SEC Division of Investment Management staff letter: American Capital, Ltd.

American Capital, Ltd.
American Two Bethesda Metro Center, 14th Floor Bethesda, MD 20814 o Capital (30 I) 951-6122 (301) 654-6714 fax January 14, 2009 VIA ELECTRONIC MAIL (shareholderproposals@sec.gov) and FEDERAL EXPRESS Division ofInvestment Management Office of Legal and Disclosure 901 E Street, N.W. Washington, D.C. 20549 Re: Securities Exchange Act of 1934 - Rule 14a-8 Shareholder Proposal Submitted by the Massachusetts Laborers' Pension Fund Ladies and Gentlemen:
American Capital, Ltd., a Delaware corporation ("ACAS" or the "Company"), in accordance with Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is filing this letter with respect to the shareholder proposal and supporting statement (together, the "Proposal"), attached as Exhibit I hereto, that the Company received from the Massachusetts Laborers' Pension Fund ("Proponent") for inclusion in the proxy materials (the "2009 Proxy Materials") that ACAS intends to distribute in connection with its 2009 annual meeting of shareholders (the "2009 Annual Meeting"). The Proposal was sent to ACAS by letter dated December I, 2008, which is also attached as part of Exhibit I hereto. Attached as Exhibit II hereto is a copy of the Company's letter to the Proponent regarding procedural defects, dated December 15, 2008, and the Proponent's response to such letter, dated December 16,2008. ACAS intends to omit the Proposal from the 2009 Proxy Materials pursuant to Rule 14a-8(i)(7) promulgated under the Exchange Act because the Proposal relates to ACAS' ordinary business operations. We respectfully request the concurrence of the Staff (the "Staff') of the Division of Investment Management of the Securities and Exchange Commission (the "Commission") that it will not recommend any enforcement action if ACAS omits the Proposal from the 2009 Proxy Materials. Nasdaq: ACA$ www.AmcricanCapital.com Member S&P 500 BOSTON CHICAGO DALLAS FRANKFURT LONDON LOS ANGELES MADRID NEW YORK PALO ALTO PARIS PROVIDENCE WASHINGTON, D.C.

January 14,2009
The Proposal
The Proposal requests that the board of directors of ACAS "adopt and disclose a written and detailed suceession planning policy, including the following specific features:

The Board of Directors will review the plan annually;
The Board will develop criteria for the CEO position which will reflect the
Company's business strategy and will use a formal assessment process to evaluate candidates;
The Board will identify and develop internal candidates;
The Board will begin non-emergency CEO succession planning at least 3 years
before an expected transition and will maintain an emergency succession plan that is reviewed annually;
The Board will annually produce a report on its succession plan to shareholders."
Rule 14a-8(i)(7) Discussion
Rule 14a-8(i)(7) states that a company may omit a shareholder proposal from its proxy materials "if the proposal deals with a matter relating to the company's ordinary business operations." As discussed below, we believe that the Proposal is excludable hom the 2009 Proxy Materials under Rule 14a-8(i)(7) because it deals with matters relating to ACAS' ordinaJy business operations; specifically, the management of the Company's CEO succession policies and practices. The Proposal is nearly identical to the proposals submitted by the Proponent and its affiliates during the 2008 proxy season and which were the subject of the following no-action letters from the Staff: Whole Foods Market (November 25, 2008); Merrill Lynch (February 12,2008); Verizon Communications (February 12,2008); Bank of America (January 4, 2008); and Toll Brothers, Inc. (January 2, 2008). Accordingly, we believe that this issue has been clearly settled by the Staff. The policy rationale for the ordinary business exclusion was clarified by the Commission in Exchange Act Release No. 34-40018 (May 21, 1998) (the "1998 Release"). In the 1998 Release, the Commission summarized the principal considerations in the application of the ordinary business exclusion and observed that the general underlying policy of the ordinary business exclusion is consistent with the policy of most state corporate laws: "to confine the resolution of ordinary business problems to management and the board of directors, since it is impracticable for shareholders to decide how to solve such problems at an annual shareholders meeting."

