SECURITIES AND EXCHANGE COMMISSION - SEC.gov · ),60$ 20%0hprudqgxp0 d ivision of corporation finance united states securities and exchange commission washington, d .c. 20549 january

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

D IVI SION OF

CORPORATION FINANCE

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON , D .C. 20549

January 30, 2018

Richard C. Witzel, Jr. Skadden, Arps, Slate, Meagher & Flom LLP [email protected]

Re: CF Industries Holdings, Inc. Incoming letter dated January 8, 2018

Dear Mr. Witzel:

This letter is in response to your correspondence dated January 8, 2018 concerning the shareholder proposal (the “Proposal”) submitted to CF Industries Holdings, Inc. (the “Company”) by John Chevedden (the “Proponent”) for inclusion in the Company’s proxy materials for its upcoming annual meeting of security holders. We also have received correspondence from the Proponent dated January 8, 2018, January 10, 2018, January 11, 2018, January 12, 2018, January 14, 2018, January 15, 2018, January 16, 2018, January 17, 2018, January 22, 2018, January 23, 2018, January 24, 2018, January 25, 2018, January 28, 2018 and January 29, 2018. 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 informal procedures regarding shareholder proposals is also available at the same website address.

Sincerely,

Matt S. McNair Senior Special Counsel

Enclosure

cc: John Chevedden ***

http://www.sec.gov/divisions/corpfin/cfmailto:[email protected]

January 30, 2018

Response of the Office of Chief Counsel Division of Corporation Finance

Re: CF Industries Holdings, Inc. Incoming letter dated January 8, 2018

The Proposal asks the board to take the steps necessary (unilaterally if possible) to amend the bylaws and each appropriate governing document to give holders in the aggregate of 10% of the Company’s outstanding common stock the power to call a special shareowner meeting.

There appears to be some basis for your view that the Company may exclude the Proposal under rule 14a-8(i)(9). In our view, the Proposal directly conflicts with management’s proposal because a reasonable shareholder could not logically vote in favor of both proposals. Accordingly, we will not recommend enforcement action to the Commission if the Company omits the Proposal from its proxy materials in reliance on rule 14a-8(i)(9).

Sincerely,

Evan S. Jacobson Special Counsel

DIVISION OF CORPORATION FINANCE INFORMAL PROCEDURES REGARDING SHAREHOLDER PROPOSALS

The Division of Corporation Finance believes that its responsibility with respect to matters arising under Rule 14a-8 [17 CFR 240.14a-8], as with other matters under the proxy rules, is to aid those who must comply with the rule by offering informal advice and suggestions and to determine, initially, whether or not it may be appropriate in a particular matter to recommend enforcement action to the Commission. In connection with a shareholder proposal under Rule 14a-8, the Division’s staff considers the information furnished to it by the company in support of its intention to exclude the proposal from the company’s proxy materials, as well as any information furnished by the proponent or the proponent’s representative.

Although Rule 14a-8(k) does not require any communications from shareholders to the Commission’s staff, the staff will always consider information concerning alleged violations of the statutes and rules administered by the Commission, including arguments as to whether or not activities proposed to be taken would violate the statute or rule involved. The receipt by the staff of such information, however, should not be construed as changing the staff’s informal procedures and proxy review into a formal or adversarial procedure.

It is important to note that the staff’s no-action responses to Rule 14a-8(j) submissions reflect only informal views. The determinations reached in these no-action letters do not and cannot adjudicate the merits of a company’s position with respect to the proposal. Only a court such as a U.S. District Court can decide whether a company is obligated to include shareholder proposals in its proxy materials. Accordingly, a discretionary determination not to recommend or take Commission enforcement action does not preclude a proponent, or any shareholder of a company, from pursuing any rights he or she may have against the company in court, should the company’s management omit the proposal from the company’s proxy materials.


*** JOHN CHEVEDDEN ***

January 29, 2018

Office of Chief Counsel Division ofCorporation Finance Securities and Exchange Commission 100 F Street, NE Washington, DC 20549

# 15 Rule 14a-8 Proposal CF Industries Holdings, Inc. (CF) Special Shareholder Meeting Improvement Hijack of Rule 14a-8 Proposal John Chevedden

Ladies and Gentlemen:

This is in regard to the January 8, 2018 no-action request.

The page of the attached 1976 release refers to "shareholder democracf' in the preamble.

The company no action request is a move against shareholder democracy.

1fthis rule 14a-8 proposal is published shareholders will have the choice to vote to improve the special meeting provisions of the company or chose the status quo.

If the proposal is not published shareholders will only have the choice to ratify the stats quo as compared to nothing else.

If this rule 14a-8 proposal is published shareholders will have the benefit of hearing from both sides of this important governance issue.

Ifthis rule 14a-8 proposal is not published shareholders will only hear one side of the issue.

This is to request that the Securities and Exchange Commission allow this resolution to stand and be voted upon in the company 2018 proxy.

Sincerely,

~.LL~

cc: Douglas C. Barnard

mailto:[email protected]

·-:.

T1tJe 1'1-Commodlty and Securiti~Exchanges

CffAPJ'ER II-SECURITIES AND EXCHANGE COMMISSION

!Bel- Noe. 8,&-1291111, 86-19'7'1'1, l:~638)

PART 240-GENERAL RULES AND REGU· LATIONS, SECURmES EXCHANGE ACT OF 1934 Adoption of Amendments Relating to

Proposals by Security Hotders

The Becurtties and Ellcllanre Commls&lon today announc:eil t.bat Itball adoptedcertain amendmeota to RUle i.a-:a and the Invmtmeni ComJJ&ZU' Act or 1MO ns u.s.c. aoa-1 e' seq., aa amended by Pub. L. No. 94-29 (.June •• 19'15>>.

NotJ.ce of. t.be proposed amendment.a t.o R\lle 14&-8 was pui}llshed on July'/, 11'11 1n Securities Exchange Act Release No, 34:-J.2598 (tl PR 29982).1 A number of helPful commen~ were received tram the pUbllc and were stven a.reful oons1derat1on ln connectlc>n with the prepa.ra.Uon Gf the 1ln&l :Niv1810ns. 1D addition to the pubUc commenf.aey, tbe amendment.a adQpted t.oday also re1lect the paat expe.rience of the Oommission and its staff in admJnistering R\lle 14&-8,

The Commission wishes to em,phaslze tbat the a.mendment.s which It b.a8 adopted are not Jntended as & ft.Dal resolution or the questions and issues relating to -sharebolder 1>arttcfpat1on 1n corpoTa.te governs.nee s.nd, more gen-erally, sha.reholder democracy. The Commission intends tQ st,tdy these issues on a broade: be.sis and the staff Js presently !ormu1atmg prol)OSals for such a study. In the interim the stair will monitor the operation of theBe 6be.relto1der proposa.l provislons to asses& their impact on the proxy ro1Jc1thlg process.

The CommJssion believes the amendments discussed herein w:111 benefit both issuers and the1r seeurttyb.oldern. Among other thin.rs. the amendment$ clarifythe procedural requirements applicable to proponents and managements in connection with stQckholder proposals and codi!y certain pl'ior toterpretattve positions taken bY the commtssion's staff, The ~endment,o; are discussed uelow lo

• ,._ eomp:u,lon relene.e a.li,o Wa.tJ lseued on July '1, 10'16 dlacu&11lng tlle 1nrorm&1 ~~ures tor the rendering or llh sets forth the requirements tt.a.t & proJ>O-nent must satisfy 1D order to 'be ellgible to submit proJ]06als. The· subparagraph, which is w1cha.nged Irom the fonn In which it wu propooed for comment, re-taina the traditional requirement p)at a proponent must be a security holder ~,.. titled t.o vote. at the meet1n&' at which he int.en& to p.resent his proposal tor actlon. In addition, the prO\Tision ciodUies certain tntel'J)J'etative J>()ldtlons ex-pressed by the Commlsslo~'s11taf! lD ~e past with respect to beneficial ownership. voting dgbts, and continuou1- ownerslnP of the ls8Uer's1loour1tles.

As revised, the subparagraph states that a proposal may be submitted not oni::, by a record owner of a securtb' of ii:ie muer, but &Jso by a beneficial owner u 1'811. However, JJ a Jtl'OJ)Onent claims to ban a beneDc-1 ownership Snterest. be mlUlt be prepared to document th.at snt-..rest wltbiD 10 busille$S days af~...r recelvms a request for apprOPriate docu-mentation !J'OJll the management.. The term "business d,qa," as used 1n sub.. -paragraph (1) andinotberprovl:stona or the revised rule, ts intended to mean all calendar days except Saturdays, Bun-d&YS and na.tional holld&ys.

