled by an independent director.

That Statl' would prefer no definition at all (See: (tomcast Corporation (March 5 .. 2010)~ and Dean Foods (March 7. 2013)~ or a partial definition (See: General Electric Cto1npany (January I 0~ 2012. recon. denied February I. 20 12)~ PepsiCo, Inc .• (February 2 .. 20 12)~ Reliance Steel & Aluminum (February 2 .. 20 12): and .. Sempra Energy (February 2 .. 20 12) in which proponents included the language. ·~who had not previously served as an executive otlicer of the company·· to the fully accepted definition employed by the company defies reason or fairness.

The Honorable Elizabeth Murphy May 21~ 2013 Page 5

ANNEX I Page 5 of35

The New York Stock Exchange definition of independent director.. which is enclosed as Exhibit B .. runs over 1.000 words and contains numerous examples of a nonindependent director being someone other than a person ""who had not previously served as an executive officer of the company,.. For example: being a partner. shareholder or officer of an organization that has a relationship with the listed co1npany: being an employee of the listed company or having an hnmediate family 1nember who has been an executive officer of the listed company within the last three years: the director or an imtnediate f~nnily member has received during any twelve-month period within the last three years tnore than $120,000 in direct compensation from the listed company other than director and committee fees and pension for other forms of deferred compensation for prior service; or the director is a current employee of a company that has made payments to, or received payments from the I is ted company in an atnount that exceeds the greater of $1 tnillion or 2 percent of such other company's consolidated gross revenues.

The definition of independent director for NASDAQ~ which is enclosed as Exhibit C. is more than 400 words and contains similar examples.

Spotlighting a limited., isolated example of lengthy and complex definitions gives a patently inadequate and misleading impression of the scope and detail of the definitions. It is established that Staff has arbitrarily and capriciously exercised its discretion to rule that this one, small element of an exchange definition is preferable to a reference to the entire definition that qualifies other independent members of the board.

Substantial Importance- In response to the devastating financial itnpact of the Enron/WorldCom/Tyco wave of scandals at the start of this century, the various stock exchanges revised their listing standards to require metnbers to have a tnajority of independent directors on their boards and to have the key board comtnitteescompensation. nomination and audit- comprised entirely of independent directors.

The critical missing link in this structural reform was to require an independent director to serve as the chairman of the board.

According to the Millstein Center for Corporate Governance and Performance (Yale School of Management)" ··The independent chair curbs conflicts of interest promotes oversight of risk~ manages the relationship between the board and CEO .. serves as a conduit for regular communication with sharcowners. and is a logical next step in the development of an independent board." (Chairing the Board: The Case tl>r Independent Leadership in Corporate North America .. 2009.) Andre\v Grove .. former chairtnan and CE() of Intel Corporation, recognized this and relinquished the CEO~s position. -·The separation of the t\VO jobs goes to the heart of the conception of a corporation. Is a company a sandbox for the CEO, or is the CEf) an employee? If he's an etnployee. he

The Honorable Elizabeth Murphy May 21., 2013 Page 6


needs a boss., and that boss is the board. The chairman runs the board. How can the CEO be his own boss?"' (Business Week, November 11. 2002).

The reform to ensure independent board leadership \Vas not tnandated by the Exchanges; hence investors are left to encourage the retonn through advisory votes on shareholders' proposals. According to Georgeson's Annual Corporate Governance Review, which surveyed U.S. members of the S&P 1,500 Supercotnposite Index, which hold their tneetings in the first six months of a year, 103 proposals seeking an independent chairman of the board came to a vote in 2010-2012 time period-35 in 2010, 22 in 2011. and 46 in 2012. Institutional Shareholders Services (-"ISS''), which surveyed a broader universe of companies. reported 13 7 independent chainnan proposals cotning to a vote in the 20 I 0-2012 time period--46 in 2010, 32 in 20 11 .. and 59 in 20 12.

There is time for the Commission to review and reverse the Staffs no-action determination in the McKesson case as the Company's shareholder meeting will not be until July with proxy materials expected to come out in June.

However, because it is too late to grant relief and justice to the proponents in Comcast Corporation (March 15, 2013); Matte/, Inc., (February 9., 2012); Wei/Point, Inc .. (February 24. 2012, recon. denied March 27 .. 2012); The C/orox Company (August 13. 2012); Harris Corporation (August 13, 2012); The Procter & Gamble Company (July 6, 2012 .. recon. denied September 20, 2012); Cardinal Health, Inc ... (July 6, 2012); and, Chevron Corporation (March 15, 2013 ). the Commission can protect future proponents from the contusion caused by Staffs determinations by directing the Stafl~ to prepare a Legal Bulletin, after soliciting comment frotn both cotnpanies and shareholders.. to provide clear and fair guidelines to all interested parties-Staff" companies and shareholders-on the tiling of future shareholder proposals for an independent chainnan of the board.

Shareholders need a more thorough explanation of the evolution of how the SEC treats these proposals that is distributed widely and not offered anecdotally in certain Staff decisions. If after considering all viewpoints .. Staff tnaintains that providing no detinition for what is being proposed and voted on is preferable to referencing the definition governing the Co1npany~s other directors. then at least shareholders will be able to tailor their proposals accordingly.

Procedural History:

()n April 2, 2013, McKesson sent a letter to the Office of Chief CounseL Division of Corporation Finance. seeking a no-action detennination regarding its intention to omit the Fund~s Proposal seeking an independent chainnan of the board of directors on the



grounds that the Proposal is impennissibly vague and indetinite so as to be inherently misleading. A copy of the letter is enclosed hereto as Exhibit D.

On April 15, 20 13 .. the Fund sent a letter to the Office of Chief Counsel, Division of Corporation Finance, arguing that the no-action determination sought by McKesson should be denied because the Fund's 2012 proposal seeking an independent chairman of the board was neither vague nor indefinite when it received a majority vote. The letter also argued that the 20 13 version that refers to the New York Stock Exchange definition of independence is consistent with McKesson's own definition of independent director and gives shareholders tnore certainty. not less. In the alternative, the Fund indicated its willingness to clarify the Proposal as provided in Section E of Staff Legal Bulletin No. 14, dated July 13, 200L The Fund does not understand why Staff would not permit a substitute formulation of the shareholder proposal. The Company's claim is that the proposal is false and misleading; hence there should be flexibility on creating a substitute formulation that provides claritication for shareholders.

A copy of the letter is enclosed hereto as Exhibit E.

On April 17. 2013, the Office of Chief Counsel, Division of Corporation Finance, determined that ~-because the Proposal does not provide information about what the New York Stock Exchange"s definition of "independent director" tneans, \Ve believe shareholders would not be able to determine with any reasonable certainty exactly what actions or measures the Proposal requires. Accordingly, we will not reco1nmend enforcement action to the Commission if McKesson omits the proposal frotn its proxy materials in reliance on rule 14a-8(i) (3).'' (Emphasis supplied.) A copy of the April 17, 20 13 .. detennination is enclosed hereto as Exhibit F.