January 14,2009
In the 1998 Release, the Commission stated that one of the two central considerations underlying the ordinary business exclusion is that "certain tasks are so fundamental to management's ability to run a company on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight." The Commission cites examples such as the "management of the workforce, such as the hiring, promotion, and termination of employees..." The second consideration underlying the policy of the ordinary business exception is the "degree to which the proposal seeks to 'micro-manage' the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment." The Commission noted that this consideration may come into play in a number of circumstances, such as where the proposal "seeks to impose specific time-frames or methods for implementing complex policies." The Proposal clearly falls within the ordinary business exclusion based upon the application of the foregoing policies. CEO succession planning inherently involves the management of ACAS' workforce and decisions regarding the hiring, promotion and termination decisions by ACAS' board of directors. Further, by specifying detailed features of the proposed succession policy, the Proposal seeks to micro-manage ACAS' management of the workforce, which is a complex matter that shareholders cannot effectively supervise. It is important to note that planning for and monitoring an executive succession plan, including CEO succession, is an identified function of the Compensation and Corporate Governance Committee of the ACAS Board of Directors (the "Committee") in the Corporate Governance Guidelines adopted by the ACAS Board of Directors (the "Guidelines") that are publicly available on ACAS' corporate website. The Guidelines state that the Committee "shall review its executive succession plans at least annually, including consideration of any changes to the criteria or qualifications for particular positions, developments with regard to internal candidates for positions and the continued validity of emergency succession plans." Accordingly, CEO succession planning is not an area in which the Proponent is attempting to fill an existing void in corporate governance and business operations. On the contrary, the Proponent would be actively interfering with ordinary business operations. Even prior to the 2008 no-action letters cited above, the Staff has historically applied the ordinary business exclusion in several no-action letters involving proposals relating to CEO employment and succession, such as: Wachovia Corporation (February 17,2002) (stating that a stockholder proposal instructing the board of directors to seek and hire a new CEO within six months is excludible because the "termination, hiring, or

January 14,2009 promotion of employees" relates to ordinary business operations); Willow Financial Bancorp, Inc. (August 16,2007) (stating that a stockholder proposal recommending the replacement of the CEO and Chief Financial Officer is excludible because the "termination, hiring, or promotion of employees" relates to ordinary business operations); and The Boeing Company (February 10,2005) (stating that a stockholder proposal urging that independent directors approve, rather than merely review, the hiring of certain senior executives is excludible because the "termination, hiring, or promotion of employees" relates to ordinary business operations). Conclusion Based on the foregoing, ACAS intends to omit the Proposal from the 2009 Proxy Materials for the 2009 Annual Meeting. We respectfully request that the Staff confirm that the Proposal may be omitted from such proxy materials. Should you have any questions or would like any additional information regarding the foregoing, please do not hesitate to contact the undersigned at (30 I) 951 6122. Pursuant to Rule l4a-8(j), we are enclosing herewith six copies of this letter, and a copy of this letter is being sent simultaneously to Proponent as notification of ACAS' intention to omit the Proposal from its 2009 Proxy Materials. ACAS expects to file its definitive proxy materials with the Commission on or about April 6, 2009. Pursuant to Rule 14a-8(j), this letter is being filed with the Commission no later than 80 days before ACAS files its definitive 2009 Proxy Materials. Please file-stamp the enclosed copy of this letter and return it to me in the enclosed self-addressed, postage-paid envelope. Cydonii . Fairf:
Vice President, Deputy General Counsel and Assistant Secretary Attachment

January 14,2009 cc: Mr. Thomas P.Y. Masiello
Executive Director
Massachusetts Laborers' Pension Fund
P.O. Box 4000

Burlington, MA 01803-0900

Ms. Jennifer O'Dell
Assistant Director
LlUNA Department of Corporate Affairs
905 16th Street, NW
Washington, DC 20006

Exhibit I

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MASSACHUSE'rrs LABORERS'

