Securities Exchange Act of 1934 — Section 16

December 15, 1992

Response of the Office of Chief Counsel
Division of Corporation Finance

You have asked the Division whether dividend equivalent rights ("DERs") awarded pursuant to the Company's Management Incentive Plan (the "Plan") may rely on the exemption provided by Rule 16b-2 in circumstances where the Company maintains a dividend reinvestment plan (the "DRIP") that is available to all shareholders.

The Plan, which satisfies the requirements of Rule 16b-3, provides for annual cash awards, of which up to 50% may be deferred at the discretion of a participant in the form of a contingent award of common stock, to be delivered in the third year following the grant year, or after retirement or the termination of employment. Pursuant to the Plan's DER feature, the dividends that would have been paid during a calendar year with respect to shares credited to a participant's contingent stock award account are calculated at the end of each year and the participant's account is then credited with the number of full shares of common stock that such amount of dividends could have purchased at the average closing market price of the common stock for the last five business days of the year. Any amounts remaining are carried forward and applied to the DER calculation for the participant's account at the end of the next year. No voting rights accrue to any shares credited to a participant's account. Participation in the DER feature is mandatory for all Plan participants who defer awards.

Pursuant to the DRIP, which is available on an optional basis to all shareholders, all cash dividends are reinvested on a quarterly basis at then current market prices. If a dividend is not large enough to purchase a full additional share, the shareholder's account will be credited with a fractional share which will accrue its proportionate share of future dividends. All shares purchased under the DRIP have full voting rights.

It is the view of the Division that the terms of the Plan's DER feature are sufficiently similar to the terms of the DRIP to permit Plan participants to rely on Rule 16b-2 to exempt the acquisition of DERs. Cf. Simpson, Thacher & Bartlett (June 19, 1991).

Because this position is based on the representations made in your letter, it should be noted that different facts or conditions might require a different result.

Incoming Letter:

The Incoming Letter is in Acrobat format.

http://www.sec.gov/divisions/corpfin/cf-noaction/ahp121592-sec16.htm