Grounds for Reversal:

The aforesaid April 17~ 2013~ determination by the Office of Chief Counsel, Division of Corporate Finance is a succinct adanission as to why this determination and the \Vhole string of recent no-action detenninations on this issue are part of an arbitrary and capricious abuse of discretion. The April 17. 2003. determination blatantly substitutes an unauthorized new test in place of the long established test tor whether a shareholder proposal is ianpermissibly vague and indefinite so as to be inherently tnisleading.

Staff Legal Bulletin No. 148 (September 14, 2004), provides that a shareholder proposal is excludable as vague and indetinite if ··neither stockholders voting on the proposaL nor the co1npany implementing the proposal (if adopted) \VOuld be able to determine with any reasonable certainty exactly what actions or tneasures the proposal requires ... ( Etnphasis supplied.)


ANNEX I Page 8 of35

In this case the exact action or measure the proposal requires is that McKesson adopt a policy that the Board's chairman be an independent director according to the definition used by the New York Stock Exchange. That is spelled out in clear and concise language in the proposal and neither McKesson nor the StatT has seriously questioned the ability of McKesson or its shareholders to detennine that with a reasonable certainty.

But the Staff arbitrarily and capriciously abused its discretion on April 17. 2013, by substituting its own test for vague and indefinite:

Whether shareholders know, •·what the New York Stock Exchange's definition of ·independent director' means?'" (Emphasis supplied.)

Staff Legal Bulletin No. 148 does not require that shareholders be able to pass a quiz on the details of the New York Stock Exchange definition of an independent director or any other Exchange to which McKesson might subsequently belong in order to vote on the Proposal. It is not the burden of the Fund or any proponent to provide such detail. As a general matter .. the SEC Staff has not pennitted companies to exclude proposals from their proxy statements under Rule 14a-8(i)(3) for failing to address all potential questions of interpretation within the 500-word limit requirements tor shareholder proposals. See e.g ... Goldman Sachs Group, Inc ... (February 18. 2011); Goldman Sachs Group, Inc .. (March 2, 20 I I); Bank of America Corporation (March 8, 20 II); Intel Corporation (March 14, 20 II); and, Caterpillar, Inc., (March 21, 2011 ). It is tilne to return to that sensible approach instead of the arbitrary and capricious abuse of discretion the Staff has shown in its April 17 .. 2013, determination here and the line of determinations leading up to it.

Furthennore, there is no reason for shareholders to have to ""know"" any of the intricacies of the New York Stock Exchange definition. All that Staff Legal Bulletin No. 148 requires them to know is that the Proposal wants McKesson to use that definitionthe same definition it already uses-in adopting a policy tbr an independent chair. Why is this controversial or complicated? McKesson adtnits in its proxy statements that its detinition of independence is consistent with that of the New York Stock Exchange. As long as McKesson is listed on the New York Stock Exchange it has to satisfy that definition. The only reason the reterence to the New York Stock Exchange \Vas inserted into the 20 13 Proposal was to reassure shareholders that the Proposal was not trying to impose some different or exotic definition on McKesson; and, it is worth noting that any shareholder who has the inclination to look up the definition and has access to the internet can quickly find the definition.

The Honorable Elizabeth Murphy May 21,2013 Page9

Conclusion:


For the aforementioned reasons~ the Fund respectfully submits that the Cotnmission should grant discretionary review of the no-action determination at issue here and reverse the Staff's determination that the Fund's Proposal may be excluded under Rule 14a-8(i)(3 ).

The Fund also respectfully submits that the Cotnmission should direct the Staff to prepare a Legal Bulletin~ after soliciting comment from both companies and shareholders. to provide guidelines to all interested parties-Staff, companies and shareholders-on the tiling of future shareholder proposals for an independent chairman of the board.

KH/cz Enclosed

Sincerely,

Ken Hall General Secretary-Treasurer

cc: Willie C. Bogan, Associate General Counsel and Secretary. McKesson Corporation [email protected]


Exhibit A

Shareholder Proposals Seeking an Independent Chairman of the Board Where Independence is Defined Solely by Reference to a Stock Exchange Listing

2010-2012

2012 American Express Company Amgen Inc. Anadarko Petroleum Corporation Chevron Corporation Comcast Corporation Dean Foods Company Frontier Communications Corporation Janus Capital Group Inc. Johnson & Johnson JPMorgan Chase & Co. Limited Brands. Inc. Lockheed Martin Corporation News Corporation Northern Trust Corporation Parker-Hannitin Corporation Pioneer Natural Resources Company

2011 Abercrombie & Fitch Anadarko Petroleum Corporation JPMorgan Chase & Co. Old Dominion Freight Line, Inc. WeiiPoint. Inc.

2010 AutoNation. Inc. Constellation Energy Group, Inc. Home Depot, Inc. JPMorgan Chase & Co. Kohl's Corporation

22.2o/o 41.8% 39.5% 38.2o/o 21 o/o 45.8% 42.3% 42.7% 42.9% 40.2% 21.7% 36.9% 30.5% 40.8o/o 22.2% 23.8%

3] .2°/o 41.6°/o 11.9% 28.4% 29.8°/o

15.( 0/o 18.3o/o 22.4°/o 34% 16.8o/o

AFSCME UAW AFSCME Plumbers and Pipefitters AFL-CIO AFSCME AFL-CIO AFSCME AFSCME AFSCME AFL-CIO AFSCME Christian Brothers Investment Service AFSCME Norges Bank Investment Management New York State Pension Funds

AFSCME AFSCME Chevedden. J Teamsters SEIU

JB EW Norges Bank Trowel Trades Trowel Trades Trowel Trades

303A.01 Independent Directors


Listed companies must have a majority of independent directors.

Exhibit 8

Commentary: Effective boards of directors exercise independent judgment in carrying out their responsibilities. Requiring a oversight and lessen the possibility of damaging conflicts of interest.

Amended: November 25, 2009 (NYSE-2009-89).

303A.02 Independence Tests

The following is the operative text of Section 303A. 02 effective through June 30, 2013:

In order to tighten the definition of "independent director" for purposes of these standards:

(a) No director qualifies as "independent" unless the board of directors affirmatively determines that the director has noma partner, shareholder or officer of an organization that has a relationship with the company).

Commentary: It is not possible to anticipate, or explicitly to provide for, all circumstances that might signal potential conflict: relationship to a listed company (references to "listed company" would include any parent or subsidiary in a consolidated g making "independence" determinations broadly consider all relevant fads and circumstances. In particular. when assassin! the board should consider the issue not merely from the standpoint of the director, but also from that of persons or organizi can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among othe Exchange does not view ownership of even a significant amount of stock, by itself, as a bar to an independence finding.