BENEFIT FUNDS

14 New England Executive Park, Suite 200
P. O. Box 4000
Burlington, MA 01803-0900

Tel: 781.272.1000 Fax: 781.238.0717

Fax
To:
Mr. Samuel Flax Thomas p.v. Masiello, Executive Director From: Massachusetts Laborers' Benefit Funds American Capital Strategies. Inc. CompanY' Fa,,: 301-654-6714 Palles' 3 including "?ve;;cr..:.p"'a"'9"'e _ c Phone: Oat", 1211108 ------,---------~~---.:.:::..:.:..::-=- RO: cc; o Urgent D For Rovlew o Please Comment 0 Pie""., R9ply D PI.,,.,,., R.,cycle

Comments,
If you shOUld have any problems recelvln9 this transmission, please contact Gayle Otis. Ext 534

1:'::/lH/2l)U~ l.'l;l.U j:·A..... I~J. '::J~ UIl.I MASSACHUSETTS LABORERS' PENSION FUND 14 NEW ENGLAND EXECUTIVE PARK· SUITE 200 P.O. BOX 4000, BURLINGTON, MASSACHUSETTS 01803-0900 TELEPHONE (781) 272·1000 OR (800) 342-3792 FAX (781) 272-2226 December 1,2008 ViaEacsimile

301-654-6714

Mr. Samuel Flax
EVP, General Counsel, ChiefCompliance Officer and Corporate Secretary American Capital Strategies, Ltd. 2 Bethesda Metro Center, 14th Floor Bethesda, MD 20814 Dear Mr. Flax:
On behalf ofthe Massachnsetts Laborers' Pension Fund ("Fund"), 1hereby submit the enclosed shareholder proposal ("Proposal") for inclusion in the American Capital Strategies, Ltd. ("Company") proxy statement to be circulated to Company shareholders in conjunction with the next annual meeting of shareholders. The Proposal is submitted lUlder Rule 14(a)-8 (Proposals of Security Holders) of the U.S. Securities and Exchange Conunission's proxy regulations. The Fund is the beneficial owner of approximately 800 shares of the Company's common stock, which have been held contil1Uously for more thun a year prior to this date of submission. The Proposal is submitted in order to promote a governance system at the Company that enables the Board and senior management to manage the Company for the long-term. Maximizing the Company's wealth generating capacity over the long-term will best serve the interests of the Company shureholders and other important constituents ofthe Company. The Fund intends to hold the shares through the date ofthe Company's next annual meeting ofshareholders. The record holder ofthe stock will provide the appropriate verixicatioD ofthe Fund's beneficial ownership by separate lette''. Either the undersigned or a designated representative will present the Proposal for consideration at tile annual meeting of shareholders. If you have any questions Or wish to discuss the Proposal, please contact Ms. Jennifer O'Dell, Assistant Director ofthe LlUNA Department of Corporate Affairs at (202) 942-2359. Copies of correspondence or a request for a "no-action" letter should be forwarded to Ms. O'Dell in care ofthe Laborers' International Union ofNorth America Corporate Govemance Project, 905 16111 Street, NW, Washington, DC 20006. Very truly yours, ~L~~tl7i{~-d Thomas P. V. Masiello Executive Director

TPVM/gdo

Enclosure

€..@l;l>" cc: Jerillifer O'Dell

~~/U~/~VUO ~~;~U rAA IO~ ~~O U'~I
Resolved: That the shareholders of American Capital, Ltd, ("Company") hereby request that the Board of Directors adopt and disclose a written and detailed succession planning policy, including the following specific features:

The Board of Directors will review the plan annually;
The Board will develop criteria for the CEO position which will reflect the
Company's bUsiness strategy and will use a formai assessment process to evaluate candidates;
The Board will identify and develop Internal candidates;
The Board will begin non-emergency CEO succession planning at least 3
years before an expected transition and will maintain an emergency succession plan that is reviewed annually;
The Board will annually produce a report on its succession plan to
shareholders,

Supporting Statement:

CEO succession is one of the primary responsibilities of the board of directors. A recent study pubilshed by the National Association of Corporate Directors (NACD) quoted a director of a large technology firm: "'A board's biggest responsibility is succession planning. It's the one area where the board is completely accountable, and the choice has significant consequences, good and bad, for the corporation's future," (The Role of the Board in CEO Succession: A Best Practices Study, 2006). The study also cited research by Challenger, Gray & Christmas that "CEO departures doubled in 2005, with 1228 departures recorded from the beginning of 2005 through November, up 102 percent from the same period in 2004." In its 2007 study What Makes the Most Admired Companies Great: Board Govemance and Effective Human Capital Management, Hay Group found that 85% of the Most Admired Company boards have a well defined CEO succession plan to prepare for replacement of the CEO on a long-term basis and that 91 % have a well defined plan to cover the emergency loss of the CEO that is discussed at least annually by the board. The NACD report identified several best practices and innovations in CEO succession planning. The report found that boards of companies with successful CEO transitions are more likely to have well-developed succession plans that are put in place well before a transition, are focused on developing internal candidates and include clear candidate criteria and a formal assessment process, Our proposal is intended to have the board adopt a written policy containing several specific best practices in order to ensure a smooth transition in the event of the CEO's departure, We urge sharellolders to vote FOR our proposal.

Exhibit II

AmCI'icll11 Capital, Ltd. II A . 1'10 Bethesda Metro Center, 14th floor n mencan Bethesda, MD 20814 tL~ Capital (301) 951·6122 o (301) 654-6714 fax December 15,2008 VIA FlmERAL EXPRESS Thomas P.V. Masiello, Executive Director Massachusetts Laborers' Pension Fund 14 New England Executive Park, Suite 200 P.O. Box 4000 Burlington, MA 01803-0900 RE: Stockholder Proposal Dear Mr. Masiello:
American Capital, Ltd. (the "Company") has received your letter dated Deccmber I, 2008, submitting a stockholder proposal for presentation at the 2009 annual meeting of stockholders and for inclusion in the Company's 2009 proxy statement on behalf of the Massachusetts Laborers' Pension Fund (the "Fund"). This letter is to notify you of celtain procedural and eligibility deficiencies with respect to your proposaL Pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, in order to be eligible to submit a stoc1dlolder proposal to the Company, you must have continuously held at least $2,000 in market value, or 1% of the Company's securities entitled to vote on the proposal at the Company's 2009 alU1Ualmeeting of stockholders for at least one year by the date that you submitted the proposaL You must also provide the Company with a written statement that you intend to continue to hold the securities tlll'ough the date of the meeting. Rule 14a-8 further requires that if you are not the registered holder of the Company's securities at the time that you submit the proposal, you must prove your eligibility to the Company. You stated in your letter that the record holder of the Company's common stock owned by the Fund would provide the appropriate verification ofthe Fund's beneficial ownership by separate letter. Please note that we have not yet received this letter. Thus, you are required to provide the Company with the following evidence of ownership in accordance with Rule 14a-8:
I) A written statement from the "record" holder of your securities (usually a broker or bank) verifying that, at the time you snbmitted your proposal, you continuously held the securities for at least one year; or Nasdaq: ACAS www.AmerlcanCapital.com Member S&P 500 -----. BOSTON CHlCAGO DALLAS FRANKFURT LONDON LOS ANGELES MADRID NEW YORK PALO AL:l'O PARIS PROVlDENCE WASHfNGTON, D.C.

Thomas P.V. Masiello
December 15, 2008
2) If you have filed a Schedule 13D, Schedule 130, Form 3, Form 4 and/or Form
5, or amendments to those documents or updated forms with the Securities and Exchange Commission, reflecting your ownership of the shares as of or before the date on which the one-year eligibility period begins, you may submit:
(a) A copy of the schedule and/or form, and any subsequent amendments reporting a change in your ownership level; and (b) Your written statement that you continuously held the required number of shares for the one-year period as of the date of the statement. For your convenience, please find enclosed a copy of Rule 14a-8. Pursuant to Rule 14a-8, your response to this notification must be postmarked, or transmitted electronically, no later than 14 days from the date that you received this notification. If such a response complying with Rule 14a-8 is not reeeived by the Company, the proposal will not be presented at the annual meeting or included in the proxy statement. Additionally, the Company reserves the right to make any other appropriate objeetions to the proposal. You may eontaet the undersigned with any question regarding the foregoing. [signature on following page]