The subparagra,ph further provides that the security owned by the PMJ)0'7 nent .must be one whtcb wouJd enable him .to vote on bJs proposal a.t the meet~ mg of security hol~ers.-ThUs, under thts proVUiion e. prope>nent could not tsubullt a proposal that goes beyond the scope or his vottng rights. For exl\,lnl>le, a proponent who owned a security th&.t could be vot.ed on the election of some of the. 1.ISsuer's directors but on no other mntters couJd not submJt a proposal Nl-lating to the issUeJ"'s business activities, since he would not be able to vot.e on it personally,

F'illallY, the subpa.ragro.ph ~tat.es that the proponent must own a voting seeu-rtty at the time be submits his proposaland he must continue to own tha.t secu-rity through the date on w1'Jch the meet-fn8 ls held. In this regard, the amende, but also that someone. will be present to knowledgeably di5-cuss tbe matter provosed for actlon imd answer any quest:lor;s which may arise from the shareholders attending themeeting.

The subparagraph also contains a provision whlch has been adopted 1n recogrutiorr of the !act tbat many proponent.~ are unaware. of the.notice .requirement at the ttme they submit their proposals and tberefore untntentlonlLlly fail f.() comply wftll lt. Specifically, the rubpan1-graph permits a proponent who is unaware of the notice requirement at thE' time of submJsston to furnish the req111 -site notjce wltntn 10 business dn:vs afl,e s111u1r·,·tion of sevet'Bl commeutn.tors. wh11 p:,,. pre~ed the view tJ1at the "rea:mn:tble t lme" deadline p1•oposed in Rcleasr Nu, 34-12698 for the furnishing ot the requlsite notice was unnecessarily vague.

The com.mission also bas amended the subparagraph to malre It clear that. & proponent, who furnishes tlle requisite notice 1n good ta.lth but subsequently- dt>t.ennines that he v.•W be unru,le to appeiu nt the meet.mg may arrane-e to have sm~ other security blder or ihe Issuer -Prf'-

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January 28, 2018

Office ofChiefCounsel Division of Corporation Finance Securities and Exchange Commission 100 F Street, NE Washington, DC 20549

# 14 Rule 14a-8 Proposal CF Industries Holdings, Inc. (CF) Special Shareholder Meeting Improvement Hijack of Rule 14a-8 Proposal John Chevedden



The shareholders are getting poor value by the company hijacking the topic of the rule 14a-8 proposal and turning it into a ratification pumpkin. The company now has the expense ofa no action request and it willhave the expense of publishing the ratification proposal instead of the rule 14a-8 proposal. These costs will be offloaded to the shareholders.

And the shareholders will lose out because with a ratification proposal they will not have the value ofhearing both sides of the debate on this proposal topic.


Sincerely,

~-



January 25, 2018

Office of ChiefCounsel Division of Corporation Finance Securities and Exchange Commission 100 F Street, NE Washington,, DC 20549

# 13 Rule 14a-8 Proposal CF Industries Holdings, Inc. (CF) Special Shareholder Meeting Improvement Copycat Company Proposal John Chevedden



The company does not e4p}ain the occurrence of2 proxy access proposals on the same ballot in a number ofcases after SLB 14H was issued. The company did not cite any rule 14a-8 proposal on proxy access that was excused from publication by citing SLB 14H.

A shareholder can logically vote for a company proposal as the floor on a particular topic and for a rule l 4a-8 proposal as an improvement on the floor of the same topic.

' 'A reasonable shareholder could logically vote for both proposals." This is the standard ofSLB 14H.

The company is attempting to force its shareholders, who want an improvement in the status quo in regard to the shareholder right to call a special meeting, to vote for ratification of the status quo.

If ratification is not approved then shareholders who want an improvement will have no right to call a special meeting whatsoever.

Ifone votes to not ratify the auditors - it is not interpreted that the shareholder wants to dispense with independent auditing.

This is to request that the Securities and Exchange Commission allow this resolution to stand and be ¥oted upon in the company 2018 proxy.

Sincerely,

~~_,,.,-/_____ ~hn Chevedden





January 24, 2018

Office ofChief Collllsel Division of Corporation Finance Securities and Exchange Commission 100 F Street, NE Washington, DC 20549

# 12 Rule 143-8 Proposal CF Industries Holdings, Inc. (CF) Special Shareholder Meeting Improvement Copycat Company Proposal John Chevedden



The company does not claim that any shareholders anywhere have ever voted on whether to ratify the retention ofspecial meeting provisions.

Tue company says it will include the 25% Ownership Threshold. However the company is silent on whether it will include additional provisions to muddy the waters.

The company is silent on whether shareholders will be limited to yes or no votes. It is not possible to predict what a no-vote will mean. Will a no-vote mean a shareholder supports a higher threshold or a lower threshold?

The company no action request is too vague to be considered by the Staff.






January 23, 2018

Office ofChief Counsel Division of Corporation Finance Securities and Exchange Commission 100 F Street, NE Washington, DC 20549

# 11 Rule 14a-8 Proposal CF Industries Holdings, Inc. (CF) Special Shareholder Meeting Improvement Copycat Company Proposal John Chevedden



The company is silent on a reason to have an advisory vote on the special shareholder meeting topic in 2018 when it did not have an advisory vote on this same topic in 2017 or in any other previous year.

The company is silent on whether it believes it could have an advisory vote in 2019 on this same topic.

The company is silent on whether it believes it would be free to copycat all rule 14a-8 proposals in every future year.

In order to somewhat maintain the status quo perhaps the ruJe 14a-8 proposal submittal limit could be raised to 2 proposals and then a company could chose one proposal to copycat.

The company cited no instance in the last 10 years where a proponent at any of3000 companies duplicated a company proposal after it was announced.

This is to request that the Securities and Exchange Commission aUow this resolution to stand and be voted upon in the company 2018 proxy.

Sincerely,

~-L~cilinChevedden





January 23, 2018

Office of Chief Counsel Division ofCorporation Finance Securities and Exchange Commission 100 F Street, NE Washington, DC 20549

# 10 Rule 14a-8 Proposal CF Industries Holdings, Inc. (CF) Special Meeting John Cbevedden



The attached letter applies to issues in this no action request. It is also available at https://www.sec.gov/comments/i9review/i9review-8.pdf


Sincerely,

~,-./L


mailto:[email protected]://www.sec.gov/comments/i9review/i9review-8.pdf

rdit. . ~&;:·Dormn1 fflJ SOCIAL INVESTMENTS®

Investing for Good 5 M

June 22, 2015

Keitb F. Higgins Director Divfaion ofCorporation Finance U.S. Securities and Exchange Commission I 00 F Street, NE Washington, DC 20549 Via E-Mail: [email protected]

Re: Staff.Review ofRule 14a-8(i)(9)

Dear Mr. Higgins:

I am writing on behalfofDomini Social Investments LLC, an SEC-registered investment adviser and the manager ofthe Domini Social Equity Fund, an open-end mutual fund that has been an active proponent of shareholder proposals. The Fund, which now represents $1.1 billion, has submitted more than 250 shareholder proposals over the past twenty years on a broad range of social, environmental and governance issues. We view Rule 14a-8 as a critical governance tool that has enabled numerous constructive dialogues and policy changes and greatly value the opportUnity to submit shareholder proposals as well as to vote on proposals submitted by other investors.

Thank you for the opportunity to comment on Staff's review ofthe application ofRule 14a-8(i)(9). We are concemed that a broad interpretation ofthe exclusion (and Staff's current interpretation, we believe, is already too broad) could transform this rarely used provision into the exception that swallows the rule. It is not difficult to foresee issuers challenging an expanding range of shareholder proposals on the grounds that they intend to offer a similar, ''conflicting" proposal oftheir own, merely as a means to omit a shareholder proposal and limit shareholder choice. rn our view, Staff should view (i)(9) challenges with some degree of skepticism, as good faith efforts to address an issue can frequently be worked out between management and proponents beforehand, obviating the need to consider (i)(9). There are, therefore, likely to be meaningful distinctions between these management and shareholder proposals that would present shareholders with the opportunity to send a clear message to the board. Staff should be reticent to limit such opportunities without a clear and direct conflict between the two proposals. For these reasons, we believe a narrow construction of(i)(9) is recommended. We note, below, that this narrow construction is entirely consistent with the original intent ofthe subsection, as described by a series of comment letters submitted by the issuer community.

We recommend that Staff issue a Staff Legal Bulletin containing the following elements, described in further detail below:

l . Conflicts under 14a-8(i)(9) shotJld be limited to legal conflicts. 2. Non-binding shareholder proposals cannot conflict with binding proposals. 3. IfStaffdetennines that there is, in fact, a legal conflict between a binding shareholder proposal

and a management proposal the proponent should be offered the opportunity to convert the

S32 Broadway, 9th Floor l New York, NY 10012-3939 (Tel: 212-217-l 100 ( Fax:211-217-1101 www.domini.com I [email protected] I investor Services: l-800-582.6757 I DSIL lnvestment Services LJ.C, Distributor

mailto:[email protected]:www.domini.commailto:[email protected]

2

proposal to a non-binding proposal, consistent with how Staffhas treated other legal conflicts as described in StaffLegal Bulletin 14.

