General Electric CEO Jeff Immelt refuses to justify lobbying for global warming regulation; Global warming shareholder resolution wins sufficient support to be voted again in 2007
For more info contact: Steve Milloy, 301-258-2852, steve@feafund.com
Washington DC, May 2, 2006 – General Electric CEO Jeff Immelt refused to justify GE’s lobbying for global warming regulation at the company’s annual shareholder meeting on April 26.
Tom Borelli and Steve Milloy, portfolio managers of the Free Enterprise Action Fund (FreeEnterpriseActionFund.com), repeatedly asked questions about GE’s global warming lobbying, but CEO Immelt provided no substantive responses. The global warming shareholder resolution requested that GE report to its shareholders on the scientific and economic justification for its lobbying. The resolution received 5.9% of the vote (votes representing over 500 million shares of GE stock) and qualified for inclusion in GE’s 2007 proxy statement.
Meeting highlights were as follows.
Borelli announced that the Free Enterprise Action Fund (FEAF) withheld its votes for from CEO Immelt as director. Borelli’s comments, which received applause from other shareholders at the meeting, observed that CEO Immelt seemed unduly focused on so-called “stakeholders” rather than shareholders. As evidence of this point, Borelli pointed out that GE’s 2005 Annual Report is addressed to “stakeholders” – not “shareholders” –and that GE’s 2005 Citizenship Report uses the word “stakeholder” more than twice as many times as “shareholder” (41 vs.17).
In addition, Borelli pointed out that the stakeholder section of GE’s Citizenship Report (p.14) credits non-governmental organizations (NGOs) and advocacy groups for the company’s Eco-magination business strategy. Borelli described these advocacy groups as “looters,” whose only interest is to use GE’s resources to achieve their social and political agenda.
In presenting the shareholder proposal concerning global warming, Milloy challenged CEO Immelt to disclose to shareholders how GE was going to increase its earnings in a declining economy that may result from global warming regulations. (1) Milloy noted that carbon dioxide restrictions in the EU from the Kyoto Protocol have already led to negative economic impacts. Finally, Milloy mentioned that the increase in energy prices resulting from carbon dioxide regulations might hurt GE retirees, who attended the meeting requesting a cost-of-living-adjustment in light of GE’s over-funded pension plan.
The global warming resolution was opposed by Sr. Pat Daily of the Interfaith Center of Corporate Responsibility (www.ICCR.org) and Rev. Michael Crosby, Coordinator of the Tobacco Program at the Interfaith Center for Corporate Responsibility – both are social activists who supported GE’s global warming policy and were thanked for their support by CEO Immelt.
During the Q&A part of the meeting, Milloy observed that GE seemed to only work with environmental activist groups in forming its global warming policy. Milloy asked CEO Immelt for a commitment to work with groups holding different viewpoints on global warming, such as the Cato Institute and the Competitive Enterprise Institute. CEO Immelt refused to make such a commitment.
“Our resolution received enough support to be included in GE’s proxy statement next year,” said Tom Borelli. “Additional resolutions for GE are under consideration, including a resolution regarding the company’s support of environmental activists groups,” Borelli added. “We believe shareholders should know how much of GE’s assets are being given to organizations whose goals and actions may be inimical to shareholder value.”
The Free Enterprise Action Fund (FEAF) is a mutual fund seeking to provide investors with financial returns while defending and advocating for the American system of free enterprise. The FEAF owns less than one percent of the outstanding shares of Goldman Sachs.
The Free Enterprise Action Fund seeks long-term capital appreciation through investment and advocacy that promote the American system of free enterprise. 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.FreeEnterpriseActionFund.com. Please read the prospectus carefully before investing.
Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. The Free Enterprise Action Fund is a new fund with limited investment history and there is no guarantee that it will achieve its investment objectives.
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.
References:
- Letter to GE Shareowners, March 17, 2006. http://www.freeenterpriseactionfund.com/
GE_shareholder_letter_3-17-06.pdf
