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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Notice of Exempt Solicitation
submitted pursuant to Rule 14a-6(g)
1. Name of Registrant:
The Lubrizol Corporation
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2. Name of person relying on exemption:
College Retirement Equities Fund
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3. Address of person relying on the exemption:
730 Third Avenue, New York, NY 10017
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4. Written materials. The following materials are attached:
Exhibit 1: Letter from Teachers Insurance and Annuity
Association - College Retirement Equities Fund to the shareholders
of Lubrizol Corporation
Exhibit 2: Resolution to be proposed by Teachers Insurance and
Annuity Association - College Retirement Equities Fund at the annual
meeting of Lubrizol Corporation
Exhibit 3: Article published on Teachers Insurance and Annuity
Association - College Retirement Equities Fund's web site
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Exhibit 1
TEACHERS INSURANCE AND ANNUITY ASSOCIATION
COLLEGE RETIREMENT EQUITIES FUND PETER C. CLAPMAN
Senior Vice President and
730 Third Avenue/New York, NY 10017-3206 Chief Counsel, Investments
212 490-9000
March 18, 1999
Dear Fellow Lubrizol Shareholder:
TIAA-CREF has held a significant equity position in The Lubrizol
Corporation for more than 15 years, and currently owns 967,000 shares (or 1.6%)
of Lubrizol's common stock. At Lubrizol's upcoming Annual Meeting, scheduled for
April 26, 1999, we intend to propose a resolution (set forth in Lubrizol's proxy
statement) that requests the Board of Directors to redeem the Company's "dead
hand" poison pill, unless shareholders vote otherwise. We are asking for your
support of our proposal.
As detailed below, we believe that Lubrizol's vigorous effort to keep
our proposal out of its proxy statement illustrates management's extraordinary
disdain for shareholder interests. Therefore, we intend to "send a message" to
Lubrizol's board of directors that its actions are unacceptable by withholding
our votes on Lubrizol's director nominees. We encourage you to do the same.
LUBRIZOL'S DEAD HAND PILL DISENFRANCHISES SHAREHOLDERS
Lubrizol's dead hand poison pill can be redeemed only with the consent
of Lubrizol's CURRENT directors (or future directors approved by them).
Therefore, if Lubrizol's directors were to reject an attractive third-party
acquisition offer that shareholders favored, the shareholders would have no
ability to replace Lubrizol's directors with directors who would have the power
to redeem the pill and allow shareholders to accept that offer. We cannot accept
the premise that Lubrizol's current directors (and their nominees) are the only
individuals who can accept or reject an acquisition bid for the company. We
believe that Lubrizol's directors have wrongfully usurped shareholder power for
themselves.
It is noteworthy that, while Ohio courts have yet to rule on the
validity of dead hand pills, they have been declared illegal in Delaware, the
state in which the majority of U.S. public companies are incorporated.
LUBRIZOL'S ARGUMENTS IN SUPPORT OF ITS DEAD HAND PILL
ARE WITHOUT MERIT
Lubrizol concedes in its response to our proposal that its dead hand
provision prevents a potential acquiror from replacing the current board with
directors who could approve the acquiror's acquisition proposal. What Lubrizol
does not say, however, is that the only practical way a potential acquiror could
gain control of sufficient voting power to replace the board is BY SOLICITING
OUR VOTES. The dead hand ignores the will of the shareholders by subverting the
voting process. If the potential acquiror tried to obtain sufficient voting
power to replace the board through stock purchases or voting agreements,
Lubrizol's pill would be triggered and the potential acquiror would suffer
substantial economic dilution. Therefore, a third party bidder could only
replace the current board if Lubrizol's other shareholders approved of the
proposed transaction and granted that party their proxies. This is how corporate
governance is supposed to work.
Lubrizol has further obscured the issue by noting in its response to our
proposal that shareholders previously approved a "continuing director" provision
in Lubrizol's Amended Articles of Incorporation. The apparent implication is
that we should therefore not be offended by the dead hand provision in the pill,
which also contains the "continuing director" concept. There are, however, two
major differences that Lubrizol neglects to mention.
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March 18, 1999
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First, unlike the amendment to the Articles, shareholders did not approve the
dead hand provision - it was unilaterally adopted by the board of directors.
Second, and more importantly, the "continuing director" provision in the Amended
Articles of Incorporation does not vest the right to approve a "related party"
transaction solely in continuing directors. To the contrary, shareholders are
expressly empowered by the Amended Articles of Incorporation to approve such
transactions.
OTHER COMPANIES HAVE PULLED THEIR DEAD HAND PROVISIONS
TIAA-CREF, the world's largest pension system and a significant
investor in virtually all major U.S. companies, has asked a number of other
companies to drop their dead hand provisions. Most of the companies receiving
our resolution have agreed with our analysis and voluntarily amended their pills
to remove the dead hand provisions. In contrast, Lubrizol vigorously resisted
our efforts to bring this issue before the shareholders, petitioning the SEC and
wasting valuable resources in an attempt to deny you the right to vote on our
proposal. Only after the SEC flatly rejected Lubrizol's meritless arguments were
you afforded the opportunity to vote on our proposal.
LUBRIZOL IS STRUGGLING
Under the stewardship of Lubrizol's current management, the Company has
provided consistently poor returns to shareholders. On February 25, 1999, The
Wall Street Journal listed Lubrizol among the worst performers in the past
decade, noting that it has lagged significantly behind its specialty chemical
peers. Lubrizol's shares have foundered during the most buoyant stock market in
history, losing more than a third of their value over the past five years.
A majority of Lubrizol's current directors have served on the board
during these five years of poor performance. They have erected a defense in the
dead hand pill that would prevent us from replacing them with directors who may
be more independent in evaluating an attractive takeover bid for Lubrizol.