We do not believe a rufemaking is necessary or advisable to clarify subsection (i)(9).

"me review of (i)(9) was prompted by a situation where corporate management was widely perceived to be engaged in a form ofgamesmanship - offering a pro:l\.'Y access proposal that set the bar so high no shareholder could uti Iize the right, merely to fend off a shareholder proposal. As Chair White noted, "In impartially administering the rule, we must always consider whether our response would produce an unintended orunfair result. Gamesmanship has no place in the process."1 We have learned from a series of letters submitted by the issuer community that the original intent ofthe rule was to eliminate a perceived form ofgamesmanship by shareholders - the use ofRule l 4a-8 to circumvent the solicitation rules. As discussed below, it is virtually impossible to utilize 14a-8 to offer counter proposals. The rule, however, has been applied where such abuses have not even been alleged. The issuer community is seeking an extremely broad and unreasonable read1ng ofthe subsection that would transfonn what was intended to be a rarely used prohibition ofa very specific abuse ofprocess into a trump card to be used by management any time they so choose.

Defining Conflicts as Inconsistent Mandates

You have suggested that the approach takei1 by the Staffunder subsection (i)(9) has been to exclude proposals where inclusion could "present alternative andCOl'J;/licting decisions for sharel~olders" and "could provide inconsistenl and ambiguow, results. " The articulation ofStaffs rationale has materiall)' changed over time and, we believe, has strayed from the text and intent of the subsection. To the extent that this reflects the cutTent view used by the Staff, we believe it is excessively broad, inconsistent with the text ofthe rule and not in the best interests of shareholders.

We believe the focus on "alternative" decisions for shareholders misreads the rule, which focuses on "contlicts,n not choices. We do not believe that subsection (i)(9) was ever intended to prevent s hareholders from considering clear and unambiguous alternatives.

The reference to "decisions for shareholders" and to "inconsistent and ambiguous results," is more problematic, however. Earlier iterations ofthis standard referenced the problem ofan inconsistent and inconclusive "mandate'' from shareholders. (See, e.g., " ... a favorable shareholder vote on both management's and tl1e proponent's proposal would result in an inconsistent and inconclusive mandate from the sbareholders.'1 Pantepec Int'!, Inc.(September, 1976) (emphasis added)).

l11is earlier formulation was closer to the mark. Staffs focus ought to be on whether the two proposals create a legal problem for the board- two incon.sistent legal mandates - not on whether shareholders or directors might be faced with a difficult or confusing decision. Staff must therefore consider the legal implications ofprecatory proposals. Precatory proposals can never give rise to a "conflict.'' A majority vote in support ofa non-binding shareholder proposal presents information to the board, but does not create a legal mandate. The board is free to ignore the precatory proposal. The fact that proxy advisory firms or other third parties may believe that a board should respond to a significant vote for a precatory proposal is immaterial. There will always be multiple demands made upon the board that Staff cannot possibly anticipate or mediate. The fact remains that tberejs a legal distinction between binding artd non-

1 h rtp://www .sec.gov/news/speech/observations-on•shareholders-201 5.hcml

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binding proposals that Staffhas failed to recognize in .its application of(i)(9). We therefore recommend that Staff issue guidance clarifying that.Rule 14a-8(i)(9) refers to legal conflicts, and non-binding shareholder proposals cannot create a "conflict" for purposes of the rule.

Staffshould also be cognizant of the role of the board, and should not seek to supplant that role. Even where ambiguity is a possible outcome, the information is not necessarily unimportant or irrelevant. Ambiguous results can suggest to the board a degree of uncertainty with respect to its decision that may dictate changes or reconsideration. Resolution ofany possible conflicts between a management proposal and a non-binding shareholder proposal are to be detemtlned by the board ofdirectors, presumably in consultation with shareholders. Any other result supplants the decision making process ofthe board by denying the board access to informat,ion about a more complete range of shareholder preferences on the matter at hand. This is one ofthe key benefits ofthe non-binding proposal - it can provide this kind of information to boards without dictating any actions. It is not the role ofthe Staff to determine, ex ante, that possibly ambiguous information should not be produced and should not be provided to the board for consideration. This interpretation does not protect shareholders but substitutes the decision ofthe Stafffor the decision oftile board. This is an inappropriate role for the Staff.

Indeed, the joint letter recently submitted by CalPERS and CalSTRS2 m'akes a strong case that the presentation ofalternative proxy access proposals has not, in fact, produced inconsistent or ambiguous results. As that letter noted, "shareowners clearly understood the intended impact of their votes, and companies were provided a clear and consistent view of their shareowners opinion, thanks to an explanation ofthe voting process provided by the companies." We also would note that the decisions of several companies this year to present both management and shareholder prox.y access proposals on the same ballot demonstrates that doing so does not present any meaningful legal conflicts. ·

Precatory proposals can be used to take the temperature of shareholders on an issue and can prov'ide a board with valuable information about shareholder preferences. These proposals, however, are merely advisory and cannot create anything in the nature ofa legal conflfot. We can conceive ofno policy reason - or basis in the rule - to permit their exclusion simply because they present an alternative approach to a management proposal. To the contrary, in such situations they may provide particularly valuable information to the board.

We believe our recommended approach will eliminate confusion overSta~s standard ofreview, send a clear signal to both issuers and proponents, thereby reducing the volume of(i)(9) challenges, and allow shareholders to vote on alternative proposals to help inform the board's decision-making process. This should lead to better decision-making by the board.

The PJ'ocess for Evaluating Direct Conflicts Between Bjnding Proposals

When evaluating two binding proposals that may be in direct conflict with each other, Staff should consider whether there are material differences between the management and shareholder proposal that would prevent the board from acting on both proposals. Ifthe two proposals can co-exist, the shareholder proposal should be pennitted.

In interpreting subsection (i)(9), Staffshould also provide an opportunity to eliminate any direct conflict. This could include conversion ofthe proposal to a non-binding proposal. Staff currently permits

2 http://www.sec..gov/comments/i9review/i9review-4.pdf

http://www.sec..gov/comments/i9review/i9review-4

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proponents to modify their proposals under certain circumstances, including converting binding to nonbinding proposals if the binding nature of the proposal creates a conflict with state law. Although SLB 14 recognizes that state Jaw draws a distinction betWeen binding and non-binding proposals, in our view, Staff's decision-making has not sufficiently recognized this important legal distinction. Staff also permits other modifications to address other types of legal conflicts.3 This accommodation would eliminate the conflict while preserving the oppottunity for shareholders to vote on the shareholder proposal, and thereby provide valuable input to the board,

We would also encourage Staff to deny relief under (i)(9) to any company that is unable to present the text of its proposal aJong with its no-action request! Rule 14a-8(i)G) and (k) ensure a fair process, where Staff and proponents are in a position to fully evaluate any no-action requests. It is not possible to fully evaluate an (i)(9) challenge without comparing the provisions ofthe two proposals, as recommended in the subsection's accompanying note. While an issuer may describe specific points ofconflict, the proposal should be evaluated in its entirety to ensure that there are no undisclosed provisions that negate the disclosed provisions (for example, a hypothetical proxy access proposal providing an access right to shareholders that control 3% ofshares could be negated by an undisclosed provision that requires a twenty year holding period). This would also help ensure that the board has approved the proposal

The comment letter submitted on behalf ofthe New York City Comptroller's Office provides important data in this regard, noting that thirteen companies that submitted no-,action requests pursuant to (i)(9) after the Whole Foods decision argued that they intended to present proxy access proposals, but then failed to do so. In fact, eleven ofthese companies used their statements in opposition to argue against the entire concept of proxy access.5 Clearly, in these cases, there was no legitimate intent to present a proxy access proposal. These efforts at gamesmanship can be eliminated ifStaff requires that companies include in their no-action requests a board-approved management pwposal.

Considerations of "Confusion" and "Ambiguity" are Inconsistent with the Text of the Rule

Any approach that requires Staffto make assumptions about the possibility ofshareholder "confusion" -an irrelevant consideration not referenced in the rule itself - can only lead to inconsistent decision.,. making. Shareholder "confusion" is most likely to be caused by substantially similar proposals, not by proposals that offer clearly distinct approaches to the same issue. Tn general, management and shareholder proponents should be able to reach agreemeot on substantially similar proposals. Staff, therefore, is generally ooly faced with no-action requests under CiX9) when the two proposals are materially different, and least likely to cause any confusion because tl1ey present shareholders with a clear, unambiguous choice.

