{ "title": "CNX Addresses Shareholder Proposal", "modified_at": "2023-03-28 13:59:12", "published_at": "2023-03-27 22:12:00", "url": "https://positive-energy-hub.prezly.com/cnx-addresses-shareholder-proposal", "short_url": "http://prez.ly/28vc", "culture": "en", "language": "EN", "subtitle": "The following letter was sent from CNX CEO Nick DeIuliis in response to a shareholder proposal from Handlery Hotels Inc.", "slug": "cnx-addresses-shareholder-proposal", "body": "

Jon Handlery, CEO

Handlery Hotels Inc.

180 Geary Street, Suite 700

San Francisco, California 94108

 

Dear Jon,

I begin this letter by telling you how disappointing it was to hear nothing back from you, Handlery Hotels, or the firm you have doing your proxy bidding (or is it the other way around?). \u200b Not a letter, email, or call of substance regarding your shareholder proposal to CNX Resources Corporation that we have included in our proxy despite our outreach attempts.

For us, shareholders are not just owners but partners. \u200b And we desire great long-term partners. \u200b As such, please accept this letter as an update for you and Handlery Hotels, our partners.

Ethical and Professional Duties

When one initiates such proxy proceedings, ethical and professional duties attach to it to see matters through in the spirit of what you request. \u200b Your submission of the proposal and then purposely evading us is not consistent with such duties.

That’s unfortunate because we value partner feedback. However, we expect it to come in the form of good faith inquiry and conversation, not through the public theatrics of intermediaries like Proxy Impact that don’t look to create legitimate value for all partners as much as they do look to drum up attention in the form of being a serial filer of public shareholder proposals.

Lobbying Against the Paris Climate Accord

CNX has clearly stated in our proxy that we believe your proposal would not add shareholder value, is immaterial to our business strategy, and would be a waste of owner resources. \u200b Nevertheless, we went ahead and issued a report that shows there has been no lobbying by the company, or the industry organizations we associate with, against the Paris Climate Accord. \u200b None, zero, nil. You can access the report online here1 and I attach a copy of the report to this letter for your convenience. \u200b

By the way, should you have genuine interest, the reason we don’t spend company time or money lobbying against the Paris Climate Accord is that the agreement itself lacks substance and was a nonstarter from the day it was executed. \u200b Why bother investing effort in exposing something that will inevitably be exposed as unachievable in the physics-constrained real world?

Compare and Contrast Exercise: CNX Resources vs Handlery Hotels

I enjoyed reading your opinion piece in the San Francisco Chronicle from July 23, 2020 “S.F. politicians are putting my family-owned hotel at risk of closure” as it helped me understand that you come from a long line of family businesses serving guests for almost 100 years and how important your employees and their jobs are to you personally. \u200b As an employee of a long-standing regional business going back over 150+ years, I too hold in the highest regard our employees and the importance of family-sustaining jobs that CNX provides here in Appalachia. \u200b

Your criticism of burdensome compliance costs and the resulting threat to your business and potential impact to your employees’ jobs is understandable. \u200b However, this is where confusion sets in with your proposal. Although veiled under the guise of a simple compliance request, the proposal is about much more. \u200b From our standpoint, it is a direct attack on the domestic energy industry and threatens jobs here in Appalachia.

So, while I have your attention, let’s engage in an exercise. \u200b You and I are both responsible for running companies. \u200b And although our similarities may end there, running companies in the real world offers the opportunity to compare the talk to the walk and to contrast tangible metrics between our companies within the arena of Environmental, Social, and Governance (ESG) performance. \u200b

The Paris Climate Agreement envisions a zero-carbon world by 2030. CNX transparently discloses its carbon footprint. \u200b Can Handlery attest to its carbon footprint? If so, we have not been able to find those calculations online. \u200b

Do Handlery Hotels offer beef menu items, seafood, and beer? \u200b Such foods are the worst carbon offenders2 in the food supply chain. \u200b Do Handlery Hotels heat its pools? \u200b If so, this creates a significant3 carbon footprint for a nonessential luxury. \u200b How do guests of Handlery Hotels travel to your locations? \u200b Flying and driving produces a carbon footprint. Is this calculated in Handlery Hotels’ Scope 3 carbon emissions disclosures if such disclosures exist? \u200b

