Stockholders Recommended to Vote “Against” Exelon’s Board Expansion Proposal
– By Abby Gessner –
NRG Energy, Inc. has announced that RiskMetrics Group (formerly Institutional Shareholder Services), PROXY Governance, Inc., Glass Lewis & Co., and Egan-Jones Proxy Services, the nation’s four leading proxy advisory firms, recommend that their clients vote “FOR” the election of NRG’s highly qualified and independent director nominees at NRG’s 2009 Annual Meeting of Stockholders to be held on July 21. All of the proxy advisory firms also recommend that NRG stockholders vote “AGAINST” Exelon’s Board expansion proposal.
“We are pleased that RiskMetrics, PROXY Governance, Glass Lewis, and Egan-Jones all support the election of all four of NRG’s director nominees and are unanimously opposed to expanding the NRG Board. While we appreciate the support we’ve received from the proxy advisors, we very much appreciate that our shareholders will be making their own decisions based on a variety of issues and opinions,” said David Crane, President and Chief Executive Officer of NRG. “NRG’s current directors have overseen a five-year period of growth and value creation and have contributed to what we believe is an unmatched record of financial, operational and transactional execution during that time. Regardless of the outcome with Exelon, our Board and management will remain committed, as we always have been, to driving value for our stockholders and remaining open to offers at the right price and on the right terms.”
In its July 13, 2009, report, RiskMetrics (RMG) noted*:
- “Given RMG’s conclusion that Exelon’s current bid is not compelling enough to support splitting the board with nine dissident nominees, RMG recommends that shareholders vote on the Management Proxy (White Card), and support the re-election of all the incumbent nominees.” (emphasis added)
- “On balance, we conclude that Exelon’s current bid is not compelling enough to support splitting the board with nine dissident nominees. Virtually all of the NRG shareholders to whom we spoke expressed a belief that Exelon should sweeten its offer.” (emphasis added)
- “The downside to supporting Exelon at the annual meeting may be to embolden Exelon and to undercut NRG’s negotiating leverage, with the net result a failure to maximize value...” (emphasis added)
- “The nearly unanimous opinion of shareholders with whom we spoke was that the NRG management team had done an exemplary job over recent years in creating value.” (emphasis added)
PROXY Governance in its July 9, 2009 report noted*:
- “As the incumbent board has demonstrated its commitment to shareholder value not only through its willingness to engage Exelon in September 2008, but through its ongoing initiatives to improve operating efficiencies, its willingness to act on significant but short-fuse opportunities such as Reliant Retail, and its long-term strategy to strengthen the company’s competitive stance in a carbon-constrained economy, we believe shareholders will be best served by re-electing the incumbent nominees.” (emphasis added)
- “In September 2008, before the public tender offer and the proxy contest, NRG voluntarily met with Exelon to begin exploring strategic options. By its own account, NRG expected to continue those discussions at industry events in November, in the hope financial markets would have begun to calm by then. The clear implication is that, far from being entrenched, the company’s management and board are open to strategic discussions which might maximize shareholder value – and that the issue remains what it was last September, the question of whether Exelon will pay full value for the company’s existing operations and future potential.” (emphasis added)
- “In NRG’s strategies over the past five years one sees an acute awareness of opportunity, and a deep understanding of how and where to hedge various risks. The opportunistic purchase of Reliant Retail – at 1.5x average adjusted EBITDA, significantly below market valuations of 4.0x to 6.0x for similar assets –… is the most recent case in point.” (emphasis added)
Glass Lewis, in its July 9, 2009, report, stated the following*:
- “…We find no reason to recommend for the election of the Dissident [Exelon] nominees to the NRG board of directors. In our opinion, the board and its advisors have given Exelon’s proposals and Offer reasonable consideration.” (emphasis added)
- “… We note that the board has not closed itself off from future discussions regarding a potential transaction with Exelon nor has it prohibited NRG shareholders from tendering their shares to Exelon under the revised Offer. Further, we note that the reelection of the incumbent director nominees does not block Exelon’s revised Offer.”
- “We also believe that the election of the Dissident [Exelon] nominees could give Exelon an unnecessary advantage in a strategic transaction involving NRG. In our opinion, the election of the incumbent nominees will help ensure that the NRG board remains open to any, and all, potentially interested parties and proposals.” (emphasis added)
- “Given that we do not believe it is in the best interests of shareholders to support Exelon’s nominees, we do not believe shareholders should support this expansion in the Company’s board.” (emphasis added)
Egan-Jones in its July 9, 2009 report stated*:
- “We believe, as reportedly so do several significant shareholders of the Company, that Exelon’s revised offer of July 2 continues to undervalue the Company, thereby making furtherance of its proxy contest undesirable at this time.”
- “We are of the view that the election of the Exelon nominees would not contribute meaningfully to the quality of the Company’s board of directors.”
- …“We believe that election of the slate of director nominees presented by the management is in the best interest of Company and its shareholders.”
- “We believe that approval of this proposal is not in the best interests of the Company and its stockholders.”
Crane concluded, “We strongly urge all NRG stockholders to vote “FOR” our director nominees, in accordance with the recommendations of RiskMetrics, PROXY Governance, Glass Lewis and Egan-Jones, on the WHITE proxy card, and “AGAINST” Exelon’s proposal to expand the Company’s Board.”
NRG stockholders are reminded that their vote is important, no matter how many shares they own. Whether or not they attend the Annual Meeting, NRG stockholders are encouraged to submit a WHITE proxy by Internet, telephone or by signing and dating the WHITE proxy card itself and returning it as soon as possible. Even if you have already voted by using the blue card, you can still change your vote by using the WHITE proxy card.
NRG stockholders may obtain copies of the exchange offer documents or proxy solicitation materials which have been filed with the SEC at www.sec.gov. Any NRG stockholders who have questions or require assistance voting their shares should contact MacKenzie Partners, Inc., which is assisting NRG in this matter, at 800.322.2885.
* Permission to use quotations was neither sought nor obtained.