Thomas P.V. Masiello
December 15, 2008
Sincerely, nii . Fairfax c· resident, Deputy General Counsel ld Assistant Secretary Enclosure

GENERAL RULES & REGULAnONS UNDER THE
1934 ACT
Rule 14a-8 -- Sh<ircholder Proposals
Flied on 02/10/2006
GS[Q

SECURITIES EXCHANGE ACT OF 1934 RULES
Rule 14a-8 -- Shareholder Proposals
This section addrc·sscs when a company must include a shareholder's proposal in its proxy statement and identify the proposal ill its form of proxy when the company holds all annual or special meeting of shareholders. In sununary, in order to have your shareholder proposal included on a company's proxy card, and included along with any supporting statement in 'its proxy statement. you must be eligible and follow certain procedures. Under a few specific circumstances, the company is pennitted to exclude your proposal, but only after submitting its reasons to the Commission. We sttllchlred this section in a questioll~and~answel' format So that it is easicr to understand, The references to II you" arc to a shareholder secking \0 submit the proposal. (a) Question 1: What is a lll'Qposal? A shareholder proposal is your recommendation or requirement that the company andlor its board of directors take actionl which you intend to present at a meeting of the company's shareholders. Your proposal should state as clearly as possible the course of action that you believe the company should follow. ffyottl' proposal is placed on the companis proxy card, the company rnust also provide in the fOlm of proxy meatlS for shareholders to specify by boxes a choice between approval or disapproval, or abstention. Unless otherwise indicated, the word 'I proposal" as llsed in this section refers botli to your proposal, and to your corresponding statement in support of your proposal (ifany). (b) Question 2: Who is eligible to submit a proposal) and bow do I demonstrate to tb~ company thM I lun eligible? (1) In order to be eligible to submit a proposal, you must have continuously held at least $21000 ill market value, or 1%. of tile com.pany's securities entitled to be voted on the proposal at the meeting for at least One year by the <late you submit the proposal. You must cOlltinue to hold those securities through the dute ofthc meeting. (2) Ifyou arc the regist.ered holder ofyour securities. which means that your name appears in the company's records as a shareholder, the comptmy can verify your eligibility on its ownl although you will still have to provide the company with nwritten statement that you intend to continue to hold the securities through tlle date oftbe meeting of shareholders. However, if like many shareholders you arc not a re~istered holderl the company likely does llOt know that you arc a shareholder, or how many shares you own. In tillS casel at the time you submit your proposal. you must prove your eligibility to the company in one of two ways:
(i) The first way is to submit to the company a wriHen statement from the II rccordll holder ofyout' securities (usually a broker or bank) verifYing that, at the time you submitted youI' proposal, you continuously held the securities for at least olle yeaI'. You must also include your own written statement that you intend to continue to hold the securities through the date of the meetil~g ofsharcholders; or (ii) The second way to prove ownership applies only if you have filed a Schedule 13D \240.13d-lOl),
Schedule 13G (240. 13d-I02), Fom13 (249,103 ofthis ehaptcr), Fornl 4 (249.104 oftlHS ehapler)
andlor Form 5 (249.105 of this chapter), or amendments to those documents or updated forms, reflecting your ownership ofthe shares as of or before the date on which the one-year eligibiUty period begins. tfyou have filed one ofthese documents with the SEC, you may demonstrate your eligibility by submitting to the company:
(A) A copy ofthe schedule and/or fonn, and any subsequent amendments reporting a change ill your ownership level; (B) Your written statement that you continuously held the required number of shares for the one-year period as of the date of the statemcnt; and (C) Your writtcll statement that you intend to continue ownership ofthe shares through thc datc ofthc company's annual or special meeting. (e) Question 3: How many·pl'oposals may I snbmit? Bach shareholder may submit no more than one proposal to a company for a particular shareholders! meeting.