Disclosure Requirement The listed company must comply with the disclosure requirements set forth in Item 407(a) of Reg1

(b) In addition. a director is not independent if:

(i) The diredor is, or has been within the last three years, an employee of the listed company, or an immediate family mem of the listed company.

Commentary: Employment as an interim Chairman or CEO or other executive officer shall not disqualify a director from bei

(ii) The director has received, or has an immediate family member who has received, during any twelve-month period withi from the listed company, other than director and committee fees and pension or other forms of deferred compensation for J way on continued service).

Commentary: Compensation received by a director for former service as an interim Chairman or CEO or other executive o1 test. Compensation received by an immediate family member for service as an employee of the listed company (other than independence under this test.

(iii) (A) The director is a current partner or employee of a firm that is the listed company's internal or external auditor; (B) tt of such a firm; (C) the director has an immediate family member who is a current employee of such a firm and personally v. immediate family member was within the last three years a partner or employee of such a firm and personally worked on tt

(iv) The director or an immediate family member is, or has been with the last three years, employed as an executive officer executive officers at the same time serves or served on that company's compensation committee.

(v) The director is a current employee, or an immediate family member is a current executive officer, of a company that ha!

http://nysemanual.nysc.com/LCMToolsfrOCChapter.asp'?manual=/lcm/sections/lcm-sccti... 5/21/2013

ANNEX I Page 12 of 35 Page 2 of4

for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of

Commentary: In applying the test in Section 303A.02(b)(v), both the payments and the consolidated gross revenues to be 1 such other company. The look-back provision for this test applies solely to the financial relationship between the listed com employer: a listed company need not consider former employment of the director or immediate family member.

Disclosure Requirement: Contributions to tax exempt organizations shall not be considered payments for purposes of Sect disclose either on or through its website or in its annual proxy statement. or if the listed company does not file an annual pr filed with the SEC, any such contributions made by the listed company to any tax exempt organization in which any indepe three years, contributions in any single fiscal year from the listed company to the organization exceeded the greater of $1 r revenues. If this disclosure is made on or through the listed company's website, the listed company must disdose that fact provide the website address. Listed company boards are reminded of their obligations to consider the materiality of any sue

General Commentary to Section 303A.02(b): An "immediate family member" includes a person's spouse, parents, children brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person's home. When applying need not consider individuals who are no longer immediate family members as a result of legal separation or divorce, or th•

In addition, references to the "listed company" or "company" include any parent or subsidiary in a consolidated group with 1 determination under the independent standards set forth in this Section 303A.02(b).

Amended: November 25, 2009 (NYSE-2009-89).

!. For purposes of Section 303A, the term "executive officer" has the same meaning specified for the term "officer" in Rule 1

303A.02 Independence Tests

The following will be the operative text of Section 303A.02 effective commencing July 1, 2013:

In order to tighten the definition of "independent director" for purposes of these standards:

(a)(i) No director qualifies as "independent" unless the board of directors affirmatively determines that the director has no n partner, shareholder or officer of an organization that has a relationship with the company}.

(ii) In addition, in affirmatively determining the independence of any director who will serve on the compensation committeE must consider all factors specifically relevant to determining whether a director has a relationship to the listed company wh management in connection with the duties of a compensation committee member, including, but not limited to:

(A) the source of compensation of such director. including any consulting, advisory or other compensatory fee paid by the I

(B) whether such director is affiliated with the listed company, a subsidiary of the listed company or an affiliate of a subsidic

Commentary: It is not possible to anticipate. or explicitly to provide for, all circumstances that might signal potential conflict! relationship to a listed company (references to "listed company" would include any parent or subsidiary in a consolidated g making "independence" determinations broadly consider all relevant facts and circumstances. In particular, when assassin! the board should consider the issue not merely from the standpoint of the director, but also from that of persons or organize can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among othe Exchange does not view ownership of even a significant amount of stock, by itself, as a bar to an independence finding.

When considering the sources of a director's compensation in determining his independence for purposes of compensatior receives compensation from any person or entity that would impair his ability to make independent judgments about the list

"!? 1 /?011

ANNEX I Page 13 of 35 Page 3 of4

any affiliate relationship a director has with the company, a subsidiary of the company. or an affiliate of a subsidiary of the c

compensation committee service. the board should consider whether the affiliate relationship places the director under the

management, or creates a direct relationship between the director and members of senior management. in each case of a about the listed company's executive compensation.

Disclosure Requirement The listed company must comply with the disclosure requirements set forth in Item 407(a) of Reg1

(b) In addition. a director is not independent if:

(i) The director is, or has been within the last three years, an employee of the listed company, or an immediate family mem of the listed company.

Commentary: Employment as an interim Chairman or CEO or other executive officer shall not disqualify a director from bei

(ii) The director has received, or has an immediate family member who has received, during any twelve-month period withi

from the listed company, other than director and committee fees and pension or other forms of deferred compensation for J way on continued service).

Commentary: Compensation received by a director for former service as an interim Chairman or CEO or other executive 01

test. Compensation received by an immediate family member for service as an employee of the listed company (other than independence under this test.

(iii) (A) The director is a current partner or employee of a firm that is the listed company's internal or external auditor; (8) tt of such a firm; (C) the director has an immediate family member who is a current employee of such a firm and personally v. immediate family member was within the last three years a partner or employee of such a firm and personally worked on tt

(iv) The director or an immediate family member is, or has been with the last three years, employed as an executive officer

executive officers at the same time serves or served on that company's compensation committee.

(v) The director is a current employee, or an immediate family member is a current executive officer, of a company that hal

for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of

Commentary: In applying the test in Section 303A.02(b)(v), both the payments and the consolidated gross revenues to be 1 such other company. The look-back provision for this test applies solely to the financial relationship between the listed com

employer; a listed company need not consider former employment of the director or immediate family member.

Disclosure Requirement: Contributions to tax exempt organizations shall not be considered payments for purposes of Sect disclose either on or through its website or in its annual proxy statement, or if the listed company does not tile an annual pr

filed with the SEC. any such contributions made by the listed company to any tax exempt organization in which any indepe

three years, contributions in any single fiscal year from the listed company to the organization exceeded the greater of $1 r revenues. If this disclosure is made on or through the listed company's website, the listed company must disclose that fact

provide the website address. Listed company boards are reminded of their obligations to consider the materiality of any sue

General Commentary to Section 303A.02(b): An "immediate family member" indudes a person's spouse, parents. children brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person's home. When applying

need not consider individuals who are no longer immediate family members as a result of legal separation or divorce, or th•

In addition, references to the "listed company" or "company" include any parent or subsidiary in a consolidated group with t determination under the independent standards set forth in this Section 303A.02(b).

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ANNEX I Page 14 of 35 Page 4 of 4

Amended: November 25, 2009 (NYSE-2009-89); January 11. 2013 (NYSE-2012-49).

~For purposes of Section 303A, the term "executive officer" has the same meaning specified for the term "officer'' in Rule 1

303A.03 Executive Sessions

To empower non-management directors to serve as a more effective check on management, the non-management directo executive sessions without management.

