Letter to Institutional Shareholder Services
Today CNX submitted a letter to proxy advisory firm Institutional Shareholder Services regarding the Handlery Hotels shareholder proposal.
March 29, 2023
Institutional Shareholder Services
702 King Farm Boulevard, Suite 400
Rockville, Maryland 20850
We understand that Institutional Shareholder Services (“ISS”) typically does not engage with public companies to discuss shareholder proposals between proxy filing and annual meeting. However, we believe that a discussion with ISS would be valuable not only for the shareholders of CNX Resources Corporation (“CNX”), but also for ISS to help it carry out the important responsibility of soundly advising shareholders on the merits of individual shareholder proposals during proxy season.
CNX received a shareholder proposal this year from Handlery Hotels, Inc. (“Handlery Hotels”) through an intermediary firm, Proxy Impact, requesting the CNX Board to investigate and issue a report regarding lobbying and policy influence activities that oppose the Paris Climate Agreement. You will see in our Statement of Opposition (“Opposition Statement”) included in our Proxy Statement that our Board recommends a vote “AGAINST” the proposal. For the following reasons, we urge ISS to recommend the same.
CNX’s disclosures already provide shareholders with ample information on CNX’s business, efforts to ensure environmental responsibility such as reductions in emissions from operations and third parties, and engagement in the public policy process. The company’s resources are better spent focusing on execution instead of conducting an exercise in duplicative and unnecessary reporting. We attempted to engage directly with Handlery Hotels, but they were unresponsive. So, we sent a letter providing our views on its proposal. You can access the letter online, and I attach a copy for your convenience.
As we clearly state in our Opposition Statement and in our letter to Handlery Hotels, this proposal will not add shareholder value, is immaterial to our business strategy, and would be a waste of owner resources. Nevertheless, we issued a report that addresses the proposal request and that shows there has been no lobbying by CNX, or the industry organizations we associate with, against the Paris Climate Agreement. The proposal request is satisfied and now moot. You can access the report online, and I attach a copy for your convenience.
Further, we have an ethical and professional duty to aggressively rebut questionable shareholder proposals that are a clear distortion and abuse of the shareholder proposal process. While this proposal may be presented by its proponents as a simple compliance request, it should be viewed in the larger context of the problematic, self-serving proxy proposal firm industry that looks to appropriate shareholder value and use it to enrich a business model predicated on spamming corporations with boilerplate, meritless shareholder proposals to garner attention and funding. That’s quite different than intending to advocate with a sincere desire to improve the business of a specific issuer. Proposals such as this reduce available resources and dilute attention from important, substantive, and relevant shareholder proposals on which issuers should be focused. The growing epidemic of these spam-like proxy proposals clogs governance and devalues shareholder engagement. That hinders ISS in providing sound recommendations and guidance.
We trust ISS is not a proponent of blindly supporting shareholder proposals without conducting specific research on the subject issuer and the particular matter. We hope you agree that proper ESG behaviors focus on transparent environmental reporting and the tangible reduction of emissions. CNX has a track record of success on these topics, which we consistently disclose to shareholders in our Corporate Responsibility Report, our Proxy Statement, and other public communications. CNX has achieved over a 90% reduction in GHG emissions since 2011, and we invest millions of dollars of capital into methane emissions reduction technologies to achieve reductions in Scopes 1 & 2 CO2e. We support underserved communities in our region. Our hardworking employees earn family-sustaining wages, with our median employee annual compensation exceeding $170,000 (See 2023 Proxy Statement).
ISS serves an important role in advising shareholders on how to vote on governance matters. We ask that ISS fulfill that role by applying sound judgement on individual proposals that reflect the facts and circumstances of each case. Blanket support of shareholder proposals that destroy shareholder value, lack a basic understanding of the specific issuing company, and distract management and boards from meaningful shareholder engagement contradicts the warranted mission of ISS.
We request you recommend a vote “AGAINST” the Handlery Hotel proposal in your forthcoming report. We are available to engage in meaningful dialogue with ISS and are happy to talk at your convenience.