Last year, AHF President and Gilead stockholder Michael Weinstein submitted a shareholder proposal, “Patient Access as a Criterion of Executive Compensation,” for consideration for shareholder Proxy vote in conjunction with the 2014 Annual Meeting of Gilead Stockholders in May.
However, Gilead officials rejected the proposal outright without any prior consultation with Weinstein to resolve alleged discrepancies in his proposal—as required under SEC regulations—and then sought to reject the proposal under the auspices of three different SEC rules. On Friday, the SEC soundly rejected all Gilead’s appeals and told Gilead they may not omit Weinstein’s proposal from its proxy.
WASHINGTON (February 24, 2014) AIDS Healthcare Foundation (AHF) President and Gilead Sciences stockholder Michael Weinstein has learned that the Securities and Exchange Commission (SEC) has soundly rejected repeated efforts by Gilead Sciences, Inc. to exclude a shareholder proposal submitted by Weinstein to Gilead that was intended to be included in its Proxy for shareholder vote during Gilead’s 2014 Annual Meeting in May. Last year, Weinstein submitted a shareholder proposal titled, “Patient Access as a Criterion of Executive Compensation,” for consideration for shareholder vote in conjunction with the 2014 Annual Meeting. The proposal would tie executive compensation to Gilead to the affordability and availability of its lifesaving medications.
However, Gilead initially rejected Weinstein’s proposal outright without any prior consultation with Weinstein to resolve alleged discrepancies in his proposal—as required under SEC regulations. Weinstein then wrote asking the SEC to deny Gilead’s request for the exclusion of his proposal from its Proxy and allow shareholders the opportunity to vote on it during this year’s Annual Meeting, which prompted Gilead to petition the SEC to exclude the measure under two additional SEC rules. In a letter dated February 21, 2014, the SEC rejected ALL Gilead efforts to rebuff the proposal, telling Gilead they may not omit Weinstein’s proposal from its proxy. Following is then text of the SEC’s letter rejecting Gilead’s move to block the shareholder resolution:
February 21, 2014
Response of the Office of Chief Counsel (for the SEC)
Division of Corporate Finance
Re: Gilead Sciences, Inc.
Incoming letter dated December 24, 2013
The proposal requests that the board adopt a policy that incentive compensation for the chief executive officer should include non-financial measure based on patient access to the company’s medicines.
We are unable to concur in your view that Gilead may exclude the proposal under rule 14a-8(i)(3). We are unable to conclude that the proposal is so inherently vague that neither shareholders voting on the proposal, nor the company in implementing the proposal, would be able to determine with any reasonable certainty exactly what actions or measure the proposal requires. In addition, we are unable to conclude that you have demonstrated objectively that the proposal is materially false or misleading. Accordingly, we do not believe that Gilead may omit the proposal from its proxy materials in reliance on rule 14a-8(i)(3).
We are unable to concur in your view that Gilead may exclude the proposal under rule 14a-8(i)(4). We are unable to conclude that the proposal relates to the redress of a personal claim or grievance against the company. We are also unable to conclude that the proposal is designed to result in a benefit to the proponent, or to further a personal interest, which is not shared by the other shareholders at large. Accordingly, we do not believe that Gilead may omit the proposal from its proxy materials in reliance on rule 14a-8(i)(4).
We are unable to conclude that Gilead has met its burden of establishing that Gilead may exclude the proposal under rule 14a-8(i)(7) as a matter relating to the company’s ordinary business operations. Accordingly, we do not believe that Gilead may omit the proposal from its proxy materials in reliance on rule 14a-8(i)(7).
“The SEC wisely rejected Gilead’s efforts to exclude this proposal from its 2014 proxy, a move by Gilead that would have completely devalued shareholder input had it been it been sustained,” said Michael Weinstein. “And despite Gilead’s protestations otherwise, the matter addressed in my shareholder proposal is of direct relevance to the shareholders of Gilead: The proposal ties a portion of executive compensation to patient access to Gilead’s lifesaving medications—a new degree of accountability that recognizes the unique role pharmaceutical companies play both as businesses and in society. In recent years, while as many as 10,000 low-income Americans living with HIV/AIDS were put on waiting lists for access to lifesaving AIDS drugs through the federal/state AIDS Drug Assistance Programs, Gilead CEO John Martin reported a five-year total compensation package of over $250 million. In light of this and other examples of profligate corporate compensation—particularly in the pharmaceutical industry—allowing shareholders to vote on a measure tying a portion of executive compensation, such as bonuses or stock options, to patients’ access to a company’s drugs seems an utterly reasonable request.”