On December 28, 2018, Exelon asked the U.S. Securities and Exchange Commission for permission to omit BURN MORE COAL’s shareholder proposal from Exelon’s 2019 proxy materials. If granted, it would mean no shareholder vote at Exelon’s 2019 annual meeting on our proposal for a greenwashing audit. Below is BURN MORE COAL’s response.
January 8, 2019
Office of Chief Counsel
Division of Corporate Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Request by Exelon Corporation to Omit Shareholder Proposal of Steven J. Milloy
Dear Sir or Madam:
I am responding to the December 28, 2018 request from Exelon Corporation (“Exelon”) to omit my shareholder proposal (the “Proposal”) from its 2019 proxy solicitation materials.
Exelon’s request is false and misleading and should be denied.
Introduction
The fundamental pillars of the federal securities laws and regulations are their (1) disclosure and (2) anti-fraud provisions.
Exelon has touted its environment-related activities in numerous and various public statements and documents.
The Proposal merely requests that Exelon report to shareholders on the actual benefits of its environment-related activities.
The goal of the Proposal is to ensure, via disclosure, that Exelon’s touted benefits are bona fide. Exelon has not already implemented this request.
The Proposal is, therefore, entirely consistent with the fundamental pillars of federal securities laws, including the proxy solicitation rules, and the extensive Commission precedent refusing registrant efforts to dodge accountability to shareholders via disclosure/reporting.
I will now address Exelon’s assertions in its December 28 letter.
The Proposal is not vague and misleading.
Contrary to Exelon’s assertions, the Proposal is straightforward and readily understandable. It explains in plain English its purpose and even provides an example of Exelon’s touting and the sort of reporting requested.
Exelon touts anticipated reductions in carbon dioxide (CO2) emissions as a principle justification for its voluntary shuttering of coal plants and embrace of solar and wind electricity generation capacity.
But these CO2 cuts are not required by any law or regulation. As the CO2 cuts are not, by themselves, obvious or actual benefits to anyone or anything, for the reasons explained in the Proposal itself, the Proposal merely requests that Exelon explain to shareholders what the actual benefits of its CO2 cuts are. Who is benefitting? How?
Exelon’s request to the Commission is disingenuous as it merely pretends not to understand what has been requested. The reality is more likely that Exelon does not want to be accountable to shareholders or anyone for its unsubstantiated claims.
The Proposal does not seek to micromanage Exelon’s choice of technologies.
The Proposal merely requests that Exelon report to shareholders. Disclosure to shareholders is a fundamental pillar of the securities laws. Disclosure is not micromanagement. Disclosure does not limit Exelon technology choices. The purpose of disclosure is to prevent fraud and mismanagement.
The Commission has previously rejected arguments that reports to shareholders are efforts to inappropriately interfere in ordinary business operations, including reports calling for disclosure of political contributions, charitable contributions, cost-and benefits of climate-related activities, and many more.
The Proposal does not micromanage Exelon’s resource allocation or marketing.
Once again, the Proposal merely requests a report to shareholders – the shareholders who actually own the company and who management works for. The Proposal seeks merely to illicit information concerning Exelon’s touted activities. It does not seek to influence Exelon’s allocation of resources or marketing, except to the extent the requested disclosure prevents mismanagement and fraud.
Climate change is a significant policy issue that transcends day-to-day business matters.
The Commission has already determined many times before that climate and the environment are significant policy issues that transcend day-to-day business matters.
In Exelon’s case, the company’s basic business is selling affordable and reliable electricity. Yet Exelon seems to be engaging in the ultra vires and incredible activity of trying to save the planet. Consider the image below from Exelon’s web site:
Exelon claims that the activity contemplated by the image from its web site (above), for example, does not transcend day-to-day business matters. The image clearly debunks that claim.
The Proposal does not demean Exelon’s environmental stewardship
The Proposal merely requests disclosure that will help shareholders assess Exelon’s highly touted environmental stewardship.
If requesting information is “demeaning” to Exelon, what does that say about what Exelon thinks of the disclosure provisions of the federal securities laws and regulations?
Ironically, Exelon’s December 28 letter attacks me merely because I am associated with a corporation called BURN MORE COAL LLC, publish the web site JunkScience.com and have authored book entitled, “Green Hell: How Environmentalists Plan to Control Your Life and What You Can Do to Stop Them” Regnery 2009). I don’t apologize for not conforming to Exelon’s concept of the ideal shareholder – one who is silent, submissive, ignorant and gullible.
I am a shareholder in Exelon and have been for a long time. I have owned enough Exelon stock for a long enough period to file this Proposal. The proxy rules contain no ideological test for proposals. I do not have to agree with Exelon’s management or its other institutional investors to have this Proposal included in Exelon’s proxy materials and voted on at the next annual meeting.
Exelon’s ad hominem attack is a transparent effort to appeal to prejudice as a means of evading shareholder disclosure about its environmental stewardship.
If Exelon’s touted environmental stewardship is so awesome, it should be eager to disclose to shareholders the actual and tangible benefits of said stewardship.
Exelon has not already substantially implemented the Proposal.
First, if Exelon had already substantially implemented this Proposal, it would not have been submitted to the company nor would we have had to go through the foregoing rigmarole.
Next, doing things is not the same thing as assessing and reporting on whether the things done have produced any benefit to anyone, including shareholders. None of the information requested by this proposal has been disclosed by Exelon. None.
Consider that Exelon’s December 28 letter states that Exelon has issued a “greenhouse gas verification statement” verifying that it has in fact voluntarily reduced greenhouse gas emissions in compliance with the requirements of a non-governmental organization (i.e., “The Climate Registry”).
The Proposal, however, does not seek disclosure of the level of Exelon’s greenhouse gas reduction. That apparently has already been done. The Proposal requests disclosure of the more meaningful next step – what are the actual and tangible benefits of said reduction to anyone or anything?
The greenhouse gas cuts are not required by law or regulation. They are voluntary. They cost money and require management’s attention and efforts. But there is no mention of how anyone or anything (e.g., shareholders, ratepayers, local communities, the climate, the environment) may have benefited from them.
If voluntarily cutting carbon dioxide emissions has actual and tangible benefits, Exelon should disclose to shareholders what those benefits are. Have financial benefits accrued to shareholders? Have ratepayers saved money? How has the climate or environment improved? If there are no benefits, then that should be candidly disclosed.
If the benefits are hypothetical, imaginary or controversial, that should be disclosed. Exelon has apparently made no such assessments, much less disclosed them, in any of its reports.
How are shareholders supposed to monitor and evaluate the use of corporate resources with the sort of unsubstantiated, if not, entirely vacuous puffery presented in Exelon’s Sustainability Reports?
Conclusion
Exelon’s request for permission to omit the Proposal from its 2019 proxy materials should be denied.
If you have any questions, I may be contacted at xxx-xxx-xxxx. A copy of this letter has been sent to Exelon and its counsel.
Sincerely,
/s/
Steven J. Milloy
Attachment: Milloy shareholder proposal entitled, “Greenwashing Audit”