(d) Question 4: How long enn my proposal be?
The proposal, including any accompunying supporting statement, may not exceed 500 words. (e) Question 5: What is the deadline for submitting fi prorosal? (1) If you are submitting YOUI' proposal for the company's annual meeting. you can in most cases "find the deadline in last year's proxy statement. However, if the company did not hold an annual meeting (ast year, or has changed the date ofits meeting for this year more than 30 days from last year's meeting, you can usually find the deadline in one of the company's qUl'llierly reports On Form lO-Q (249.308a of this chapter) or lO-QSD (249.308b of this chaplcr), 01' In shareholder rcporls of investment companies under 270JOd-l of this chapter of the Investment Company Act of 1940. In order to avoid controversYI shareholders should submit their proposals by means, including electronic means, that permit them to prove the date of delivery. (2) The deadline is calculated ill the following manner if the proposal is submitted for a regularly scheduled annual meeting, The proposal must be received at the company's principal executive offices not less than 120 calendar days before the date of the company1s proxy statement released to shareholders in connection with the previous year's annual meeting. However, if the company did not hold an annual meeting the previous year, or if the date ofth1s year's anllual mceth1g has been changed by marc than 30 days from the date of-tlte previous year's meeting, then the deadline is a reasonable time before the company begins to print and mail its proxy materials. (3) If you are submitting your proposal for ameeting ofshareholders other than a regularly scheduled annual meetingl the deadline is a reason.able time before the company begins to print and mail its proxy materials. (f) Question 6: 'Vhat if r fail to folloV' one of th~ eHglbility or proceduralrcqulrements explained in anSWCI'S to Questions 1 through 4 of this sectton? (1) The compally may exclude your proposal, but only after it has notified you of tile problem! and you havefaHcd adequately to correct it. Within 14 calendar days of receiving your proposall the company must notify you ill writing of any proecedural or eligibility deficiencies, as well as of the time frame for your response. Your response must be postmarked, or transmitted electronicalty, no later than 14 days from the date you received the cOJn)any's notification. A company need not provide you such notice of a deficiency if the deficiency cannot be remedied. sue 1 as if you fail to submit a proposal by the company's properly detennined deadline, If the company intends to exclude the proposal. It wlll later have to make a. submission under 240.14a-8 and provide you with a copy under Question 10 below, 240,14a-80), (2) Ifyou fail in your promise to hold the required number ofsecurities through the date ofthe meeting ofshareholders then the company will be permitted to exclude aU ofyour proposals from its proxy materials for any meeting
held ill the l following two calendar years. "(g) Question 7: Who hns the burden ofpcrsnnding the Commissf(»> (11' its staff that my proposal call he excluded? Except as otherwise noted) the burden is on the company to demonstrate that [t is entitled to exclude f. proposal:
(h) Question 8: Must I appeln' personally at the shareholders' meetIng to present the proposal? (1) Either you, or your representative who is qualified under state Jaw to present the proposal on your behalf! must attelld t1\e meeting to present the proposal. Whether you ,attend the meeting yourself or send n qualified representative to the meeting h.. your place) you should make sure that you, or your representative, foHow the pl'Oper state law procedures for attending tbe meeting and/or presenting your ~roposaL (2) If the company holds its shareholder meeting in whole or in part via electronic media, and the company pcnuits you or your representative to present your proposal'via such media, then you may appear through electronic mc!ia rather than traveling tD the meeting to appear In person. (3) Ifyou or your qualified representative fail to appear and present the proposal, without good cause! the company wilt be permitted to ex.clude all of your proposals from its proxy materials for any meetings held in the following two calendar years. (i) Question 9: If I have complied with the pl'ocedur~ll'cquiremel1ts, 011 whl'lt other bases may l'I eompany rely to cxcJudc my proposnl? (I) improper ullder stale law: If the proposal is not a proper subject for action by shareholders under the laws of the jurisdiction of the companyls organization; Note to paragraph (1)(1): Depending on tll~ subject matter, some proposals arc not considered proper under state law ifthey would be binding on the company if approved by shareholders. In our experiencD, most proposals that "are cast as recommendations or requests that the board of directors take specified action arc proper under state law. Accordingly, we will assume that a proposal drafted as a reoommendation or suggestion is proper unless the company denwl1strates otherwise, (2) Violalion oflaw: If the proposal would, if implemented, cause the company to violate any slate, fedcral, or

