Stephanie B. Mudick
153 East 53 Street
New York, NY 10043
January 24, 2000
Securities and Exchange Commission
Office of the Chief Counsel
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Stockholder Proposal to Citigroup Inc. ("Citigroup") of Mark Latham, Ph.D.
Dear Sir or Madam:
This is in response to the letter dated January 10, 2000 from Mark Latham, Ph.D., opposing the petition for no-action submitted by Citigroup dated December 22, 1999.
Citigroup submits that the Proponent’s assertions lack merit and are unresponsive to the bases for omission set forth by Citigroup in its petition. Moreover, the Proponent’s submission of a "Revised Proposal" fails to address the bases for omission set forth in the petition. For example, the Proponent’s substitution of precatory language to revise his Proposal is irrelevant to the bases for omission submitted by Citigroup. Similarly, the Proponent’s assertions that retention of a proxy advisor for stockholders "would not prevent the Company from hiring consultants, so it does not interfere with the Company’s ordinary business operations" and "would not restrict the Company from hiring any other external consultants" are irrelevant to Citigroup’s position. Citigroup made no such contentions.
I. Rule 14a-8(i)(7)
Citigroup’s position is that retention of a proxy advisor selected by stockholders through annual meeting proxy materials and ultimately in the course of the annual meeting, relates to the Company’s ordinary business operations in a number of ways, and therefore, may be excluded under Rule 14a-8(i)(7). First, retention of a consultant to be paid by the Company relates to ordinary business operations. Second, supplementary disclosure in the Company’s proxy materials concerning retention of a consultant relates to ordinary business operations.
The Proponent contends that "choosing a proxy advisory firm will be an easier decision for shareowners than other matters they are asked to vote on, including compensation plans, directors and most proposals." The Proponent then goes on to compare selection of a proxy advisory firm with selection of a personal computer to purchase. Proxy statement disclosure. which is complete and accurate gives fairly extensive information regarding the matters to be voted upon. With all due respect to the Proponent, the Proxy Statement is not the appropriate forum for a Consumer Reports guide to proxy advisory firms, without which stockholders may not have sufficient material to make an informed decision.
II. Rule 14a-8(i)(4)
Significantly, the "Revised Proposal" is not revised in any meaningful way with respect to the proponent’s personal interest in its inclusion in the Citigroup Proxy Statement. Notwithstanding the Proponent’s claim that the Proposal is solely designed to benefit Citigroup stockholders, a proposal revised in a manner to exclude fully the Proponent’s self interest would have omitted the Proponent’s Web site.
The Proponent contends that any potential benefit to be derived by him from the Proposal would be incidental. The Proponent also contends that the revised proposal is neutral on its face, as well as in its design and substance. The Proponent further contends that there is no paid advertising on his Web site. Citigroup disputes each of these claims.
As discussed more fully in Citigroup’s petition, the Citigroup Proxy Statement should not serve as a forum for free advertising of the Proponent’s Web site to the many thousands of Citigroup investors. While there may be no paid advertising on the proponent’s Web site currently, that could change if this Proposal is included in the Citigroup Proxy Statement because the opportunity for paid advertising depends, generally, on the number of "hits" or visits to a Web site. Consequently, if thousands of investors are made aware of the Web site, the number of visits would likely increase, thereby attracting potential paid advertisers.
Significantly, in discussing his commercial interests as set forth on his Web site, the Proponent claims that if his proposal is successful in helping shareowners, his professional reputation would be enhanced and he expects opportunities for consulting or full-time employment. This candid disclosure conflicts with the Proponent’s purportedly selfless motives. This telling disclosure further bolsters Citigroup’s contention that the benefit to be gained by the Proponent in advertising his Web site in Citigroup’s Proxy Statement is disproportionate to the possible benefit other shareholders may derive.
III. Rule 14a-8(i)(3)
Neither the Proponent’s letter nor the "Revised Proposal" resolves the fundamental ambiguities and misleading nature of the Proposal, as set forth more fully in Citigroup’s petition. For example, the Proponent fails to explain what criteria stockholders would employ to evaluate the various proxy advisory firms that pay an entry fee and have their names placed on the ballot. How will stockholders distinguish one firm from another? By summarily declaring, "Everyone reading business newspapers or magazines learns about the reputations of companies and people in many fields," the Proponent glosses over the key element that would make the stockholder vote meaningful and informative.
Moreover, the discussion on personal computers and potential media coverage for proxy advisory firms is similarly flawed. It is entirely unclear what media coverage the Proponent anticipates prior to the Company’s 2001 Annual Meeting and relying on such speculative coverage as a source of information for stockholders is illogical. Whereas personal computers have been on the market for many years and have been covered extensively by the media, proxy advisory firms are surely not likely to generate such coverage before the 2001 Annual Meeting. These are fatal gaps in the logic underlying the Proposal that highlight its misleading nature and preclude stockholders from understanding the subject matter on which they being asked to vote.
If you have any comments or questions concerning this matter, please contact me at 212-793-7855 or Shelley J. Dropkin at 212-793-7396.
Very truly yours,
[Stephanie B. Mudick]
cc: Mark Latham, Ph.D.