GE Loses Bid to Block Global Warming Shareholder Proposal; Free Enterprise Action Fund (Ticker: FEAOX) Calls On GE to Justify Lobbying for Global Warming Regulation
For more info contact: Steve Milloy, 301-258-2852, firstname.lastname@example.org
Washington DC, February 12, 2007 – Action Fund Management, LLC (AFM), investment advisor to the Free Enterprise Action Fund (Ticker: FEAOX), announced today that the General Electric Company (Ticker: GE) failed to block the FEAOX’s shareholder proposal calling on GE to justify lobbying for global warming regulation.
On January 31, 2007, the U.S. Securities and Exchange Commission denied GE’s request to exclude from its proxy materials a proposal filed by the FEAOX requesting that GE report to shareholders on the scientific and economic analyses relevant to GE’s climate change policy.
The FEAOX (www.FEAOX.com), a publicly-traded mutual fund, filed the proposal because GE is lobbying for government regulation of greenhouse gas emissions. Such regulation, if enacted, may raise energy prices and reduce energy availability which, in turn, may harm the U.S. economy, GE’s earnings and shareholder value.
“There is ample reason for us to be concerned that global warming regulation may harm GE’s earnings,” said Tom Borelli of AFM. “In 2006, GE’s plastics unit reported disappointing earnings because the company said could not pass along to customers the increased costs of petroleum-based raw materials. So last year’s high energy prices gave us a preview of what increased energy costs can do to earnings,” observed Borelli.
More recently, the global warming alarmism that GE is helping foster is already having unintended consequences for the company. A California legislator is seeking to ban incandescent light bulbs – one of GE’s products. “It’s quite ironic that CEO Immelt’s global warming lobbying effort may result in a ban of the light bulb – the invention of GE’s founder Thomas Edison,” said AFM’s Steve Milloy.
GE has acknowledged in its 2005 annual report that it needs a growing economy to prosper. The potential increase in energy prices that may result from government regulation of greenhouse gas emissions may reduce economic growth and, as a result, GE’s earnings.
The proposal asks the company to review the scientific basis of human activity on global climate change and to assess whether government regulation of carbon dioxide emissions will have a beneficial effect. Importantly for shareholders, the report asks management to consider the costs and benefits of GE’s climate change policy on the company.
“We believe that CEO Immelt has not conducted sufficient due diligence in terms of the consequences of global warming regulation and the impact of high energy prices on the company’s earnings,” said Milloy. “At last year’s annual meeting, CEO Immelt rebuffed our suggestion that GE meet with experts who hold varying viewpoints on global warming,” noted Milloy. “We believe that GE’s failure to hear all sides of the debate should be of concern to its shareholders,” Milloy added.
“At the very least, the proposed global warming report may compel Jeff Immelt to at least consider the impact of higher energy prices on the entire GE company,” said Borelli. “After all, GE’s annual revenues are on the order $160 billion, while its global warming-related Ecomagination product line is only worth about $10 billion in sales,” Borelli added.
The FEAOX aims to increase shareholder value by advancing free-market principles in the companies it owns. FEAOX is available exclusively through BISYS Fund Services Limited Partnership (applications may be obtained at http://www.FEAOX.com/how.html), and through E*Trade Financial and HSBC.
An investor should consider the fund's investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the Free Enterprise Action Fund can be found in the fund's prospectus. To obtain a prospectus, please call 1-800-766-3960 or visit www.FEAOX.com. Please read the prospectus carefully before investing. Mutual fund investing involves risk, including loss of principal.
The Free Enterprise Action Fund is advised by Action Fund Management, LLC., which receives a fee for its services, and is distributed by BISYS Fund Services Limited Partnership, which is not affiliated with Action Fund Management, LLC.