As I expect you have reviewed in our recently filed Proxy Statement, as well in our Corporate Responsibility Report, CNX is dedicated to transparent environmental reporting and continues to drive GHG emissions lower year-over-year. CNX has achieved over a 90% reduction in such emissions since 2011. \u200b Also, as we publicly disclose, CNX continues to invest capital into methane emissions reduction technologies to achieve reductions in Scope 1 and Scope 2 CO2e. \u200b

We look forward to understanding how Handlery Hotels is so far ahead on its decarbonization journey that it has time to engage others on the matter.

On the subject of family-sustaining jobs, CNX’s median employee annual compensation is over $170,000 (see 2023 CNX Proxy Statement). \u200b Where does the Handlery Hotels’ median employee compensation number fall? \u200b When establishing employee wages, I’m hoping that Handlery Hotels management takes into strong consideration the exorbitantly high cost of living in California and ensures that employees are able to put bread on the table, pay bills, and put gas in their car to be able to get to work (unless employees are not permitted to utilize gas powered vehicles). In other words, do you pay your employees a living wage?

Speaking of labor, CNX is proud to partner with our regional building trades. \u200b Further, many of our regional building trades have locked arms with us to help provide career opportunities to young adults in underserved communities where we operate through the CNX Mentorship Academy.4 \u200b I understand from your op-ed piece in the San Francisco Chronicle that at the start of 2020, Handlery Hotels had 70 dedicated union employees but by that same summer Handlery Hotels had reduced the count to zero (July 23, 2020 “S.F. politicians are putting my family-owned hotel at risk of closure”).

Let’s talk labor in the context of supply chains and human rights. \u200b CNX is willing to certify that not only the energy we produce, but also the materials and services utilized in our business, are not sourced from regions known to utilize child- and slave-labor. Can Handlery Hotels make the same certification?

It appears CNX and Handlery Hotels may share a mutual disdain for excessive, frivolous, time consuming, and costly actions by third parties (plaintiff’s attorneys and proxy advisory firms) that detract from value-add business activities. \u200b Without thoroughly reviewing the docket and specific complaints, filings, and proceedings, we are aware that Handlery Hotels has had its hands full with various arguably meritless suits (from Handlery Hotels’ stated positions), some dismissed and some still pending, ranging from Americans with Disabilities Act claims in Samuel Love v. Handlery Hotels, Inc. Case No. 21-cv-00850-TSH (N.D. Cal. Jun. 21, 2021), to elder abuse claims in Campbell v. Handlery Union Square Hotel, No. C 12-2466 MEJ (N.D. Cal. Aug. 2, 2012). \u200b

You and the Handlery Hotels management team expended and continue to expend valuable time and company resources and incurred and continue to incur significant legal fees to fend off these efforts, distracting from the important day-to-day management of your business. \u200b You noted such lawsuits are a cost of doing business and even if a case is frivolous, settling the case may be more palatable than racking up legal fees trying to fight it and risk losing big (The New York Times Magazine, July 21, 2021, “The Man Who Filed More Than 180 Disability Lawsuits”). \u200b The meritless claims out there designed to harass business owners, the doers of our society taking risks and who provide jobs and tax revenue benefits to society, represent a wrong in our system. \u200b

Might this Proxy Impact lobbying disclosure proposal equate to a frivolous, time consuming, and costly action by a third party intended to harass and distract a business from the important day-to-day management? \u200b If it does, perhaps there is no agreement between CNX and Handlery Hotels on this topic.

The Proxy Advisory Firm Racket

Now that we’re discussing the proposal, I am curious as to how your proposal arose and the perils of the value-appropriating ecosystem that might have spawned it. \u200b The proposal and your go-between, Proxy Impact, are unnecessary products of a cottage industry of self-serving “ESG advocacy” activist firms that are more interested in placing proposals for attention than genuinely improving the business of the underlying company or industry.