foreign law to which it is subject;
Note to paragraph (i)(2): We will not apply tbis basi!> for exclusion 10 permit exclusion of a proposal on grounds that it would violate foreign law if compliance with the foreign law would result in a violation of any state or federal law. (3) Violation ofproxy rules: Uthe proposal or sUPP011.ing statement is COlltmry to any of the Commission1 s proxy rules, includit)g 240, 14a-9, whicb prohibits materially false or misleading statements. in proxy soliciting materials; (4) Personal grievance,' special interest; Ifthe proposal relates 10 the redress of a personal claim 01' grievance against the company or any other person. or if it is designed to result in a bencfit to youJ or to further a personal intcrest, whloh is not shared by the other shareholders at large; (5) Relevance: Tftho proposal relates to operations which account for less than 5 percent of the companis total assets at the end of its most recent fiscal year, and for less thall 5 percent of its net earnings and gross sales for its most recent fiscal year, and is not otherwise significantly related to the company's business; . (6) Absence ofpowedauthority: Ifthe company would,lack the power or authority to implement the proposal; (7) Manetgemenrjunctiolls: Ifthe proposal dt:als with a maller relating to the company's ordinalY business operatiollsi (8) Relates to election: If the proposal relatcs to an election for membership Oll the companyls board of directors or analogous governing body; (9) Conflicts wUh company's proposal: ffthe proposal directly conflicts with Ol1e oftbe company's own proposals to be submitted to shareholders at the same meeting; Note 1o paragraph (i)(9): A company1s submission to the Commission under this section should specify the points of conflict with the company's proposal. (to) Substantially implemented: If the company has already substantially implemented the proposalj (11) Duplication: If the proposal substantially duplicates anoth~r proposal previously submitted to the company by another proponent that will be included in the cornpanyts proxy tl'Hl.tcrials fo!' the same meetingi (12) Resubmissions: If the proposal deals with substantially tIle Sfll'ne subject matter as another proposal or proposals that has or have been previously included in tlle company's proxy materials within the preceding 5 calendar yearsJ a company may exclude it from its proxy materials for any meeting held within 3 calendar years ofthe last time it Was tncluded if the proposal receIved:
(i) Less than 3% ofthe vote (fproposed once within the preceding 5 calendar years; (ii) Less than 6% of the vote on its last submlssion to sliareholders ifproposcd twice previollsly within the preceding 5 calendar years; or (Ui) Less than 10% of the vote on its last submission to shareholders if proposed three times or mere previously wi1hin the preceding 5 calendar years; and (13) Specific amount ofdivideuds: If the proposal relates to specific amollnts ofcash orstock dividends. CD Qnestion 10: What procedures must the company follow if it intends to exclude my proposal?
0) Ifthc company intends to exclude a proposal from its proxy materialsl it must file its reasons with the
Commission no later than 80 calendar days before it files its definitive proxy statement and form o,fproxy with the Commission. The company must simultaneously provide you Witll il copy of its submission. The Commission staff may pcnnit the company to make its submission later than 80 days before th~ company files its definitive proxy statement and fonn of proxy, if the company demonstrates good cause for missing the dcadllne. (2) The company must file six paper copies of the following:
(i) The propos.l;
(ii) An explanntioll ofwhy tile company believes that it may exclude the proposall which should, ifpossibteJ refer to the most recent applicable authority. such as prior Divislon letters issued under the lulc; and (iii) Asupporting opinion of counsel when such reasons are based on matters ofstate or foreign law.

