U.S. Securities and Exchange Commission
Washington, DC 20549
NOTICE OF EXEMPT SOLICITATION
1. Name of the Registrant:
WALGREEN CO.
___________________________________________________________________________
2. Name of the person relying on exemption:
CTW INVESTMENT GROUP
___________________________________________________________________________
3. Address of the person relying on exemption:
1900 L STREET, NW, SUITE 900 WASHINGTON, DC 20036
___________________________________________________________________________
4. Written materials. Attach written materials required to be submitted
pursuant to Rule 14a6(g)(1):
CtW Investment Group's #proxyaccess proposal at $WAG Jan 8th meeting wins
ISS support -letter to investors @ ow.ly/s9aK6
[The link cited in this Tweet is to the "Dear Shareholder" letter from CtW
Investment Group to Walgreen investors that was posted on EDGAR on
December 6, 2013 and is reproduced below.]
CTW INVESTMENT GROUP
December 5, 2013
Re: Support Proxy Access Proposal
Dear Walgreen Shareholder:
We urge you to vote FOR voting Item # 5 calling for the adoption of a proxy
access bylaw at Walgreen Co.'s (NYSE: WAG) annual shareholder meeting on
January 8, 2014.
- PROXY ACCESS ENHANCES GOVERNANCE AND LONG-TERM ACCOUNTABILITY by giving
long-term owners a meaningful voice in nominating and electing directors.
- THE PROPOSAL'S OWNERSHIP THRESHOLD SUPPORTS A LONG-TERM FOCUS by
following the 3% ownership and 3-year eligibility thresholds.
- IT PROVIDES A CRITICAL SAFETY VALUE AS WALGREEN PURSUES AND RISKY AND
AMBITIOUS TRANSFORMATION from a domestic drugstore chain into a global
Alliance Boots. The structure of the deal disenfranchises shareholders
and raises serious concerns about the company's future governance and
strategic direction.
The CtW Investment Group, the sponsor of the proposal, works with union
sponsored pension funds to enhance long-term shareholder returns through
active ownership. These funds have $250 billion in assets under management
and are substantial Walgreen shareholders.
PROXY ACCESS ENHANCES GOVERNANCE AND LONG-TERM ACCOUNTABILITY: In our view
it encourages boards to be more accountable to shareholders, more vigilant
in their oversight of management and more thoughtful in their nomination
process. Critically, it enhances the voice of institutional investors with
a long-term stake in the company's success. As the Norwegian Government
Pension Fund Global, the world's largest pension fund, puts it: "A
successful board should not fear proxy access."/1/
THE PROPOSAL'S OWNERSHIP THRESHOLD SUPPORTS A LONG-TERM FOCUS: It follows
the "3%/3-year" model that was the basis for the SEC's now vacated 2010
proxy access rule, won majority shareholder support at Verizon and
CenturyLink this year, and was adopted by the board at Hewlett-Packard.
The proposal allows a 3% shareholder or group who has held shares for at
least 3 years to have their nominees for the board included in the proxy
materials, so long as they are nominating candidates for no more than 20%
of the board seats being filled. The structure safeguards against potential
abuse by special interests and short-term activists, and provides long-term
investors with an appropriate mechanism for use in extraordinary
circumstances, such as in the wake of a costly transactional failure or
other material governance failure.
IT PROVIDES A CRITICAL SAFETY VALUE AS WALGREEN PURSUES AND RISKY AND
AMBITIOUS TRANSFORMATION: With the announcement in June 2012 of its planned
acquisition of Alliance Boots ("AB"), Walgreen has embarked on a dramatic
and potentially risky transformation of its strategy, board and ownership
Structure, placing a high premium on the additional protections proxy
access affords shareholders.
THE AB TRANSACTION'S COMPLICATED STRUCTURE DISENFRANCHISES SHAREHOLDERS:
At last year's shareholder meeting, we raised concern over the decision
to structure the potential $20 billion acquisition of AB as a two-step
process, denying shareholders a vote on the transaction until the final
step (expected in the first
__________________________
/1/ http://www.sec.gov/Archives/edgar/data/1365135/000095015912000199/
px14a6g.htm
1900 L Street, N.W. Washington, D.C. 20036
(202) 721-6060
www.ctwinvestmentgroup.com
This is not a solicitation of authority to vote your proxy.
Please DO NOT send us your proxy card as it will not be accepted.
half of 2015). With Walgreen already having taken a 45% stake in AB and
begun integrating operations, management and governance, shareholders
face the risk that they will be asked to vote on completing an
acquisition that is considered a fait accompli and complicated to unwind.
THE DEAL DRAMATICALLY ALTERS WALGREEN'S GOVERNANCE PROFILE: Following
the first-step of the transaction, AB's Executive Chairman Stefano
Pessina holds a board seat and an 8% equity interest in Walgreen, rising
to 16% of the outstanding shares if the second step is completed. This
represents a sudden concentration of ownership in a single individual
and marks a significant shift in Walgreen's governance structure, raising
questions about whether Pessina could have undue influence. It should be
noted that following the merger of Alliance Unichem, headed by Pessina,
with Boots in 2006 to form AB, and the subsequent LBO in 2007, Pessina
was ultimately able to displace management and pursue his own agenda at
Sthe combined company.2 Of additional concern to long-term shareholders,
Kohlberg Kravis Robert & Co., a part owner of AB, obtained the right to
designate a board nominee (presently Dominic Murphy) despite currently
holding less than a 1% stake in Walgreen.
THE STRATEGIC TRANSFORMATION CARRIES SIGNIFICANT RISKS: The AB
transaction is the linchpin of an untested strategy for global growth -
one that reorients the company from a domestic retailer with a long
history of organic growth into a vast global conglomerate, combining
retail and drug wholesale businesses. Besides integration challenges,
the deal creates greater exposure for Walgreen shareholders to Europe's
economic woes, since AB does over 90% of its business there. Perhaps of
greatest concern, this foray into international expansion comes at a
time when we believe that Walgreen should be focused on domestic
improvement as it still suffers the effects of the Express Scripts
debacle, which cost over $4 billion in prescriptions in 2012.
A NEED FOR SHAREHOLDER VOICE: For corporate governance, transactions
present the true test of promises to advance and protect shareholder
interests. Besides the many good governance reasons why proxy access
is warranted, we believe Walgreen's ambitious and risky acquisition
strategy places a premium on having enhanced outlets for shareholder
voice in determining the path forward. Accordingly, we urge you to
vote "FOR" our proxy access proposal.
If you would like to discuss our concerns directly, please contact my
colleague Michael Pryce-Jones at 202-262-7437.
Sincerely,
/s/
Dieter Waizenegger
Executive Director, CtW Investment Group
_________________________
/2/ The Guardian, "Pessina tightens grip after Alliance Boots chief
quits," July 12 2007. http://www.theguardian.com/business/2007/jul/12/
retail
This is not a solicitation of authority to vote your proxy.
Please DO NOT send us your proxy card as it will not be accepted.