Commentary: To promote open discussion among the non-management directors, companies must schedule regular exeo

participation. "Non-management'' directors are all those who are not executive officers, and indudes such directors who arr or family membership, or for any other reason.

Regular scheduling of such meetings is important not only to foster better communication among non-management directo

calling of executive sessions. A non-management director must preside over each executive session, although the same d

While this Section 303A.03 refers to meetings of non-management directors. listed companies may instead choose to hold independent director must preside over each executive session of the independent directors. although the same director is

directors.

If a listed company chooses to hold regular meetings of all non-management directors, such listed company should hold ar once a year.

Disclosure Requirements: If one director is chosen to preside at all of these executive sessions, his or her name must be d annual proxy statement or. if the listed company does not file an annual proxy statement. in its annual report on Form 10-K company's website, the listed company must disdose that fad in its annual proxy statement or annual report, as applicable

individual is not the presiding director at every meeting, a listed company must disclose the procedure by which a presidio'

listed company may wish to rotate the presiding position among the chairs of board committees.

In order that all interested parties (not just shareholders) may be able to make their concerns known to the non-manageme

method for such parties to communicate directly with the presiding director or with those directors as a group either on or tl or, if the listed company does not file an annual proxy statement, in its annual report on Form 10-K filed with the SEC. lfthi listed company must disclose that fad in its annual proxy statement or annual report, as applicable, and provide the websit same procedures they have established to comply with the requirement of Rule 10A-3 (b)(3) under the Exchange Ad regaa

companies through Sedion 303A.06.

Amended: November 25,2009 (NYSE-2009-89).


\.\.illie C. Un~an .\.oisuciatc (;l·llernl Cuum;el and Sl'('retary

1934 Act/Rule 14a-8

April 2. 2013

VIA E-MAIL ([email protected])

Office of Chief Counsel Division of Corporation Finance U.S. Securities and Exchange Commission I 00 F Street, N.E. Washington. D.C. 20549

Re: McKesson Corporation Stockholder Proposal Submitted by the International Brotherhood of Teamsters General Fund Securities Exchange Act of 1934- Section 14(a), Rule 14a-8

Ladies and Gentlemen:

Exhibit D

M~KESSON

This letter is to inform you, in accordance with Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended (the "Exchange Acf"), that McKesson Corporation. a Delaware corporation (the ··company .. ). intends to omit from its proxy statement and form of proxy (collectively, the ··20 13 Proxy Materials'') for its 2013 Annual Meeting of Stockholders (the ·•20 13 Annual Meeting .. ) a stockholder proposal (the ··Proposal'') submitted by the International Brotherhood of Teamsters General Fund (the .. Proponent"') under cover of a letter dated February 7. 2013.

The Company requests confirmation that the staff of the Division of Corporation Finance (the .. Staff) of the Securities and Exchange Commission (the ·'Commission') will not recommend any enforcement action if the Company omits the Proposal from the 2013 Proxy Materials on the grounds that the Proposal is impermissibly vague and indefinite so as to be inherently misleading, and theret(.)re excludable in reliance on the provisions of Rule 14a-8(i)(3).

Pursuant to Rule 14a-8(j). the Company has: (i) submitted this letter to the Commission no later than eighty ( 80) calendar days before the Company expects to file its dctinitive 2013 Proxy Materials with the Commission and (ii) concurrently sent a copy of this correspondence to the Proponent. In accordance with Section C of Stc~ff Legal Bulletin l.JD (November 7. 2008). this letter and the accompanying exhibit arc being emailed to the Staff at

Office of Chief Counsel Division of Corporation Finance Page 2


M~KESSON

·--·-···---····-················································-······················--············--····~·--·-···········

[email protected]. Because this request is being submitted electronically pursuant to the guidance provided in Stc!fl Legal Bulletin J.JD, the Company is not enclosing the additional six copies ordinarily required by Rule 14a-8(j). Pursuant to Rule 14a-8(k) and Section E of Slt!fl Legal Bulletin I -ID, the Company requests that the Proponent copy the undersigned on any correspondence that the Proponent may choose to submit to the Staff in response to this submission. In accordance with Section F of Stc{fl Legal Bulletin I .JF (October 18, 20 II)~ the Staff should transmit its response to this no-action request by e-mail to [email protected].

I. The Proposal

The Proposal constitutes a request that the Company's stockholders approve the following resolution:

RESOLVED: The shareholders of McKesson Corporation (the ··Company") urge the Board of Directors to adopt a policy that the Board·s chairman be an independent director according to the definition set forth in the New York Stock Exchange listing standards. unless the Companfs common stock ceases being listed there and is listed on another exchange, at which point, that exchange's standard of independence should apply. The policy should be implemented so as not to violate any contractual obligation and should specify: (a) how to select a new independent chairman if a current chairman ceases to be independent during the time between annual meetings of shareholders~ and~ (b) that compliance with the policy is excused if no independent director is available and willing to serve as chairman.

The text of the Proposal is followed by a supporting statement that is not reproduced in this letter, but that is set forth in the copy of the Proposal attached hereto as Exhibit A.

II. The Proposal May Be Excluded Under Rule 14a-8(i)(3) Because the Proposal Is Impermissibly Vague and Indefinite So As To Be Inherently Misleading.

The Company respectfully requests that the Staff concur in our view that the Proposal may be excluded from the 2013 Proxy Materials pu1·suant to Rule 14a-8(i)(3) because the Proposal is impermissibly vague and indetinite so as to be inherently misleading. Rule 14a-8(i)(3) permits a company to exclude a stockholder proposal from its proxy materials if the proposal or supporting statement is contrary to any of the Commission·s proxy rules. including Rule 14a-9. which prohibits materially false or misleading statements in proxy soliciting materials. The Staff consistently has taken the position that a stockholder proposal is excludable under Rule 14a-8(i)(3) as vague and indefinite if .. neither stockholders voting on the proposal. nor the company in implementing the proposal (if adopted), would be able to determine with any reasonable certainty exactly what actions or measures the proposal requires:· Slt!ll Legal

Office of Chief Counsel Division of Corporation Finance Page3


Mf;KESSON

Bulletin No. l-IB (September 14. 2004 )~ see also Dyer v. SEC. 287 F.2d 77 3 .. 781 (8th Cir. 1961) ( .. [l]t appears to us that the proposal. as drafted and submitted to the company, is so vague and indefinite as to make it impossible for either the board of directors or the stockholders at large to comprehend precisely what the proposal would entail.'').