Perhaps the requested lobbying report in your proposal wasn’t really the point. \u200b The proposal was directed by a firm that makes its money by sending these boilerplate templates out routinely, company after company and year after year. \u200b Hundreds of these types of proposals are pumped out each year and while they might appear to be innocuous distractions, there are serious risks that these proposals distract management teams from core business focus. \u200b One needs to look no further than recent events at Silicon Valley Bank (SVB) and the myriad of distractions that are now being cited for causing incalculable damage to our economy. \u200b

I also ponder the true purpose of your investment in CNX. \u200b Did you just happen to own shares in CNX and Proxy Impact saw an opportunity to further its agenda? \u200b Or were the shares acquired solely to file the proposal? \u200b Or maybe, just maybe, you owned the shares and have a personal passion about CNX disclosing any lobbying efforts that look to undermine the Paris Climate Accord. \u200b

Conclusion

Why is CNX advocating against this lobbying disclosure proposal? \u200b Why did I take the time to pen this letter? \u200b Because your actions look to sully the brand of CNX Resources, its employees, and the great region of Appalachia. \u200b We can’t let that go unanswered; it goes back to that ethical and professional duty I mentioned at the beginning of this letter.

We don’t run the typical playbook of silent acquiescence that corporate America typically employs for these proxy adventures. Because we believe in the importance, inherent societal value, and quality of life benefits that CNX brings to our region, the country, and the world. \u200b

Without this energy, our economy and way of life are crippled. \u200b Low carbon-intensive natural gas produced in Appalachia has the lowest methane intensity of all major U.S. oil and natural gas producing basins and its growth is critical to decarbonizing America’s power grid. \u200b

This is the energy that keeps the lights on, pool heated, beer cold, and steaks warm in your California hotels. \u200b This is the energy that fuels the airplanes that brings tourists to your fair cities of San Francisco and San Diego to stay on your properties. \u200b Our energy allows you to enjoy your affluent personal lifestyle, especially if you drive an EV. \u200b Ironically, our energy keeps the lights on in Proxy Impact’s Berkeley offices. Without CNX and our industry, there would be no Handlery Hotels. \u200b

If you conducted basic due diligence on CNX prior to your investment, you are already aware that we supply energy in an environmentally conscious way, particularly regarding methane emissions reductions.5 \u200b If you followed us as an investor, you are also already aware that CNX ‘s vision is focused on Appalachia First6 and its people. CNX is a hard-working team in Appalachia whose members earn family-sustaining wages that put food on the table. \u200b We are transparent and proud of our ESG performance, and happy to share with you strategies and tactics from the CNX Resources playbook to assist in your own ESG journey.

Lastly, given your reservations about CNX’s non-existent lobbying efforts regarding the Paris Climate Accords, I urge you to deeply consider whether CNX Resources is the right partner for you and your hotels. If you decide to maintain your investment in CNX, which we certainly appreciate, I propose we work together to focus on advancing ways to provide clean, affordable energy that will serve as the catalyst to our future, that will benefit your and countless other industries, and that will provide the jobs that are needed by many, rather than spending time compiling unnecessary and irrelevant reports. \u200b However, if you decide you no longer wish to be our partner and sell your shares in the open market, we may be on the other side purchasing your shares. \u200b \u200b \u200b

Feel free to contact me any time.

 

Respectfully,

\n \n
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Nick DeIuliis


\u200b

1https://www.cnx.com/cnx/media/Pdf/CNX-Lobbying_Trade-Assoc.pdf

2 Beef and beer are the biggest greenhouse gas emitters in Pittsburgh’s food system, says study

https://nextpittsburgh.com/latest-news/beef-and-beer-are-the-biggest-greenhouse-gas-emitters-in-pittsburghs-food-system-says-study/

3 Sorry to ruin summer, but swimming pools are terrible for the environment

https://www.fastcompany.com/90749479/sorry-to-ruin-summer-but-swimming-pools-are-terrible-for-the-environment

4 The Mentorship Academy, https://www.cnx.com/about-us/the_mentorship-academy

5 Mitigating Methane – Basin Leading in the Leading Basin

https://www.positiveenergyhub.com/mitigating-methane-basin-leading-in-the-leading-basin

6 Appalachia First, https://www.positiveenergyhub.com/appalachia-first

 

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