'Ibe language ofthe subsection itself contradicts Staff's use of"confusion'' and "ambiguity." The mle addresses proposals that "directly conflict.'' A direct conflict, by definition, is unambiguous. The Rule, by

1 Division ofCorporation Finance: Staff Legal Bulletin N'o. 14 {July 13, 2001 ), available at https://www.sec.gov/interps/legal/c'fslb 14.htm • For example, management proposals were not available to staff or proponents at the time of the initial no action request in Whole Foods Market, Inc. (December I, 2014) or Abercrombie & Fitch Co. (May 2, 2005). 5 Letter by Michael Garland on behalf of the New York City Comptroller's office (June 17, 2015), available at http://www.sec.goy/comments/i9review/i9review-7.pdf ·

http://www.sec.goy/comments/i9review/i9review-7.pdfhttps://www.sec.gov/interps/legal/c'fslb

5

its terms, addresses clear and "direct" .conflicts. lt does not appear to encompass subtle·distinctions between proposals that may cause confusion and may, in fact, be able to coexist.

Whether or not shareholders may be confused by two proposaJs on the same topic, we would discourage the drastic remedy ofexclusion to address this, which, in .effect, denies choice to avoid confusion.

We would also suggest that much of the "confusion'' that the issuer community claims stems from the presentation of two proposals on the same topic actually arises from ma11agement proposals that offer a right, such as proxy access, with one hand and withdraw it with the othet - a right designed so that it could never be implemented. As Chair White put it, ''What ifmanagement1s proposal could be viewed as a proposal that, if adopted, may purport to provide shareholders with the ability to do something, such as call a special meeting or include a nominee for director in a company's proxy materials, but that, in fact, no shareholder would be able to meet the c1iteria to do so?"6 Such a proposal may, indeed, present confusion to voters, and may incur opposition from investors, with or without the inclusion ofthe shareholder proposal. It remains management's prerogative to offer such proposals, but the confusion they create shou Id not provide a basis for excluding a shareholder proposal on the same topic that presents a more seosjbJe approach.

Atthough these types ofmanagement proposals may not offend subsection (i)(9), we would encourage Staff to remind issuers that it is their responsibility to ensure that the proxy statement does not contain any false or misleading statements. For example, issuers could be encouraged to use their statement in opposition to tpe shareholder proposal to explain the differences between the two proposals. Where the management proposal sets high thresholds, issuers should disclose the percentage ofshareholders that are believed to meet that threshold. If a provision such as a holding period requirement or a requirement that only 'net long' holdings be eligible would effectively raise the threshold~ this should be explained to shareholders. A management proposal labeled "proxy access" that includes pmvisions that make it practically impossible for any shareholder to use, should be deemed to be inherently misleading.

Rule 14a-8(i)(9) is not a "Subject Matter'' Exclusio11

The issuer community has offered severaJ approaches to interpreting (i)(9) that are inconsistent with the intent ofthe rule -according to their own research-attd with its plain terms.

For example, the Society ofCorporate Secretaries argues that (i)(9) has consistently been applied to any shareholder proposal dealing with the same subject matter, ''regardless ofspecific tenns" ofthe proposals.

7 To the contrary, two proposals touching on the same topic may coexist without creating a

conflict. The Society's overly broad reading ofthe provision would, in essence, eliminate the term ' 'conflict'' (it is certainly inconsistent with the more restrictive "directly conflicts") and open the door to a wide range ofexclusions, simply because the two proposals touch on the same topic. The Society's proposal also appears to be inconsistent with the "Note to paragraph (i)(9)1', included in the body ofthe rule, which states that: "A company's submission to the Commission under this section should specify the points ofconflict with the company's proposal.1' This note suggests that the issuer will need to provide a clause-by-clause analysis ofthe two proposals and that this should form the basis ofStaff's

6 http://www.sec.gov/news/speech/observations-on-shareholders-2015.html 7 Letter from Darla Stuckey 011 behalf of the Society ofCorporate Secretaries and Governance Profess,onals, available at http://wwwsec.gov/comments/i9review/i9review-3 .pdf.

http://wwwsec.gov/comments/i9review/i9review-3http://www.sec.gov/news/speech/observations-on-shareholders-2015.html

6

determination. The note clearly anticipates that there may be multiple points ofconflict to evaluate-, meaning that the mere subject matter ofthe proposal cannot be determinative.

A rule permitting the exclusion of proposals touching on the same subject matter as a management proposal could easily have been written, but that would be a different rule. Rule 14a-8(i)(l 1), for example, pennits the exclusion ofa shareholder proposal that "substantially duplicates" a previously submitted shareholder proposal. It seems reasonable fo conclude that (i)(9) was not intended to cover similar or duplicative proposals on the same subject matter, or the language of(i)(l l) would have been repeated, or that provision would have been extended to management proposals. By its tenns, (i)(9) was intended to cover direct con.flicts.8 ·

There is an internal contradiction in the Sociecy•s recommendation, however. The Society recommends that subject matter should be determinative "regardless of the approach ofthe conflicting proposal", ''to the extent that there is a conflict." This is circular reasoning that fails to illuminate what "conflict" means. It undermines the Society's recommendation, tacitly acknowledging that conflicting same-subject proposals are a subset ofsame~subject proposals. In other words, the Society has acknowledged that (i)(9) does not simply apply to proposals dealing with the same subject matter, regardless ofthe specific terms. It deals with conflicting proposals on the same su~ject matter.

Rule 14a-8(i)(9) was Intended to Address a Rare Procedural Abuse

Issuers are simultaneously arguing that (i)(9) was intended to address a very specific and.rare abuse of process -- counter proposals by shareholders that circumvent the solicitation rules -- and that it should be interpreted broadly to encompass counter proposa]s by management regardless ofwhether there has been any abuse of process. We would submit that these two positions are, to quote a phrase, in direct conflict.

Although the original intent ofthe exclusion appears to be unclear, a consistent view has been presented by the issuer community in several comment letters: ''to prevent shareholders from using Rule 14a-8 to mount proxy contests without complying with the rules relating to proxy contests. "9 Since 1967, according to the letter submitted by Gibson Dunn & Crutcher LLP et al (the "law firm letter"), '

]

The original intent ofthe subsection and its successor forttiulations was therefore to prohibit solicitations in opposition to management proposals. Ifthis is indeed the rationale behind the original prohibition on "counter proposals", then it is quite clear that the exemption was based on the sequencing ofproposals, and was intended to be used infrequently. The law rum letter's assertion that the sequencing ofthe proposals "is not a consideration encompassed by the text ofthe role" ignores its own assertions about the history ofthe rule, recounted above. The rule is grounded in a prohibition on counter proposals offered by shareholders, and a counter proposal must come second.

In addition to sequencing, public notice is also critical. In order to solicit votes in opposition to a management proposal, or to offer a "counter proposal'>, one must first have access to the management proposal, Of at least know of its existence. Shareholder proposals, however, are required to be submitted not less than 120 days before proxy statements are printed, which generally contain the first public disclosure ofthe annual meeting agenda. Unless management has publicly announced its intention to submit a particular proposal to a vote before the proposal filing deadline-including the terms of that proposal-a shareholder proposal cannot be considered a solicitation "opposing a proposal supported by management." This is largely a hypothetical abuse ofprocess that is generally not available to shareholders, except, perhaps, on very rare occasions (Northern States Power Company (July 25, 1995)(Shareholder proposal requesting that the board ofdirectors require management to negotiate a more equitable merger agreement excludable as ' counter to a proposal to be submitted by management. ') This subsection was presumably crafted to deal with those very rare occasions. So rare, in fact, that they were deemed to be an ' 'abuse" of process.

In reality, the shareholder proposal either accidentally coincides with a management proposal on the same topic, or management responds to the shareholder proposal with a proposal ofits own. Neither situation can be considered an "abuse" by shareholders, as suggested by the 1982 Release.

Issuers are asking Staff to interpret (i)(9) to permit the exclusion ofshareholder proposals any time a counter proposal has been offered by management. If the basis for the exclusion is to avoid the abuse ofprocess described above, then the exclusion should not apply when the announcement ofthe management proposal follows the submission ofthe shareholder proposal. In these cases, the shareholder is clearly not seeking to solicit votes in opposition to management, and, by definition, has not offered a "counter proposal." It would be more accurate to say that management is seeking to solicit votes in opposition to the shareholder proposal. We have not seen any rationale why that prerogative of management should trump shareho!ders1 1igbt to submit an otherwise valid proposal.

Not only does this reverse the intent of the subsection, as explained by the law finn letter, it eliminates the conceptofa 'direct conflict' from the rule and converts what was intended to be a narrow exemption to deal with a rare abuse ofprocess into a trump card to be used at management's discretion.

and that Staff's interpretation of the exclusion has changed over time from a focus on conflicting ''mandates" to confusion in the voting process. As discussed above, the latter standard does not appear to be grounded in. the text or the original intent ofthe rule. 11 The original classification ofcounter proposals as an "abuse" ofprocess suggests that these situations were considered extreme and, presumably, rare. It supports the notion that the original intent was for (i)(9) tobe a rarely used exclusion to deal with actions that fell outside the reahn of acceptable behavior.