(k) Question 11: May I f>ul.nnit my own statement to the. Commission responding to the cmnpan)lls argument's? Yes, yOll may submit a response, but it is not required, You should try to submit any rcspons~ to us, with a copy to the cOl:npanYl as soon as possible after the company makes its submission, This way, the Commission staffwiH have tilue to consider fully your submission before it issues its response, You should submit six paper copies of your response. (I) Question 11: Ifthe company includes my shareholder proposal in it's proxy materialS, what information about me must it include along with fhe pl'()posal itsl:lr? (1) The companis proxy statement must include your name and address, as wen as the number of the companis voting securities that you hold. However, instead of providing that information, the company may instead include a statement that it will provide the informat1on to shareholders promptly upon receiving an oral 01' written request. (2) The company is not responsible for the contents of your proposal Or supporting statement. (m) Question 13: What can I do if the company includes fn its proxy statement rcasous why it believes shareholders should not vote in favor of my proposal, and J disagree with some of its statements?
0) The company may elect to include in its proxy statement reasons why it believes shareholders should vote.
against your proposal. The company is allowed to make arguments reflecting its own point of view, just as you may express your own point of view in your proposaPs supportil\g statement. (2) Howcvcrl if you believe that the company's opposition to your proposal contains materially false or mIsleading statements that may violate our anti-fraud 1'\11et 240.14a-91 you should promptly send to the Commission staffand the company a letter explaining the reasons for your view, along with a copy ofthe company!s statements opposing your proposal. To the extent possible, your letter should include specific factual information demonstrating the inaccuracy of the company's claims, Time pennittingl you may wish (0 try to work out your diffcl'ellces with the company by yourself before contacting the Commission staff. (3) We require the company to send you a copy of its statements opposing your proposal beforc it mails its proxy materials, so that you may bring to our attention any materially false or misleading statements, under tbe following timeframcs:
(i) Ifour no-action response requires that you make revisions to your proposal or supporting statement as a condition to requiring the company to include it in its proxy materialst then the company mw:;t provide you with a copy ofits opposition statements: no later thal\ 5 calendar days after the company receives ucopy ofyour revised proposal; or (H) In all othcr cascs 1 the company must provide you with a copy of its opposition statements no later than 30 calendar days before its files definitive copies of its proxy statement and fonn of proxy under 240. 14a-6. Regulatory History:

As last amended in Release No. 34-40018, effeetive June 29. [998,63 P.R. 29106.

State Street Corp 12/16/2008 3:56:41 PM PAGE 1/001 Fax Server ~: '

STATE STREET~
Sent Via Fax 301-654-6714
12/16/2008
Mr. Samuel Flax
Ktl:vin YClI<imoW$ky
Assistsnt VIC€ Pr;~iJ",n(
Sp",OI:;l.li2;ed Tru:;\ 8iJl'Vic(;~
$TArE STfiE:F..T (--ANY,
200 NewpOl1 AVGflll1l > J08;'
N. QuintJy. MA 02171
T9lephoM~ 6t7-fl1:l5·7i'12
F(l(;SiMiie: Gi7-769-GB9:'.. r.y.sl(lmlw·,,~t,y@stale31I'Hl.,~·),' EVP, General Counsel, Chief Compliance Officer and COI1Jorate Secretary

American. Capital Strategies, Ltd.

2 Bethesda Metro Center

14'h Flool'

Bethesda, MD 20814

Re: Cerlific~tion of ShaJ'eholding in American Capital S,rategies, Lcd,

<cusi)) 02503YI03> for MA Laboters Pension Fund

Dear Me J'lax,
State Street Bank is the record holder for 800 shares of American Capital Strategies, Ltd. ("Company") common stock held for the benefit of the Massachusetts Laborers Pension Fund ("Fund"). The Flmd has been a benetlciaJ owner of at least I% or $2,000 in market value of the Company's common stock continuously for at least one year prior November 21, 2008, the date of submission of the shareholder proposal submitted by the Fund pursuant to Rule 14a-8 of the Secmities and Exchange Commission rules and regulations. The Fund continues to hold the shares of Company stock. As custodian for the Fund, State Street holds these shares at its Participant ACCOUJlt at the Depository Tnlst Company ("DTC"). Cede & Co.; the nominee name at DTC, is the record holder of these shares. If there are any questions concerning this matter, please do not hesitate to COnt~ct me directly. Kevin Y

Incoming Letter

Lineage

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