The Staff has concurred with the exclusion of stockholder proposals that, like the Proposal. have sought to impose a standard of independence for the board chairman by reference to a particular set of guidelines when the proposal or supporting statement has failed to sufficiently describe the substantive provisions of the external guidelines. For example. in Wei/Point. Inc .. (February 24.2012, recon. denied March 27, 2012) the stockholder proposal was nearly identical to the Proposal in requesting that the Wellpoint board of directors adopt a policy that the board's chairman be "an independent director according to the definition set forth in the New York Stock Exchange ('NYSE') listing standards. unless Wellpoint's common stock ceases being listed on the New York Stock Exchange and is listed on another exchange, at which time that exchange's standard of independence should apply." In its no-action request Wellpoint stated that the proposal relied upon an external standard of independence (the New York Stock Exchange standard) in order to implement a central aspect of the Proposal, but failed to describe the substantive provisions of that standard. In concurring with the exclusion of the proposal under Rule 14a-8(i)(3). the Staff concurred with Wellpoint's argument that the proposal was so vague and indefinite that neither stockholders nor the company would be able to determine with reasonable certainty exactly what actions or measures the proposal requires. The Staff has reaffirmed this position by concurring with the exclusion under Rule J4a-8(i)(3) of several proposals that sought to impose the New York Stock Exchange standard of independence for the board chairman, but failed to explain the substantive provisions of that standard. See. e.g .. The Clorox Company (August 13. 20 12); Harris Corporation (August 13, 20 I 2); The Procter & Gamble Company (July 6~ 2012. recon. denied September 20. 2012): Cardinal Health. Inc. (July 6. 2012); and ,\t/attel. Inc. (February 9. 2012).

More recently. in Chevron Corporation (March 15. 2013), the Staff concurred with the exclusion of a proposal that. like the proposal in Wei/point, is substantially identical to the Proposal. In particular. the proposal in Chevron Corporation requested that the Chevron board of directors adopt a policy that the board's chairman be "an independent director according to the definition set forth in the New York Stock Exchange standards, unless Chevron common stock ceases being listed there and is I is ted on another exchange, at which point. that exchange· s standard of independence should apply:· Finding that the detinition of··independent director .. is a ·•central aspect of the proposal:· the Staff concurred that the proposal's reference to the standard of the New York Stock Exchange. without an explanation of what that particular standard entailed. caused the proposal to be impcnnissibly vague and indefinite and. therefore. excludable under Rule 14a·8(i}(3 ). In reaching this conclusion. the Stafl' cited Stqff Legal Bulletin No. J-IG (October 16. 2012) and noted that:

·"[W)e believe that a proposal would be subject to exclusion under rule 14a-8(i}(3) if neither the shareholders voting on the proposal~ nor the company in implementing the proposal (if adopted). would be able to determine with

Office of Chief Counsel Division of Corporation Finance Page4


M~KESSON

reasonable certainty exactly what actions or measures the proposal requires. In evaluating whether a proposal may be excluded on this basis~ we consider only the information contained in the proposal and supporting statement and determine whether. based on that information. shareholders and the company can determine what actions the proposal seeks. Accordingly, because the proposal does not provide information about what the New York Stock Exchange·s definition of ·'independent director·· means, we believe shareholders would not be able to determine with any reasonable certainty exactly what actions or measures the proposal requires.'·

See also Ashford Hospitality Trust, Inc. (March 15. 2013) (same); and Comcast Corporation (March 15, 2013) (concurring in the exclusion of a proposal that requested that the company amend its articles of incorporation to require the chairman of the board of directors to be an independent director .. as defined by the rules of the NASDAQ Stock Market;· because •'the proposal does not provide information about what the NASDAQ's definition of •independent director· means'').

The Staffs position in these more recent no-action letters is consistent with its historical approach to situations where reference in the proposal to an external standard renders the proposal so vague and indefinite that neither stockholders voting on the proposal. nor the company in implementing the proposal (if adopted). would be able to determine with any reasonable certainty exactly what actions or measures the proposal requires. In The Boeing Company (February I 0. 2004), a stockholder proposal requested a bylaw requiring the chairman of the company's board of directors to be an independent director ·•according to the 2003 Council of Institutional Investors definition:· The company argued that the proposal referenced a standard of independence. but failed to adequately describe or define that standard such that stockholders would be unable to make an informed decision on the merits of the proposal. The Staff concurred with the exclusion of the proposal under Rule 14a-8(i)(3) as vague and indefinite, because it •·fail[ed) to disclose to shareholders the definition of "independent director' that it [sought] to have included in the bylaws." See also PG&E Corporation (March 7, 2008); Schering-Piough Corporation (March 7~ 2008); and .JP"Niorgan Chase & Co. (March 5, 2008) (all concurring in the exclusion of proposals that requested that the company require the board of directors to appoint an independent lead director as defined by the standard of independence ·•set by the Council of Institutional Investors:· without providing an explanation of what that particular standard entailed).

The Staff's position in these no-action letters is consistent with other situations in which the Staff has concurred that references to speci tic standards that are integral to a proposal must be sufficiently explained in the proposal or supporting statement. For example, in Dell Inc:. (March 30. 20 12). a stockholder proposal sought to provide proxy access to any stockholders who "''satisfy SEC Rule 14a-8(b) eligibility requirements;· without explaining the eligibility requirements set torth in Rule 14a-8(b). Indicating that the specitic eligibility requirements ··represent a central aspect of the proposal:· the Staff concurred that the proposal's reference to Rule 14a-8(b) caused the proposal to be impermissibly vague and indefinite and. therefbre.



M~KESSON

excludable under Rule 14a-8(i)(3). The Staff noted that although ·•some shareholders voting on the proposal may be familiar with the eligibility requirements of rule 14a-8(b), many other shareholders may not be familiar with the requirements and would not be able to determine the requirements based on the language of the proposal:· See also Chiquita Brands International. Inc. (March 7, 2012) (same): NIENIC Electronic Materials. Inc. (March 7. 2012) (same); Sprint Nextel Corp. (March 7. 2012) (same); Exxon 1\tfohil Corporation (Naylor) (March 21, 201 1) (concurring with the exclusion of a proposal requesting the use of. but tailing to sufficiently explain, ··guidelines from the Global Reporting Initiative .. ); AT&T Inc. (February 16, 2010, recon. denied lVIarch 2~ 20 I 0) (concurring with the exclusion of a proposal that sought a report on, among other things. ·'grassroots lobbying communications as defined in 26 C.F.R. § 56.4911-2""); and Johnson & Johnson (February 7, 2003) (concurring with the exclusion of a proposal requesting the adoption of the ·"Glass Ceiling Commission·s·· business recommendations without describing the recommendations).