- I'! -,.. I ; (,;·_ .

8 • Why would a provision designed to prevent a very specific abuse ofprocess (non-compliance with the solicitation rules) be applicable when there bas been no such abuse? We've seen no meaoingfuJ response to this question. The Society ofCorporate Secretaries questions the logic ofwhat they are calling the "first to propose theory." As the Faegre Bak.er Daniels letter puts it, "Was the board's action 'in response to' the shareholder proposal? ... Why does it matter?" It matters, because these scenarios undercut the very rationale these letters offer for the exclusion. Again, it is difficult to see how one can simultaneously argue that I) the subsection was crafted to deal with a very specific abuse of process and 2) the subsection should be available to management any time they receive a controversial shareholder proposal - in essence, a trump c91•d. They are arguing that the exemption is both very narrow and very broad at the same time.

The argument that this "first to propose" analysis presents insurmountable practical obstacles to Staff, requiring Staff to engage in mind-reading, is similarly without basis. To determine whether a shareholder counter proposal is being offered, it is only necessary to determine when the management proposal was publicly announced.

Rule 14a-8(i)(9) Should Not be Invoked to 'RJlise Support for Management Proposals

Issuers are also asking Staff to ex.elude proposals, in effect, because they mav present mare favorable terms than management proposals, This is a very curious request- They are essentially asking Staffto consider the possibility that shareholders may express strong support for the shareholder prbposal, and exclude it on that basis, because a strong vote for tlie shareholder proposal will either raise opposition to management from proxy advisory firms or recause it may diminish votes for the less favored management pro posal. This argument is presented in the context of avoiding "confusion", but confusion is not at issue here_

The law finn letter and the Business Roundtable, for example, cited an example from this proxy season where BorgWarner's management-sponsored special meeting proposal received more votes than a shareholder proposal on the same topic, but fa iled to pass. 12 The implicit suggestion here is that, in the absence ofthe shareholder proposal, additional shareholders would have voted for the management proposal. The shareholder proposal, in other words, did not cause confusion or present any legal conflicts, it presented a preferable option favored by a strong percentage ofshareholders (a 20% threshold, as opposed to a 25% threshold to call a special meeting13)_ Had the shareholder proposal been excluded, some additional shareholders may have voted for the management proposal, but, given a choice, it is clear that these shareholders preferred the shareholder sponsored proposal with a lower threshold. Is the purpose of (i)(9) to ensure that shareholders have fewer choices so that management can pass its own proposals? The issuer community has argued that this is not its purpose -- its purpose was to avoid abuses of the solicitation rules. No such abuse is alleged here.

The BorgWarner proxy statement contains a clear solution to the problem, which relies upon the legal distinction between binding and precatory proposals!

" If both Proposal 6 [the management proposal] and Proposal 7 [the shareholder proposal) are approved, the Company will impfement Proposal 6 and not act on Proposal 7. The Company will

12 See, also, http://www.sec.gov/comments/i9review/j9review-5.pdf, at fn. 19_ 11 The management proposal also required that shares be held 'net Jong' for at least one year to qualify, which would effectively rajse the threshold.

http://www.sec.gov/comments/i9review/j9review-5.pdf

9

consider· approval ofProposal 6 as supporting the1mplementation ofProposal 6 even ifProposal 7 is approved. The Company believes that this approach is appropriate because approval of Proposal 6 requires a supennajority vote ofstockholders and is necessary to amend the Certificate under Delaware law. In contrast, approval of Proposal 7 is advisory and non-binding on the board."14

In other wqrds, there is no issue here, and certainly no confusion, except the fact that BorgWarner could not get sufficient support for its proposal, which may have been true even ifthe shareholder proposal had been excluded. Management now has the terms ofthe shareholder proposal to draw from to modify its special meeting requirements if it so chooses, and to accommodate the desires ofshareholders. It now should have a better sense ofshareholder preferences than if the shareholder proposal had been excluded. This seems to be a far more efficient and democratic process than eliminating shareholder choice.

The arguments outlined in these letters also ignore the different position ofshareholders and managers under Rule l 4a-8. The exclusions go only one way. The company has the capacity to strategically eliminate a shareholder proposal by presenting a conflicting alternative under (i)(9). Shareholders have no similar rights. Thus, where shareholders knowingly or unknowingly provide an alternative to management, they do not deprive shareholders ofa right to vote on the company's proposal. This is a far cry from strategic use of the exclusion to deprive shateholders ofthe opportunity to yote on different approaches to the same issue, and to deprive the board ofthis potentially valuable information.

Conclusion

It has been argued that a narrow construction of (i){9) would stifle management-shareholder dialogue and discourage issuers from addressing shareholder concerns by submitting their own proposals to-a vote. To the contrary', nothing stifles dialogue faster than an automatic exclusion, particularly exclusions that are subject-matter based. IfStaffpays no attention to the substance of the two proposals, there is little incentive for management to do so. A pure subject matter based exclusion discourages engagement on the specific terms ofthe proposals and encourages management to jump the gun and submit proposals merely to stifle shareholder debate on controversial issues. It is both counter-intuitive and counter-factual to assert th.at the exclusion ofshareholder proposals promotes constructive dfalogue.

It has also been suggested that exclusions under (i)(9) further the intent of Rule l 4a-8 by preserving the opportunity for shareholders to vote on the issue, because shareholders are free to vote against the management proposal ifthey so choose. Rule 14a-8, however, pennits shareholders to present issues on the proxy statement in their· own words. A construction of the rule that equates this right to "voting against management's proposal" would be a negation ofthe rule. 15 A broad interpretation of (i)(9) could transform this rarely used provision into the exception that swallows the rule.

14http://www.borgwamer.com/en/Investors/investortooJbox/2015%20Proxy%20FlNAL%20PDF%20Book%20Proof -03182-15.pdfat 48. 15 There may be rare cases where the management and shareholder proposals essentially negate each other - a vote for one is a vote against the other. In such cases, shareholders arguably have the opporrunity to express their views simply by opposing the management proposal. But itis difficult to conceive ofsuch a case, and if two such proposals were allowed to proceed to a vote, they would presumably provide clear guidance to the board because they Tepresent a clear choice -- no infom1ed voter would support both. The Society ofCorporate Secretaries, by favoring a "subject matter" exclusion, however, is counseling Staff to exclude a much wider range of shareholder proposals than these true directly conflicting proposals.

10

[n your speech to the PLI, you noted that assessing bad faith "could be a perilous task:' We agree.14

Establishing a clear, bright line approach to 0)(9) as we recommend, consistent with the wording ofthe subsection, would dramatically reduce the opportunity for gamesmanship and avoid the need for Staffto delve into those perilous waters. Our recommended approach, first Sl!ggested by the Council of Institutional Investors and endorsed by CalPERS and CaJSTRS - non-binding proposals cannot "conflict" with management proposals -would satisfy issuers' and proponents' need for clarity and would eliminate any meaningful legal conflicts that "conflicting'' proposals may create. Our proposal to permit conflicting binding proposals to be re-characterized as non-binding proposals would eliminate the need for any investigation into issuer or shareholder motives, while preserving both shareholde,r democracy and management's right to submit altemative proposals to a vote.

Thank you again for the opportunity to comment on this review. I can be reached at if any further information would be helpful. ,

Sincerely~

16 lt is not necessary or advisable for Staffto seek to ascertain the true intentions ofmanagement. The letters submitted by !he issuer community imply the need to assess the intentions ofproponents. They suggest that proponents are committing an "abuse" ofprocess. Abuses of process can only be committed intentionally. It is therefore not management's state of mind that is at issue here, but the proponent's. Ifthe proponent had no way of knowing that management intended to submit a proposal on the same topic, then there has been no abuse ofprocess.

http:agree.14



January 22, 2018

Office of Chlef Counsel Division ofCorporatjon Finance Securities and Exchange Commission l 00 F Street, N E Washingto~ DC 20549

# 9 Rule 14a-8 Proposal CF Industries Holdings, Inc. (CF) Special Meeting John Chevedden


Thls is in regard to the January 8, 2018 no-action request

The company did not disclose whether it will put to a vote a 2018 ratification of the status quo for these governance topics:

Written Consent Declassified Board Poison Pill Super majority vote Director Majority Vote Std. Independent Board Chair

These topics generate as much shareholder interest as the topic ofshareholder right to call a special shareholder meeting.


Sincerely,

~- L.t..~--cc: Douglas C. Barnard




January 17, 2018


# 8 Rule 14a-8 Proposal CF Industries Holdings, Inc. (CF) Special Meeting John Cbe-vedden


This is in regard to the January 8, 2018 no~action request.