Rather than addressing how it intends to provide greater shareholder returns,
Lubrizol's board has instead entrenched itself by usurping our fundamental
shareholder rights.
We are frustrated with management's unwillingness to address our
concerns regarding Lubrizol's dead hand pill and therefore are bringing this
very important issue to our fellow shareholders. We would be happy to discuss
this matter with you further in more detail. Please contact Georgeson & Company
Inc., our advisor, at (212) 440-9800, or Ken Bertsch of TIAA-CREF at (212)
916-4972 with any questions you might have.
We strongly urge you to (1) vote FOR TIAA-CREF's shareholder proposal
and (2) WITHHOLD your votes from Lubrizol's director nominees at Lubrizol's 1999
Annual Meeting.
Sincerely,
/s/ Peter C. Clapman
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Exhibit 2
The following excerpt from Lubrizol's 1999 proxy statement includes
TIAA-CREF's shareholder resolution and supporting statement on the company's
"dead hand poison pill."
SHAREHOLDER PROPOSAL
The Teachers Insurance and Annuity Association College Retirement
Equities Fund, 730 Third Avenue, New York, New York, 10017-3206, the beneficial
owner of 969,233 Common Shares, has submitted the following proposal:
WHEREAS, the Company's Board of Directors, without shareholder
approval, has adopted a plan, commonly known as a "poison pill", with a
"dead hand" provision which permits only the board members that adopted
the poison pill to redeem the pill;
WHEREAS, this type of poison pill, unlike most poison pills,
not only allows the current Board to effectively thwart acquisition
offers which may be favored by a majority of shareholders, but also
denies shareholders the right to replace this Board with new directors
empowered to redeem the poison pill and permit such offers to go
forward, unless the new directors have been recommended or approved by
the continuing directors;
WHEREAS, we believe that a "dead hand" poison pill has a
coercive effect on the shareholders' basic right to freely elect a new
Board and also takes away normal decision-making authority in this
important area from a newly elected Board;
WHEREAS, we believe that such a "dead hand" poison pill
interferes with good corporate governance and can reduce the value of
the company's shares to the detriment of shareholders;
RESOLVED, that the shareholders request that the Board of
Directors redeem the "dead hand" poison pill, unless approved by the
affirmative vote of a majority of shares of the Company entitled to
vote at a meeting of shareholders held as soon as practicable.
SUPPORTING STATEMENT
By adopting the poison pill without shareholder approval, the current
Board unilaterally deprived shareholders of the traditional right to sell their
shares to potential bidders. By adding the "dead hand" feature, we believe this
Board also denies appropriate decision making authority to a new Board, elected
by shareholders, to decide what is in the best interests of shareholders on this
important subject.
Traditional poison pills have been defended with the argument that
directors can generally be trusted to act in the shareholders' interest, and if
they do not, they can be replaced by the shareholders with other directors.
Adoption of "dead hand" poison pills, however, is different.We believe
that it has the
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effect of "entrenching" the current board by coercing shareholders to vote for
incumbent directors to preserve the possibility of redemption of the pill. Their
intended effect in our view is to preclude proxy contests for corporate control,
which are an appropriate means to challenge incumbent management.
We believe that the right of shareholders freely to elect a board of
directors with full power to represent the shareholders' interests is the
foundation-stone of good corporate governance. Yet this Board has unilaterally
deprived shareholders of what is, in our opinion, their only real protection
against a board that acts against their interests -- the ability to freely elect
a board of their choosing with full powers to represent them in all respects.
By supporting this resolution, shareholders can protect the value of
their investment by sending a message to the Company that we value our right to
elect a Board that is prepared and able to represent shareholder interests on
all proper matters; and that we will not support unilateral actions by the Board
that restrict our ability to meaningfully exercise our voting rights.
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Exhibit 3
TIAA-CREF URGES LUBRIZOL SHAREHOLDERS TO STRIKE DOWN POISON PILL
TIAA-CREF announced today that it has written to fellow shareholders of The
Lubrizol Corporation (NYSE: LZ), urging them to support TIAA-CREF's shareholder
proposal requesting the Lubrizol board to redeem the company's "dead hand"
poison pill defense. The letter also encourages Lubrizol shareholders to
withhold their votes on Lubrizol's director nominees.
"In light of Lubrizol's poor performance in recent years and the unwillingness
of its management to address our concerns regarding Lubrizol's dead hand pill,
we felt it was very important to bring this issue to the attention of our fellow
shareholders," said Peter C. Clapman, TIAA-CREF's senior vice president and
chief counsel, Investments.
The letter, which was signed by Mr. Clapman, states TIAA-CREF's belief that
"Lubrizol's directors have wrongfully usurped shareholder power for themselves."
As support for its position, TIAA-CREF points out that "dead hand poison pills
have been declared illegal in Delaware, the state in which the majority of U.S.
public companies are incorporated."
Lubrizol's efforts to omit TIAA-CREF's proposal from its proxy statement were
rebuffed by the Securities and Exchange Commission. TIAA-CREF, which own 967,000
shares or 1.6% of Lubrizol's common stock, states in its letter that "Lubrizol's
vigorous effort to keep our proposal out of its proxy statement illustrates
management's extraordinary disdain for shareholder interests. Therefore, we
intend to `send a message' to Lubrizol's board of directors that its actions
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are unacceptable by withholding our votes on Lubrizol's director nominees. We
encourage you to do the same."
Shareholders with questions can contact Ken Bertsch, TIAA-CREF's director of
corporate governance, at (212) 916-4972, or John Wilcox of Georgeson & Company
Inc., TIAA-CREF's advisor, at (212) 440-9800. Media inquiries can be e-mailed to
Tom Pinto, TIAA-CREF's Media Relations Director, at [email protected].