The Proposal, which states that the Company's board of directors should adopt a policy that the board's chairman be ··an independent director according to the definition set forth in the New York Stock Exchange listing standards:· is substantially similar to the proposal in Wei/point. Inc .. Chevron Corporation and the other no-action letters cited above. The Proposal relies upon an external standard of independence (the New York Stock Exchange standard) in order to implement a central aspect of the Proposal but fails to describe the substantive provisions of the standard. Without a description of the applicable New York Stock Exchange listing standards. stockholders will be unable to determine the standard of independence that is the subject of the vote. As the aforementioned no-action letters indicate, the Company· s stockholders cannot be expected to make an informed decisions on the merits of the Proposal without knowing what they are voting on. See, e.g .. Stqff Legal Bulletin No. I -IB (September 15, 2004) (noting that ··neither the stockholders voting on the proposal. nor the company in implementing the proposal (if adopted). would be able to determine with any reasonable certainty exactly what actions or measures the proposal requires~·); and Capital One Financial Corporation (February 7, 2003) (concurring in the exclusion of a proposal under Rule 14a-8(i)(3) where the company argued that its stockholders ··would not know with any certainty what they are voting either tor or against .. ).

The Proposal is distinguishable from other stockholder proposals that refer to director independence standards where the Staff did not concur that the proposal could be excluded under Rule 14a-8(i)(3) as vague and indefinite. In those situations, the proposal requested that the chairman be an independent director (by the standard of the New York Stock Exchange) who had not previously served as an executive officer of the company. See, e.g., PepsiCo, Inc. (February 2. 2012): Reliance Steel & Aluminum Company (February 2. 2012); Sempra Energy (February 2. 2012): General Electric Company (Steiner) (January 10. 2012, recon. denied February I. 2012): and Allegheny Ener}{V. Inc. (February 12. 2010). The requirement that the board chairman not previously have served as an executive officer of the company was presented as a partial. supplementary description of the New York Stock Exchange independence standard. In contrast. the Proposal includes only an external standard of independence (the New York Stock Exchange standard of independence} that is neither explained in~ nor understandable from,

ANNEX I

Page 22 of35

Office of Chief Counsel Division of Corporation Finance M



M~KESSON

standards:· leaving the Company no discretion to incorporate some, but not all. of the applicable provisions of the New York Stock Exchange listing standards. Although the requirement that a director not be employed by the listed company is one element of the New York Stock Exchange standard of independence. the discussion of this provision in the Proposal's supporting statement does not clarify the additional requirements of the standard. Yet the Proposal would require compliance with those additional requirements. Consequently, stockholders voting on the Proposal will not have the necessary information from which to make an informed decision on all of the specific requirements that the Proposal would impose.

Accordingly, we believe that because the proposal does not provide information about what the New York Stock Exchange's definition of .. independent director'" means. stockholders would not be able to determine with any reasonable certainty exactly what actions or measures the Proposal requires. As a result. we believe that the Proposal is so vague and indefinite that the entire proposal is excludable under Rule 14a-8(i)(3).

Ill. Conclusion

For the foregoing reasons, the Company respectfully requests that the Staff confirm that it would not recommend enforcement action if the Company omits the Proposal from its 2013 Proxy Materials.

If you have any questions or require any additional information. please do not hesitate to call me at (415) 983-9007. or David Lynn of Morrison & Foerster LLP at (202) 887-1563.

Sincerely.

jfdfj(J.~ Willie C. Bogan Associate General Counsel and Secretary

Enclosures

cc: International Brotherhood of Teamsters General Fund

ANNEX I Page 24 of35

Exhibit A


INTERNATIONAL BROTHERHOOD OF TEAMSTERS JAMES P. HOFFA General President

25 Louisiana Avenue. NW Washington, DC 20001

BY FACSIMILE: 415.983.9042 BY UPS GROUND

Willie C. Bogan, Esq.

February 7, 2013

Associate General Counsel and Secretary McKesson Corporation One Post Street, 35'h Floor San Francisco, CA 941 04

Dear Mr. Bogan :

KEN HALL General Secretary-Treasurer

202.624.6800 ~.teamster.org

J hereby submit the enclosed resolution on behalf of the Teamsters General Fund, in accordance with SEC Rule 14a-8, to be presented at the Company's 2013 Annual Meeting.

The General Fund has owned 110 shares of McKesson Corporation, continuously for at least one year and intends to continue to own at least this amount through the date of the annual meeting. Enclosed is relevant proof of ownership.

Any written communication should be sent to the above address via U.S. Postal Service, UPS, or OHL, as the Teamsters have a policy of accepting only union delivery. If you have any questions about this proposal, please direct them to Louis Malizia of the Capital Strategies Department at (202) 624-6930.

KH/lrn Enclosures

Sincerely,

Ken Hall General Secretary-Treasurer

•·:~~ 1•1


RESOLVED: The shareholders of McKesson Corporation (the "Company") urge the Board of Directors to adopt a policy that the Board's chainnan be an independent director according to the defmition set forth in the New York Stock Exchange listing standards, unJess the Company's common stock ceases being listed there and is listed on another exchange, at which point, that exchange's standard of independence should apply. The policy should be implemented so as not to violate any contractual obligation and should specify: (a) how to select a new independent chainnan if a current chairman ceases to be independent during the time between annual meetings of shareholders; and, (b) that compliance with the policy is excused if no independent director is available and willing to serve as chainnan.

SUPPORTING STATEMENT: We believe that a board chairman who is independent of the Company and management will promote greater management accountability to shareholders and conduct a more objective evaluation of management.

In our opinion, a board of directors is Jess likely to provide rigorous independent oversight of management if the Chainnan is also the CEO as is the practice at McKesson. McKesson's previous Chairman/CEO was sentenced to ten years in prison after an accounting fraud scandal cost investors $8.6 billion in share value overnight. The company paid $960 million to settle related shareholder litigation. 1

Under the leadership of our current Chainnan/CEO, our Company has agreed to pay nearly $1 billion to settle litigation related to allegations of price fixing. 2

Recent developments at McKesson reinforce our concerns. A similar proposal for independent board leadership received majority support from shareholders in 2012, yet the Board has failed to respond to this clear mandate. Furthermore, a 2012 ISS Proxy Advisory Services report showed our CEO was paid three times the median of our peer competitors and 37% of shareholders voted against the Company's executive compensation plan.

An NACO Blue Ribbon Commission on Directors' Professionalism recommended that an independent director should be charged with "organizing the board's evaluation of the CEO and provide ongoing feedback; chairing executive sessions of the board; setting the agenda and leading the board in anticipating and responding to crises." A blue-ribbon report from The Conference Board echoed that sentiment a few years later.

The CalPERS' Global Principles of Accountable Corporate Governance reconunends that a company's board should generally be chaired by an independent director, as does the Council of Institutional Investors.

We urge shareholders to vote FOR this proposaL

1 Milt Freudaaheim, "McKesaon Agrcc:s to Pay $960 Million in Fraud Suit." T1te New Yon 'nmes, January 13. 200S. 2 Timothy W. Martin. ··McKesson to PayS lSI Million to Settle Drug-Pricing Swt.•• Wall Street Joumal, July 27,2012.

..


.A.~ AMALGAMATED A'~ BANK.