In The AES Corporation (December 19, 2017) AES did not disclose to the Staff its 2015 operational experience that the theory of"could not logically vote for both" did not apply to at least one company - AES.

The 2015 AES proxy may be the only time in rule 14a-8 history that an advisory proposal by a shareholder and an advisory by a company appeared on the same ballot (both on the same special meeting topic).

Perhaps there is no rule that required AES to disclose to the Staff in late 2017 that it had recent operational experience that contradicted the theory it was putting forth in its no action request -"could not logically vote for both."




Pro~: The ratification ofErnst & Young LLP as AES' Independent Registered PubUc Accounting Firm for the year 2015.

Por: 637,114,970

Against 3,804,745

Abstained: 1,802,202

Broker Non-Votes: 0

~:The consideration ofa nonbinding advisory vote on executive compensation.

For: 601,249,980

Against: 15,086,094


Broker Non-Votes: 20,821,577

For: 436, 150,69 I Against: 183,888,844

Abstained: l,860,806

Broker Non-Votes: 20,821 ,577

f!:Qposal 7: The consideration ofa nonbinding, advisory Company proposal to provide proxy access for Stockholder-

11orninated c:Lirector candidates.

For: 224,287,122

Against: 395,753,313



Proposar@)The consideration ofa nonbinding, 8 Stockholder proposal to allow Stockholders to reque ofStockholders.

For: 226,477, 1 s·1 Against: 393,037,855



Pro12osal 9 : The consideration ofa nonbinding, advisory Stockholder proposal to provide proxy access for Stockholder

nominated c:Lirector candidates.

For: 411 ,136,143

Against: 208,374,419



8-K I annualmeeting8-k42315.htm 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 2~

THE AES CORPORATION (Exact name ofRegistrant as specified in its charter)

Delaware 001-12291 54-1163725 (IRS Employer (State or other jurisdiction Commission

of incorporation) File Number Identification No.)

4300 Wilson Boulevard, Suite 1 t00 Arlington, Virginia 22203

(Address or principal executive offices) (Zip code)

(703) 522-1315 (Registrant's telephone number, including area code)

Not Applicable (Former name or former address, if changed since last report)

Check t he appropriate box below ifthe Fann 8-K filing is intended to simultaneously satisfy the filing obligation of the

registrant under any ofthe following provisions (see General Instruction A.2. below):

D Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) D Soliciting material pursuant to Rule l 4a~1Z under the Exchan~e Act ( 17 CFR 240. I 4a-12) r---7.


*** JOHN CHEVEDDEN

January 16, 2018

***

Office of Cfilef Cow1sel Division of Corporation Finance Securities and Exchange Commission l00 F Street, NE Washfogton, DC 20549

# 7 Rule 14a-8 Propos-al CF Industries Holdings, Inc. (CF) Special Meeting John Chevedden



The company cited at lengthAES Corporation (December 19, 2017) as a shining example. The company failed to note that AES seems to have a knack for putting forth a failed company proposal on a governance topic significantly supported by shareholders.

The next page shows the failed 36%-vote for a 2015 AES proposal on an important governance ~~ .

The Staff even got a thank you message from AES shortly after AES Corporation (December 19, 2017). AES expressed appreciation for how promptly it received the letter it. requested.

This is to request that the Securities and Exchange Commission allow this resolution to stand and be voted upon in the 2018 proxy.



ProP-osal 4: The ratification of Ernst & Young LLP as eindependent Registered Publk Accountiug Finn for the year 2015.

For: 637,114,970

Against: 3,804,745


Broker Non-Votes: 0

Proposal 5: The consideration ofa nonbinding advisory vote on executive compensation.

For: 601,249,980

Against: 15,086,094



Proposal 6: The consideration ofa non binding, advisory Company proposal to al low Stockholders to request special meetings of

Stockholders.

For: 436,150,691

Against: 183,888,844

Abstained; 1,860,806


ProP-osal 7: The consideration ofa nonbinding, advisoryCy")roposal to provide p roxy access or Stockholder-

nominated director candidates. ~ For:~87, 122

Against:@53,313

Abstained; 1,859,906

Broker Non-Votes: 20,82 1,-577

Proposal 8: The consideration ofa nonbinding, advisory Stockholder proposal to allow Stock.holders to request special meetings

ofStockholders.

For: 226,477.181

Agains~ 393,037,855


Broker Non-Votes: 20,82 J,577

ProP.osal 9 : The consideration ofa nonbinding, advisory Stockholder proposal to provide proxy access for Stockholder

nom inated director candidates.

For: 411,136,143

Against: 208,374,419




*** JOHN CHEVEDDE,N

January 15, 2018

***

Office of ChiefCounsel Division ofCorporation Finance Securities and Exchange Com.mission 100 F Street, NE Washington, DC 20549



Inis is in regard to the January 8, 2018 no-action request.

The company did not say whether it is going to follow the fllumina, Inc. example if the company ratification proposal obtains the dismal 22%-vote of"support" that the Illumina ratification proposal received. The company does not discuss the steps that IlJurnina took a year after its dismal 22%-vote and whether the company will do the same.

The company cited no intent in the origins of the current rule 14a-8 proposal rules that would favor a practice of displacing rule 14a-8 proposals by company proposals that would get 22% support.

A 22%-vote is considered so dismal by some that at least one company said (in a 2018 no action request) that a 23% shareholder vote for a 2017 rule 14a-8 proposal topic was grounds for the same proposal topic to not be published in its 2018 proxy.





*** JOHN CHEVEDDEN

January 14, 2018

***

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


L adies and Gentlemen:


Oo page 5 the company cites fllumina, Inc. (March 18, 2016). This involved a company proposal which received a dismal vote of 22%-support. This may be the first time in rule 14a-8 history that a vote of22% has been offered in support ofa company position.


Sincerely,

~·~ ~ hnChevedden

cc; Douglas C. Barnard



*** JOHN CHEVEDDEN

January 12, 2018

***

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

# 4 Rule l 4a-8 Proposal CF Industries Holdings, Inc. (CF) Special Meeting John Chevedden



The company request could put proponents at a disadvantage. It is possible that there are no topics that a proponent could submit to a company that a company .could not in turn just ask shareholders for a ratification of the status quo. The company has not suggested that there is some sort ofsafety valve that would keep this from happening.


Sincerely,

~#-~ cc: Douglas C. Barnard




January 11 , 2018





It is absolutely absurd for the company to ask shareholders to reconsider an issue that they voted in favor ofby a 270-to-one margin in 2014 - more than 99% approval,

The 2014 proposal on this issue received more positive votes than any company director.


Sincerely,

~ . ..,L




*** JOHN CHEVEDDEN

January 10, 2018

***

Office of Chief Counsel Division of Corporation Finance Securities and Exchange Commission l 00 F Street, NE Washington, DC 20549

# 2 Rule 14a-8 Proposal CF Industries Holdings, Joe. (CF) Special Meeting John Chevedden



In October 2015, after some controversy with proxy access shareholder proposals, SLB 14H was issued, which gave exan1ples of conflicting proposals. For example, proposals would be viewed as conflicting where a company sought shareholder approval of a merger, and a shareholder responded with a proposal that asked shareholders to vote against the merger.

SLB 14H also indicated that it would not view 2 proposals as directly conflicting ifa shareho1der could vote for both, although s/he may prefer one proposal over the other. The example provided in the bulletin was proxy access, where the shareholder proposal wol!lld permit a shareholder or group of shareholders holding at least 3o/o of the companis outstanding stock for at least 3 years to nominate up to 20% of the directors, while a management proposal would allow shareholders holding at least 5% of the company's stock for at least 5 years to nominate up to 10% of the directors.

The reason explained in the SLB 14H that these two proposals are not conflicting is because ''both proposals generally seek a [sic] similar objectives... and the proposals do not present shareholders with conflicting decisions such that a reasonable shareholder could not logically vote in favor ofboth proposals."

In the case of CF Industries, a shareholder could reasonably vote in favor of both a 25% ownership threshold to hold a special meeting and a 10% threshold, even though preferring one over the other. Both proposals seek similar objectives and the proposals do not present shareholders with such a conflict that a reasonable shareholder could not logically vote for both.

Preparationhas begun on an additional rebuttal letter.


Sincerely,

~LL~





January 8, 2018





Shareholders can logically vote for both proposals.

Shareholders can vote for the company proposal because they do not want to lose the right to cal! a special meeting.

Shareholders can also vote for the rule l 4-a8 proposal because they want an improved right to call a special meeting.


Sincerely,

~e-,I~ ~ Chevedden



(CF - Rule l 4a-8 Proposal, October 26, 2017 IRevised December l , 2017] 12-1 [This line and any line above it is not for publication.]

