Sierra Club Tries Shareholder Activism Versus Coal Burning Power Plants

by Wallace McMullen

Several environmental and social concern groups have tried presenting their concerns directly to the top management of large corporations by buying a few shares of stock, and then speaking up vigorously at the company’s annual shareholder meeting.

I feel shareholder activism is a worthwhile approach. We don’t often get to publicly speak our piece to the top management of big corporations. The shareholder meeting allows us to present our arguments directly to the CEO, with the press watching, and it is a good chance to partner with labor unions and other progressive groups who are also using this venue.

The Ozark Chapter has now embarked on trying this tactic with two corporations that are intending to build huge new coal-burning power plants, Kansas City Power & Light, and Peabody Coal. As regular readers of the Sierran know, coal-burning power plants emit significant quantities of soot, smog-precursors, sulfuric acid mist, and dozens of chemicals classified as Hazardous Air Pollutants by the EPA. So we have been working to oppose these new plants.

We received excellent help on shareholder action from the staff with the Sierra Club’s national Shareholder Action Task Force. Kate Truka lined up the shareholder proxies we used to get in in Kansas City, and Bart Naylor provided good coaching on timing and effective wording for presenting questions in the meetings.

Kansas City Power and Light
KCPL held their shareholder meeting on May 3, 2005. A number of Sierra Club members attended. Also representatives from the Burroughs Audubon Society and Concerned Citizens of Platte County were present. I will share some excerpts from the email description I sent just afterwards:

“KCPL ‘s annual shareholder meeting today went very well from our point of view. I got to ask my question: ‘How will profits be impacted by a $9 per ton fee on CO2 emissions which cause global warming?,‘ [CEO Mike Chesser’s answer: ‘We think it's a long time off, and we will get higher rates for selling electricity when it happens, so shareholders will be protected’*]. Chuck Gilliam asked his question: ‘Are you preparing a fund to cover the liability when KCPL is sued for injury to human health by coal-burning power plants?’ [Answer: No] Jill DeWitt of Burroughs Audubon asked about environmental damage and impact on waterbodies, David Melby of Concerned Citizens asked, "Why don't you use coal liquefaction to avoid the emissions from burning coal?," a guy in the back said "Isn't it true that the new plant will make our electricity cost more?," and the woman in front of me said "Mr. Chairman, how can you justify the huge gap between your salary and the pay of the employees who do the daily operational work of the company, and what are you going to do to reduce that gap?" (The Sierra Club had nothing to do with that question, but I enjoyed hearing her ask it)…

My thanks to Jill DeWitt who made the placards, to Claus W. who sent out the press advisory and prepared press materials, and to everyone who came and manned our picket line…[outside the meeting]”

*Dear reader, note that the higher rates might be a bad strategy for KCPL’s customers.

Peabody
Peabody proposes to build a 1500 MW coal-burning power plant about 45 miles southeast of St. Louis, in Illinois. They also endanger the water supply of Native Americans with their mining operations in the American West.

Verena Owen, the Illinois Chapter Clean Air Chair wrote an excellent account of what transpired at the Peabody Coal shareholder meeting in St. Louis on May 6, 2005, which I quote with her gracious permission:

“While I thought attending a shareholder meeting sounded like a great idea I felt I would never be able to actually do it.

Thank you all for helping me prove myself wrong.

It was a privilege to see you all at work and I marvel at the lucky lineup of so many talents coming together. I think the evening planning session [the night before] best illustrated that: some were working on posters, others on last minute changes to press releases, or speeches, and the rest of us huddled around Wallace's cell phone, to get last minute instructions from Bart. There was a lot of energy in the room but also a lot of quiet confidence that we would pull this off and do it well.

The next morning I enjoyed holding up my sign on the street corner and especially enjoyed the enthusiastic thumps-up from the local firefighters who went by. But I especially enjoyed holding up the big banner… that read PEABODY SUCKS -- LIFE.

Inside the shareholder meeting, I was surprised at the number of attendees. I had expected more people. There were only about 50, and half of those were Peabody staff, directors, accountants, and security guards (complete with earphone and telltale curly cord going down the back of their necks). The other half were tagged as either "guest" or "shareholder" and the guests may have outnumbered the shareholders…

The room was like a movie theater, with seating on an incline and a stage in front. And the show promptly started off with a mercifully brief "movie" about the company and its achievements.

Then, on stage with a spotlight on him, the CEO introduced the board members who were all seated in the front row and who stood up and turned around to the "audience" when their name was announced. It was very choreographed and odd.

When the floor was opened up for questions my hand went up first, but Bruce Nilles, [Sierra Club staff] beat me to the microphone, which gave me a chance to observe and change my approach a bit…

I asked questions directly of individual board members. I questioned Ms Van Trease, [a healthcare CEO] about mercury and health and I also asked Mr. Brown about what he felt the consequences will be for Peabody using outdated combustion technology for their proposed power plants. Ford and GM, which don't have hybrid cars yet, had just been downgraded to junk bond status that morning. Alas, he simply agreed with management.

And I had noticed that Bruce could not ask a follow up question, so once I was given the microphone, I clutched it with both hands figuring that the 20ish guy who had handed it to me wasn't going to wrestle it away from someone who could (almost) be his mother. I was right.

We asked questions at all the opportunities we had during the meeting. Bart had prepared us well. The Q and A session at the end also allowed us to make short statements…

It was useful to linger and chat with board members after the meeting. One of them even sought us out and was happy to talk to us…

In an email to the folks back home I summed up my experience as:

I think this event was Sierra Club at its best: creative, able to get folks from different backgrounds together to work on a common goal, good preparation, have a clear message, give hands-on help where needed, and then trusting its members to go and just do it.

Not only this, but it was also a lot of fun. I am working on a list of what other stock I need to own…For more information about shareholder activism, I recommend Bart Naylor's article, available at:

http://www.landscouncil.org/transitions/tr0001/#CHANGE%20CORPORATE%20AMERICA