February 7, 2013

Mr. Willie C. Bogan Associate General Counsel and Secretary McKesson Corp. One Post Street, 35 ... Floor San Francisco, CA 94104

RE: McKesson Corp.- Cusip #581550103

Dear Mr. Bogan:

Amalgamated Bank is the record owner of 110 shares of common stock (the 11Shareal) of

McKesson Corp., beneficially owned by the International Brotherhood of Teamsters General Fund. The shares are held by Amalgamated Bank at the Depository Trust Company in our participant account The International Brotherhood of Teamsters General Fund has held the Shares continuously since 7/19/2006 and intends to hold the shares through the shareholders meeting.

If you have any questions or need anything further, please do not hesitate to call me at (212)-895-4973.

Very truly yours,

Jerry Marchese Vice President

CC: Louis Maliza

276 SEVENTH AVENUE

Am.a"ica~ lAbar Bank NEWYORK. NV 10001 I (212) 288-8200 I www.•nwlg~~matl8dbank.com

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

, ANNEX I

Page 28 of35 Exhibit E

INTERNATIONAL BROTHERHOOD OF TEAMSTERS

JAMES P. HOFFA ! Jt!lli!LII PP!'-ildt~llt

.hJ l•l!JI'il:llld /\1,• 1JlUe, N'N 'N:1·,!li!lJ Jlwl IJC .'!)!!Ill

April IS. 201 J

VIA Ei\1:\IL: (shnreholdcrproposalsra~sec.gov)

Securiti~s and Exchange Commission Otlke of the Chief Counsel Division ofCorpuration finance I 00 F Street. N E \Vashington. DC ~0549

KEN HALL r;~~lit!l;!! Su1 r~·~t.JI'( frt~d')IHl!l

/IJ2 Gl-1 13HOO ww·::.r,;.Hn:~tt:r fl"l

Re: Shareholder proposal submitted to 1\lcKcsson Corporation by the International Rrothcrhood ot' Tcan1stcrs

I , ANNEX I

Page 29 of35

U.S. Securities and Exchange Commission April 15. 201 J Page 2 nf5

The 2012 shareholder proposal did nnt otlcr any rctcrcnce to a detinitinn of an inllependcnt chairman. The resolved clause of the proposal statt.'li:

Resolved: The shareholders of McKesson Corporation (the ucompany") urge the Board of Directors to adopt a policy that the Board's chairman be an independent director. The policy should be implcmcntc..-d so as not to violate any contractual obligation and should specify: (a) how to select a new independent chairman if a current chairman ceases to he independent during the time between annualanectings of shareholders; and, (h) that compliance with the policy is excused if no independent director is available and willing to serve as chairman.

The rcso lved clause of the 20 13 Proposal at issue here is identical, except tor the addition of a clause that .. tctines independent director by referring to the detinition of the New York Stock Exchange listing standards ( .. NYSE):

Resolvc..-d: The shareholders of McKesson Corporation (the ··company") urge the Board of Directors to adopt a policy that the Board's chairman be an independent director according to the definition set forth in the New York Stock Exchange listing standards, unless the Company's common stock ceases being listed there and is listed on another exchange, at which point, that exchange's standard of independence should apply. The policy should he implemented so as not to violate any contractual obligation and should specify: (a) how to select a new independent chairman if a current chairman ceases to be independent during the time between unnualmcetings of shareholders~ and. (b) that compliance with the policy is cxcusc..xl if no independent director is available and willing to serve as chairman. (Emphasis addc..-d.)

According to McKesson's own 2012 Proxy Statement, this is the same standard the Company uses to dctcrn1inc the independence of directors. On page 13 of its 1012 Proxy Statement. under the heading Director Independence. the Company states:

Under the Company·s Corporate Goven1ance (iuidclines. the Board n1ust have a substantial majority of directors who meet the applicahle criteria t(lr independence rcltuircd by the NYSE. The Board must determine. has'--d on all relevant th..:ts and circumstances, whether in its husincss judgment. ead1 director salistics the criteria t()r independence. including the absence of a material relationship with the Company. either d ired ly or indirectly. Consistent with the continued listing requircn1cnts of the NYSK, the Board has established standards to assist it in making a determination of dircdor indcpcnc.lcncc. (Emphasis added.)

On pages 13-1-t of the 2012 Proxy Statement \lkKcsson then goes on to provide an explanation nf hnw it is applying the 7\iYSE listing fClJUircmL·nts on indcpL·mlcnt diredur in \vonls 1 hat cxccl."d I he 500 \Vord limit ti>r :-.harcho ldcr propo-;als.


U.S. Securities anti E.xch~mgc Commission :\pril 15. 201 J Pagel of5

wfcKcsson, which mac.lc no attempt to exdudc the 2012 Proposal that contained no dctinition of an independent director. is now illogically claiming in its letter (page 7) that the 2013 Proposal should he excluded because .. stockholders would not he ;,tble to determine \~ ith any reasonable certainty what actions or measures I he Proposal requires." (Emphasis added.)

How can McKesson daim that the 2013 Proposal docs not with reasonable certainty ask that the Board adopt a JX>Iicy that the chairman be an independent director as dctincd by the NYSE listing requirement or another exchange if the Company ceases hcing listed on the NYSE'?

McKesson speciously attempts to do this by arguing in its letter (pages three to six) that the 20 I 3 Proposal seeks to impose a standard of independence by rctcrring to a set of exten1al guidelines without sutliciently describing the substantive provisions of the external guidelines.

But ~1cKesson obviously understands the substantive provisions of the NYSE listing guidelines as proven hy its numerous retcrcnccs to them in its 2012 proxy statement. Presumably it will repeat these same substantive rctcrenccs in its 2013 proxy statement t(lr the hcnctit of shareholders. And if McKt..'Sson tccls it is necessary~ it can expand on those substantive details in its response to the 2013 Proposal in the 2013 Proxy Statcn1ent.

The providing of such detail is not the hurdcn of the Proponent. As a general matter. the SEC Staff has not permitted companies to exclude proposals ti·om their proxy statements under Rule 14a-8(i)(3) tbr tailing to i.lddrcss all potential questions of interpretation within the 500-word limit requirements thr shareholder proposals. Sec e.g .. Goldman Sac:hs Group. Inc:. (February I~. 20 II): (loldman Sachs (;roup. Inc. (1\.tfan.:h 2, 20 II), /lank t!l .lmericu Corporation (March M. 20 II); lntf.!l Coqwration (March 14. 20 II)~ Cale'1'il/ar. Inc:. ( l'v1arch 21. 2011).

On pages three to six of its letter. M~Kesson cites a series of rc~ent no ad ion decisions that allowed companies to exclude independent chair proposals that only retcrcnccd external guidelines. However. SEC Statl' Bulletin No. 1--l, dated July I J. 200 I. page six states that the Staff will ··consider the spccitic arguments asserted hy the company and the shareholder'' and that ··rrhe Staftlmay determine that company X may exclude a proposal hut company Y

.. r


U.S. Securities and Exchange Commission April 15, 2013 Page 4 of5

Obviously. this \'Crsion of the independent dmirman proposal is widely used by shareholders and commonly accepted by companies.