Proposal (4} - Special Shareholder- Meeting Improvement Resolved, Shareowners ask our board to take the steps necessary (unilaterally ifpossible) to amend our bylaws and each appropriate governing docwnent to give holders in the aggregate of l 0% of our outstanding common stock the power to call a special shareowner meeting. This proposal does not impact our board's current power to call a special meeting.

Scores ofFortune 500 companies allow 10% ofshares to call a special meeting. Special meetings allow shareowners to vote on important matters, such as electing newdirectors that can arise between annual meetings.

This proposal topic won more than 70%-support at Edwards L ifesciences and SunEdison in 2013. A shareholder right to call a special meeting and to act by written consent and are 2 complimentary ways to bring an important matter to the attention of both management and shareholders outside the annual meeting cycle.

More than 100 Fortune 500 companies provide for shareholders to call a special meeting and to act by written consent. We have no right to act by written consent-hence the greater need to expand the right to call a special meeting at CF Industries. Plus CF shareholders gave 43% support to shareholder written consent in 2017. This 43%-support would have been higher (perhaps 48%) ifsmall shareholders had the same access to independent recommendations on shareholder proposals as large shareholders.

Any claim that a shareholder right to call a special meeting can be costly - may be largely moot. When shareholders have a good reason to call a special meeting - our board should be able to take positive responding action to make a special meeting unnecessary.

Please vote to enhance management accountability to shareholders: Special Shareholder Meeting Improvement

[The line above is for publication.]

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

155 NORTH WACKER DRIVE

CHICAGO, ILLINOIS 60606·1720 QOA'T'Off HOUSTON

TEL (312) 407·0700 \OS ANOCI.CS. Hl(W YQAK

,AX (312) 407·04 I I PALOAL"SO YIASl·U"GTOH, 0 C www.$kadden.com W•t.MINGTOtl

81i1JIMQ, 8RU55E.L$ 1ffAHl'tFURT PION~ M.O/IIG.

1,,Qt,COff MOSC:Ow MUWC:.M

gAAIS January 8. 2018 s.&.o PAULO SEOUL

S.HAl~GtfAI S,1NG"PO~E.

'f0,(.Y0 'fOAOHfO

BY E-MAIL ([email protected])

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

RE: CF Industries Holdings, Inc. - 20 I 8 Annual Meeting -Exclusion ofShareholder Proposal Submitted by John Chevedden


Pursuant to Rule 14a-80) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"}, we are writing on behalfofour client, CF Industries Holdings, Inc., a Delaware corporation (the "Company"), to request that the Staffofthe Division ofCorporation Finance (the "Staff') of the U.S. Securities and Exchange Commission (the "Commission") concur with the Company's view that, for the reasons stated below, the Company may exclude from the proxy materials (the "Proxy Materials") to be distributed by the Company in connection \vith its 2018 annual meeting ofshareholders1 (the "2018 Annual Meeting") the shareholder proposal and supporting statement (the "Shareholder Proposal") submitted to the Company by John Chevedden (the "Proponent").2

Although the Company 's organizational documents and its pro:,.y mo1criols j1Cncrolly use lhc term .,mcklm/de,·, rather than shareholder, 10 refer lo oholder ofthe Compnny's capitol slock, this \ctlcr uses the ll'TP\ "shorcholJcr" llll'Oughout for consistency with the tenuinoloi;y used in lhc Shareholder l'Ttlposa! al\d in Ruic l4a-8 promulgolcd under the Exchange Act.

The Proponent sullmitted on initial version of the proposal ond supporting statement on October 26. 2017 and oroviscJ ,·crsion of Ilic proposal ond supporting stotcmcnl on December I, 2017. 1,sccpt wh,'fc the context indicates otl1erwise, references herein to the Shareholder Proposal ore lo ,11ch pr.,posal and ,11pporting. statement os so revised.

mailto:[email protected]:www.$kadden.comhttp:ANOCI.CS

Office ofChiefCounsel January 8, 2018 Page2

We are e-mailing this letter to the Staffin accordance with question and answerC ofStaffLegal Bulletin No. 14D (CF)(Nov. 7, 2008) ("SLB 14D") and are providing with this letter, in accordance with question and answerG.7 ofStaffLegal Bulletin No. 14 (CF) (July 13, 2001), question and answer F.3 ofStaff Legal Bulletin No. 14B (CF) (July 13, 200J}and question and answerG ofStaff Legal Bulletin No. l4C (CF) (June 28, 2005), copies of(i} the Shareholder Proposal as submitted to the Company by the Proponent on October 26, 2017 and, in revised form, on December I, 2017, together with the accompanying cover letters with a mailing address, facsimile number and e-mail address of the Proponent and e-mail correspondence relating to confirmation of the Company's receipt thereof, enclosed as Exhibit A hereto, and {ii) the other correspondence between the Company and the Proponent relating to the Shareholder Proposal, enclosed as Exhibit B hereto, comprising (A) the Company's November 8, 2017 notice to the Proponent ofa deficiency in the proof of the Proponent's ownership ofthe requisite shares of the Company's common stock as of the date the Shareholder Proposal was submitted to the Company (the "Deficiency Notice") and (B) a letter from Fidelity Investments (the ''Broker Letter"), forwarded by e-mail to the Company by the Proponent on November JO, 2017 and November 11, 2017, confirming the Proponent's ownership ofthe requisite shares of the Company's common stock. A copy ofthis submission is being' sent simultaneously to the Proponent by e-mail and overnight courier service addressed to the Proponent as notice of the Company's intent to exclude the Shareholder Proposal from the 2018 Proxy Materials.

Rule 14a-8(k) and Section E of SLB 14D require in connection with a company's no-action request under Rule 14a-8 that a shareholder proponent send the company a copy ofany correspondence that the shareholder proponent elects to submit to the Commission or the Staff in connection with the no-action request. Accordingly, we take this opportunity, on behalfof the Company, to remind the Proponent that, if the Proponent submits correspondence to the Commission or the Staffwith respect to the Shareholder Proposal, a copy ofthat correspondence should concurrently be furnished to the undersigned.

The Shnreholder Proposal

The Shareholder Proposal, which is set fonh in full in Exhibit A hereto, requests that the Company's board ofdirectors (the "Board"} "take the steps necessary (unilaterally ifpossible) to amend our bylaws and each appropriate governing document to give holders in the aggregate of 10% ofour outstanding common stock the power to call a special shareowner meeting."

Office ofChief Counsel January 8, 20 I 8 Page3

Bnsis for Exclusion

We hereby respectfully request that the Staff concur in the Company's view that it may exclude the Shareholder Proposal from the Proxy Materials pursuant to Rule l4a-8(i)(9), because the Shareholder Proposal directly conflicts with a proposal to be submitted by the Company to its shareholders at the 2018 Annual Meeting.

Background

The Shareholder Proposal a11d S11bseq11e111 Corre.l'po11de11ce

On October 26, 2017, the Company received the original Shareholder Proposal, accompanied by a cover letter from the Proponent. The Company received a revised Shareholder Proposal on December I, 2017, accompanied by a cover letter from the Proponent. Copies of the original and revised Shareholder Proposal and accompanying cover letters are included in Exhibit A hereto. On November 8, 2017, the Company sent the Deficiency Notice to the Proponent by e-mail and ovemi ght courier service. On November 10, 2017, the Company received the Broker Letter.

Tlte Company '.s Special Meeting Prol'isions

Prior to the Company's 2014 annual meeting ofshareholders, the Company's certificate ofincorporation and bylaws provided that a special meeting of shareholders could be called only by the chairman ofthe Board, the Company's president orthe Board. At the Company's 2014 annual meeting ofshareholders, the Board recommended that shareholders approve, and the shareholders approved. an amendment to the Company's certificate of incorporation to 1,,rant holders ofnot less than 25% ofthe Company's outstanding common stock the right to call a special meeting ofstockholders, subject to applicable procedural requirements and limitations. In connection with the approval ofsuch amendment to the certificate of incorporation, the Board approved corresponding changes to the Company's bylaws, which became effective upon effectiveness of the amendment to the certificate of incorporation, establishing procedural requirements and limitations applicable to stockholder-initiated special meetings. ·

The Company Proposal

The Company plans to submit to its shareholders at the 2018 Annual Meeting a proposal that shareholders ratify the retention of the Special Meeting Provisions (as defined below), including the 25% Ownership Threshold (as defined below) (the "Company Proposal"). The "Special Meeting Provisions" are the provisions contained in Article IX(B) of the Company's Second Amended and Restated

Office ofChief Counsel January 8, 20 I 8 Page4

Certificate of Incorporation (the "Charter") and Section 3 of Article Uofthe Company's Fourth Amended and Restated Bylaws (the "Bylaws").

A copy of the Charter is attached hereto as Exhibit C, and a copy of the Bylaws is attached hereto as Exhibit D.

