HOUSTON, Jan. 29 /PRNewswire-FirstCall/ -- Reliant Energy, Inc.
announced today that it has filed a declaratory judgment action in federal
district court in Texas in response to a stockholder proposal submitted by
a hedge fund, Seneca Capital, L.P.
The proposal filed by Seneca seeks to amend the company's bylaws to
permit certain larger stockholders to nominate directors and have their
nominees included in the company's proxy materials. Since the proposal is
contrary to applicable securities laws and considerable precedent of the
Securities and Exchange Commission (SEC) Reliant is seeking a judicial
determination that it is permitted to exclude this proposal from its proxy
materials.
Reliant has also submitted a "no-action" request to the SEC staff to
exclude Seneca's proposal from Reliant's proxy. In its no-action request,
the company has noted that the decision by the Second Circuit Court of
Appeals, which covers the states of New York, Vermont and Connecticut, in a
case involving a similar proposal submitted to AIG is not binding with
respect to Reliant since Reliant is a Texas-based company. Last week, the
SEC, while noting that the AIG decision was at odds with prior SEC
interpretations, declined to address the jurisdictional issue in connection
with a no-action request filed by Hewlett-Packard concerning a similar
stockholder proposal. Reliant believes that today's action is necessary to
resolve the jurisdictional issue.
Seneca appears to have advanced its proposal now in an effort to
exploit the regulatory uncertainty created by the Second Circuit's decision
and to preempt the efforts of the SEC to implement a stockholder access
proposal that would be balanced and in the interests of all constituents.
As SEC Chairman Christopher Cox stated recently, the Commission intends to
craft a "carefully considered proposal that will ensure there is one, clear
rule to protect investors' interests." Seneca's proposal is inconsistent
with this spirit and with the stockholder access proposals that were
previously considered by the SEC, and includes none of the safeguards that
were part of those proposals.
Reliant is committed to high corporate governance standards. Over the
last several years the company adopted mandatory share ownership
requirements for officers and directors, limitations on public board
service and mandatory director resignation requirements. Within the last
six months the company added two new directors, including a director who is
a substantial institutional shareholder representative. This year, Reliant
is committed to amending its certificate of incorporation to declassify its
board of directors, as well as to considering fully and fairly the majority
voting proposal submitted by Seneca. But, as detailed in today's complaint,
Seneca's shareholder access proposal is the opposite of good governance --
an ill- considered bylaws amendment without either safeguards or clear
procedures that would only serve to benefit certain large stockholders at
the expense of all others.
Reliant regrets the necessity of initiating this action but believes
that doing so is in the best interests of all its stockholders.
Reliant Energy, Inc. (NYSE: RRI) based in Houston, Texas, provides
electricity and energy services to retail and wholesale customers in the
United States. In Texas, the company provides service to approximately 1.9
million retail electricity customers, including residential, small business
and commercial, industrial, governmental and institutional customers.
Reliant also serves commercial, industrial, governmental and institutional
customers in the PJM (Pennsylvania, New Jersey and Maryland) market.
The company is one of the largest independent power producers in the
nation with approximately 16,000 megawatts of power generation capacity
across the United States. These strategically located generating assets
utilize natural gas, fuel oil and coal. For more information, visit
http://www.reliant.com .
SOURCE Reliant Energy, Inc.
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Related links:
http://www.reliant.com
CONTACT:
investors, Dennis Barber, +1-713-497-3042, or
media, Pat Hammond, +1-713-497-7723, both of Reliant Energy, Inc.
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