The proponent submits that the ~ritical question here is l1Ql whether shareholders can pass a quil: on the details of the NYSE definition of an independent director or any other exchange to which it might subsequently hclong. The question here i~ whether shareholders know with reasonable certainty that the proposal asks 1\vfcKcsson to adopt a policy that its ~hairman meet the NYSE dctinition of an independent director or any other exchange to which it might subst."quently belong. And the answer to that question is an obvious and indisputable YES.

In the Alternative, Pursuant to Section E of SEC Staff Legal Bulletin No. 14, dated July 13, 20()1, Proponent Is Willing to Revise the Proposal

As establisht..xl above~ the Proponent believes that the 2013 Proposal is neither vague nor indetinitc and that it would be a subversion of the 14(a)-8 process if McKesson was allowed to exclude from its 2013 proxy materials a proposal that provides more certainty to shareholders than the 2012 version of that same proposal which received a majority vote.

Nonetheless~ in the alternative, if the SEC' Statf believes it would be helpful to shareholders. the Proponent is willing to revise the 2013 Proposal pursuant to Section E of SEC StatT Legal Bulletin No. 14, dated July 13. 2001, which states revisions arc permitted where Comp,mics request no action relief based on Rule 14a-8( i)(3) under the tbllowing c.:ircumstances: .. If the proposal contains specific sh1tcments that may he materially false or misleading or irrelevant to the suhject matter of the proposal. we may permit the shureholdcr to revise or delete these statements. Also., if the proposal or supporting statement contains vague terms., we may. in rare circumstances., permit the shareholder to clarify these terms."' (Emphasis addt..-d.)

Neither McKesson nor 52°~. of its voting shareholders had any objection to the 2012 version of the proposal that did not contain aJ)y_retcrcncc to any definition of independent director. A no action request hy Dean Foods to a similar proposal lacking any definition was denied., Dean l·imcb· (March 7. 2013 ). If the SEC StatT hclieves it is appropriate to clarity the Proposal, the Proponent is willing to drop the ftlllo\\iing dause trom the 2011 Proposal 'iO that it mah.:hcs the 2012 version:

··according tn the definition set t(nth in the New York Stock E.xchangc listing standards. unless the Company's common 'ilot:k ~cases hcing listcd there and is listed on another L'.Xt:hangc, at which point. that c.xchangc's standard of imlcpcndcncc should apply.··

( >r. as another altcrnati\e, the Proponent notes that ~lcKcssun's letter cites a string tJf no ,1-.:tion dc~isions \\·hich -.;ugg~st that the phrase "Who had not prev1uusly scrvctl as ~Hl l.'XCl.'lH ivc o ffkcr of the cn111pany'' t ranst( \rillS a proposal r hat rctcrcnccs a 'llol.'k L".xchangc


U.S. Scl:uritics and Ex,hangc Commission April 15, 2013 Page 5 of5

listing detinition of independence fi·om vagut! and indetinitc to clear and explicit. PepsiCo, Inc. (February 2~ 2012 ), Reliance S!eel & Aluminum Company (February 2, 10 12), Sempra Ene1xy (February 2~ 20 12), General Hlectric Company (Steiner) (January I 0, 2012. recon. denied February I, 2012)~ and, .1/leghelly /~'nergy. Inc. (February 12, 201 0). If the SEC Staff believes it is appropriate to clarify the Proposal. the Proponent is willing to revise the opening sentence of the Proposal by adding this phrase as t(lllows:

.. The shareholders of McKesson Corporation (the .. Company") urge the Board of Directors to adopt a policy that the Board's chainnan be an independent director according to the dctinition set t(>rth in the New York Stock Exchange listing standards, unless the Co1npany's common stock ceases being listed there and is listt!d on another exchange, at which point~ that exchange's standard of independence should apply, who had not previously served as an executive officer of the Company.,.

These alternative o tlcrs to revise the 20 I 3 Proposal arc not an attempt to tile a second proposal. The Prop

. ..'


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON. D.C. 20549

OIVI~ION OF"

COPPOR4TION FINANCE

Willie C. Bogan McKesson Corporation willie.bogan~_!Jmckesson.com

Re: McKesson Corporation Incoming letter dated April 2. 2013

Dear Mr. Bogan:

April 17,2013

This is in response to your letter dated April 2. 2013 concerning the shareholder proposal submitted to McKesson by the International Brotherhood ofTeamsters General Fund. We also have received a letter from the proponent dated April IS, 2013. Copies of all of the correspondence on which this response is based will be made available on our website at http://www .sec.gov/divisions/corpfin/cf-noaction/14a-8.shtml. For your reference, a brief discussion of the Division's infonnal procedures regarding shareholder proposals is also available at the same website address.

Sincerely,

Thomas 1. Kim

Exhibit F

Chief Counsel & Associate Director

Enclosure

cc: Louis Malizia International Brotherhood of Teamsters I m alizia(~teamster.org


Response of the Office of Chief Counsel Division of Corporation Finance

Re: McKesson Corporation Incoming letter dated April 2, 2013

Aprill7,20l3

The proposal urges the board of directors to adopt a policy that the board's chainnan be an independent director according to the definition set torth in the New York Stock Exchange listing standards.

There appears to be some basis for your view that McKesson may exclude the proposal from its proxy materials under rule 14a-8(i)(3), as vague and indefinite. In arriving at this position, we note that the proposal refers to the •"New York Stock Exchange listing standards" for the definition of an .. independent director," but does not provide information about what this detinition means. In our view, this definition is a central aspect of the proposal. As we indicated in StatT Legal Bulletin No. 14G (Oct. 16, 20 12), we believe that a proposal would be subject to exclusion under rule 14a-8(i)(3) if neither the shareholders voting on the proposal, nor the company in implementing the proposal (if adopted), would be able to determine with reasonable certainty exactly what actions or measures the proposal requires. In evaluating whether a proposal may be t!Xcluded on this basis, we consider only the infotmation contained in the proposal and supporting statement and determine whether, based on that information, shareholders and the company can determine what actions the proposal seeks. Accordingly, because the proposal does not provide information about what the New York Stock Exchange's definition of'•independent director" means, we believe shareholders would not be able to determine with any reasonable certainty exactly what actions or measures the proposal requires. Accordingly, we will not recommend enforcement action to the Commission if McKesson omits the proposal from its proxy materials in reliance on rule 14a-8(i)(3).

Sincerely,

Mark F. Vilardo Special Counsel

INTERNATIONAL BROTHERHOOD OF TEAMST ERS JAM E S P. H 0 F FA General President

25 Louisiana Avenue. NW Washington, DC 20001

Via First-Class Mail

May 21,2013

Via Electronic Mail (shareholde

united states securities and exchange commission · proponent's april is, 2013 letter to the staff,...

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