The Shnreholder Proposal May be Excluded Under Rule 14a-8(i)(9) Because the Shareholder Proposal Directly Conflicts with the Company Proposal

The Company believes that it may properly exclude the Shareholder Proposal from its Proxy Materials under Rule I4a-8(i)(9), which pemiits the exclusion ofa proposal "[i)fthe proposal directly conflicts with one of the company's own proposals to be submitted to shareholders at the same meeting." See also Staff Legal Bulletin No. 14H (Oct. 12, 2015} ("SLB 14H"}.3

Under the Special Meeting Provisions, subject to applicable procedural requirements and limitations in the Bylaws, holders ofrecord ofat least 25% ofthe voting power ofall outstanding shares ofcommon stock have the ability to require the Secretary of the Company to call a special meeting ofshareholders {the "25% Ownership Threshold"). See Article IX(B) of the Charter and Section 3 of Article Il of the Bylaws.

The Proponent is requesting that the Special Meeting Provisions be amended to include a 10% ownership threshold, which is in direct conflict with the Company Proposal seeking ratification of the retention of the Special Meeting Provisions, including the 25% Ownership Threshold. Therefore, the Shareholder Proposal directly conflicts with the Company Proposal such that the Company's shareholders could not logically vote for both the Shareholder Proposal and the Company Proposal {i.e., a vote for one proposal would be tantamount to a vote against the other proposal}. See SLB 14H.

J Sl,13 l4M state., that considcrntion of when a shoreholdcr proposal may be c~cluJcd under Rule l4a~'l(iX9) ~ould be based on whether lhere is o direct connict bctws'\:n tl1e mana~cmcnl and stockholder prorosnls nt issue:

Aller reviewing the histoiy of Rule l4o-8(i)(9) :ind bascJ on our understanding of the rule's intended purpose, we believe 1h01 ony ossessmcnl of whether a pmposal is escludnble under this basis should focus on whether there is a direct connict between the managcmc-nt and shareholder pmrosals. for this purpose. we bclic,·e lhat o direct connict would csist ifa rcasonnblc shareholder could not loi;icnlly vote in fo,·or of boll1 proposob, i.e., a vote for on,: proposal is tantamount to a vole ngninsl the other proposal. While thi, articulation may be a highc'f burd,-n for some companies seeking lo exclude u proposal lo meet than hnd he

Office ofChief Counsel January 8, 2018 Pages

The Staff recently issued no-action relief under Rule 14a-8(i)(9) to The AES Corporation ("AES") based on facts and circumstances similar to those to which this request relates. The AES Corporation (Dec. 19, 2017). The AES no-action letter addressed a shareholder-sponsored shareholder resolution, to be submined to shareholders at the company's 2018 annual meeting, requesting that AES's board of directors take the steps necessary (unilaterally ifpossible) to amend the company's bylaws and each appropriate governing document to give holders in the aggregate of 10% of the company's outstanding common stock the power to call a special shareowner meeting. The AES no-action request represented that the company's board ofdirectors intended to submit a proposal to shareholders at AES's 2018 annual meeting to seek shareholder ratification of the 25% aggregate ownership threshold to call a special meeting ofshareholders contained in Section 2.04 of AES's Amended and Restated By-Laws.

The situation faced by the Company in connection with the Shareholder Proposal is analogous to that presented in The AESCmporatio11 in that both involve competing proposals for implementation ofmutually exclusive approaches. Presenting both proposals in the Proxy Materials would result in directly competing proposals for implementation ofshareholder special meeting provisions that conflict on the basis of the share ownership threshold for shareholders to be able to call for a special meeting ofshareholders. Here, as in the AES no-action request. a shareholder cannot logically vote for the Company Proposal to ratify the retention of the Special Meeting Provisions, including the 25% Ownership Threshold, and also vote for the Shareholder Proposal to amend the Special Meeting Provisions to establish a 10% share ownership threshold.

The position taken in The AES Corporation is consistent with the position taken by the Staff in an analogous situation in which a company sought to exclude in reliance on Rule 14a-8(i)(9) a shareholder proposal to request modification ofan existing governance provision in a manner that would conflict \vith a management proposal to ratify the retention ofsuch existing governance provision. Jl/11mi11a, Inc:. (Mar. 18, 2016). In lll11111i11a, the shareholder proposal sought to eliminate and replace supermajority provisions in the company's charter and bylaws with a simple majority voting standard, which contlicted with the company's plans 10 seek ratification ofexisting bylaw and charter provisions related to the company's existing supennajority voting requirements at the same annual meeting. The Staff agreed with the company that it could rely on Rule l 4a-8(i )(9) to exclude the shareholder proposal. See also Herley Industries, Inc. (Nov. 20, 2007) (i;,,ranting relief under Rule l 4a-8(i )(9) to exclude a shareholder proposal requesting an amendment to the company's bylaws to provide for majority voting in the election of directors that conflicted with the company's proposal to maintain a plurality vote standard).


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Because the Company Proposal will directly conflict with the Shareholder Proposal, as detailed above, submitting both proposals to shareholders at the 2018 Annual Meeting would present alternative and conflicting decisions for shareholders, creating the potential for inconsistent and ambiguous results. Accordingly, the Company requests that the Staff, consistent with The AES Corporation and the other no-action letters cited above, concur that the Company may exclude the Shareholder Proposal under Rule 14a-8(i)(9).

Conclusion

Based upon the foregoing analysis, the Company respectfully requests that the Staff concur that it will take no action if the Company excludes the Shareholder Proposal from its Proxy Materials. Should the Staff disagree with the conclusions set forth in this letter, or should any additional information be desired in support of the Company's position, we would appreciate the opportunity to confer with the Staff concerning these matters prior to the issuance of the Staff's response. Please do not hesitate to contact the undersigned at (312) 407-0784 or Brian W. Duwe at (312) 407-0816.

Very truly yours,

~---c:::::_::>__-_-_·---·-·=····=·--··=-·=-:.._··--~~=--==-·==·:::.-:-=-·-===--

Richard C. Witzel, Jr.

Enclosures

cc: Douglas C. Barnard Senior Vice President, General Counsel, and Secretary CF Industries Holdings, Inc. 4 Parkway North, Suite 400 Deerfield, Illinois 60015-2590

John Chevedden ***

1007552.03-CIDSR0lA- MSW

Exhibit A


Exhibit A to No-Action Request - Page 1 of 12

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Mr. Barnard, Please see the attached rule 14a-8 proposal to improve corporate governance and enhance long-term shareholder value at de minimis up-front cost – especially considering the large market capitalization of the company. Sincerely, John Chevedden


Mr. Douglas C. Barnard Corporate Secretary CF Industries Holdings, Inc. (CF) 4 Parkway North Suite 400 Deerfield IL 60015 PH: 847-405-2400 FX: 847-405-271 1

Dear Mr. Barnard,

JOHN CHEVEDDEN

This Rule l 4a-8 proposal is respectfully submitted in support of the long-term performance of our company.

This Rule 14a-8 proposal is intended as a low-cost method to improve company performance -especially compared to the substantial captializtion of our company.

This proposal is for the next annual shareholder meeting. Rule 14a-8 requirements will be met including the continuous ownership of the required stock value until after the date of the respective shareholder meeting and presentation of the proposal at the annual meeting. This submitted format, with the shareholder-supplied emphasis, is intended to be used for definitive proxy publication.

Your consideration and the consideration of the Board of Directors is appreciated in support of the long-term performance of our company. Please acknowledge receipt of this proposal by email to

Sincerely,

~-.-.L~ Chevedden

6)~e_(,l.~17 Date

cc: Michael McGrane Associate General Counsel Dan Swenson Senior Director, Investor Relations & Corporate Communications


******

***


[CF - Rule 14a-8 Proposal, October 26, 2017] 12-1 - - . · - · ---------· [This line and any line above it is not for publication.]

Proposal [4] - Expand Shareholder Ability to Call a Special Shareholder Meeting Resolved, Shareowners ask our board to take the steps necessary (unilaterally ifpossible) to amend our bylaws and each appropriate governing document to give holders in the aggregate of 10% of our outstanding common stock the power to call a special shareowner meeting. This proposal does not impact our board's current power to call a special meeting.

Scores of Fortune 500 companies allow 10% of shares to call a special meeting. Special meetings allow shareowners to vote on important matters, such as electing new directors that can arise between annual meetings.

This proposal topic won more than 70%-support at Edwards Lifesciences and SunEdison in 2013. A shareholder right to call a special meeting and to act by written consent and are 2 complimentary ways to bring an important matter to the attention ofboth management and shareholders outside the annual meeting cycle.

More than 100 Fortune 500 companies provide fot s

Documents

SECURITIES AND EXCHANGE COMMISSION - SEC.gov · ),60$ 20%0hprudqgxp0 d ivision of corporation finance united states securities and exchange commission washington, d .c. 20549 january