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U.S. Securities and Exchange Commission
Washington, D.C. 20449
Notice of Exempt Solicitation
submitted pursuant to Rule 14a-6(g)
1. Name of Registrant:
PROFIT RECOVERY GROUP INTERNATIONAL, INC.
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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 Peter C. Clapman on behalf of Teachers Insurance
and Annuity Association - College Retirement Equities Fund
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LETTER
Exhibit 1
April 26, 2001
Dear Fellow Profit Recovery Group Shareholder:
TIAA-CREF is a holder of significant equity in Profit Recovery Group
International (PRG). At the company's May 25 annual meeting, we intend to
propose a resolution (set forth in PRG's proxy statement) that requests the
Board of Directors to redeem the company's "dead hand" poison pill unless
shareholders vote otherwise. (The poison pill is a powerful defense against
unsolicited takeovers; the DEAD HAND poison pill is an unusual variation,
designed to further "protect" current management from review of their actions by
shareholders.) We ask for your support of our proposal.
PRG'S DEAD HAND PILL DISENFRANCHISES SHAREHOLDERS
PRG's dead hand poison pill (or "shareholder rights plan") is
particularly objectionable compared with other poison pills, because it can be
redeemed only with the consent of PRG's CURRENT directors (or future directors
approved by them). This discourages legitimate proxy contests, which provide an
important shareholder protection and can be critical for good corporate
governance. If PRG's current directors were to reject an attractive third-party
acquisition offer that shareholders favored, the dead hand poison pill would
prevent shareholders from replacing PRG's current directors with new directors
who have the power to remove the poison pill, and accept the offer. Shareholders
should reject the premise that only PRG's current directors (and their nominees)
- and not other directors elected by you and other shareholders - ought to have
the right to accept or reject an acquisition bid for the company. We believe
that PRG'S DIRECTORS HAVE APPROPRIATED TO THEMSELVES A POWER CONTRARY TO
INTERESTS OF THE SHAREHOLDERS, THE OWNERS OF THE COMPANY.
It is noteworthy that dead hand pills have been declared invalid by
courts in Delaware, the state in which most large U.S. public companies are
incorporated. PRG is incorporated in Georgia, where it is a matter of company
discretion. Our resolution is directed to how that discretion is exercised.
PRG'S ARGUMENTS MISS THE POINT
In its proxy statement, PRG argues against the TIAA-CREF resolution
mostly by presenting the logic behind poison pills in general, and notes the
number of companies that have them. This is an attempt to distract from the main
issue, and misses the point. Our concern is a particular feature of PRG's pill -
the dead hand provision. Few companies have poison pills that include this
feature.
PRG says the dead hand provision does not limit the right of
shareholders, including any potential acquirer, to elect directors, but "merely"
requires that any transaction be approved by current directors. This prospect
highlights our concern, which is about the possibility of entrenchment by the
board and management should the company receive an unsolicited takeover bid.
Under the terms of an ordinary poison pill, a potential acquirer could attempt
to replace the board, and thereby eventually redeem the pill in the face of
opposition by current directors, by convincing holders of a majority of shares -
including you - to elect new directors. This is the way good corporate
governance can work, a process frustrated by the dead hand feature.
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THE DEAD HAND IGNORES THE WILL OF THE SHAREHOLDERS BY SUBVERTING THE VOTING
PROCESS. The dead hand provision indicates an element of mistrust of
shareholders, and the view that shareholders will not know their own best
interests when considering a potential takeover. A potential acquirer, or other
interested shareholder, cannot replace the current board unless a sufficient
number of PRG's other shareholders approve the election of new directors.
Shareholders are entitled to freely elect directors who are able to make the
critical decisions on the future of the company.
OTHER COMPANIES HAVE REMOVED DEAD HAND PROVISIONS
Delaware courts invalidated dead-hand provisions for Delaware companies
in 1998. Since then, TIAA-CREF, the world's largest pension fund and a
significant investor in virtually all major U.S. companies, has asked 60
non-Delaware companies to drop their dead hand provisions. To date, 56 of the
companies have taken this action; two other companies were acquired, making the
issue moot. This leaves only PRG and one other company that have declined to
take action.
We would be happy to discuss this matter with you in more detail. Please
contact Ken Bertsch of TIAA-CREF at (212) 916-4972 with any questions you might
have.
Sincerely,
Peter C. Clapman
PLEASE VOTE "FOR" THE SHAREHOLDER PROPOSAL ON PRG'S PROXY CARD
TIAA-CREF is requesting that you cast your votes FOR the shareholder proposal
(Proposal 2) on the proxy card sent out by Profit Recovery Group International.
Please note that if you leave the proxy card blank and return it, the company
will count your votes against our proposal. TIAA-CREF, which will not be sending
out a separate proxy card, is taking no public position on any other item being
considered at the annual meeting.