Shareholder fights on the agenda as ExxonMobil convenes annual meeting
US supermajor’s board under scrutiny following Arjuna Capital, Follow This lawsuit
Their proposal may no longer be on the ballot but the shadow of activist investors Arjuna Capital and Follow This will hang over ExxonMobil’s annual general meeting on Wednesday, as shareholders vote on a slew of proposals and the US supermajor’s legal attempts to curb the environmental groups continues to play out.
The fate of four shareholder proposals will be up for grabs, but all eyes will focus on the vote for ExxonMobil’s board, particularly the outcome for chief executive Darren Woods and lead director Joseph Hooley.
The scrutiny stems from ExxonMobil’s ongoing lawsuit against Arjuna Capital and Follow This, a pair of green-energy organisations that have pushed the US supermajor and other fossil fuel companies for years on their climate-related disclosures.
Arjuna Capital and Follow This filed a proposal in December to require ExxonMobil to slash its greenhouse gas emissions beyond the company's current targets. Follow This submitted similar measures in 2022 and 2023 that were resoundingly rejected by shareholders.
However, instead of letting the proposal die before investors, ExxonMobil turned around and sued the two groups in US federal court in January, arguing they had hijacked the shareholder process for their own agendas.
That move has angered a slew of investors, who have called on their fellow shareholders to vote against the renomination of Woods and Hooley to the US supermajor’s board.
Investors that have urged votes against Woods and Hooley include:
- The California Public Employees Retirement System, or CalPERS, the largest state public pension fund in the US with $490 billion in total assets and a self-proclaimed “significant long-term owner of ExxonMobil”
- State treasurers and financial officers from California, Connecticut, Illinois, Maryland, New York, Nevada, Oregon, Vermont and Washington
- The United Steelworkers union, which represents ExxonMobil employees
- The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), a US union association
- Norges Bank Investment Management, the Norwegian oil fund
Proxy voting advisory firm Glass Lewis also opposed Hooley’s candidacy and has blasted ExxonMobil for filing its suit in Fort Worth, within the Dallas metro area, as opposed to Houston, closer to its headquarters.
Glass Lewis said the Fort Worth venue is inconvenient for the defendants and has been “targeted by conservative litigants hoping for favourable rulings”.
ExxonMobil has blasted that claim, saying it filed a joint motion with Arjuna Capital to keep the case in Fort Worth because changing it to another Texas-based venue would have little outcome on the impact of the case.
An issue of process
The emissions-reduction proposal from Follow This and Arjuna Capital will not in fact be up for a vote, having been withdrawn by the groups in an attempt to head off the lawsuit.
But even after a US judge dropped Follow This from the lawsuit over a jurisdictional issue, ExxonMobil says it is intent on continuing its case against Arjuna Capital, convinced that the green investment firm and other activists will keep submitting aggressive environmental, social and governance proposals.
“The proposal process is being abused by those who treat shareholder democracy as a venue for activism and counter-activism, from self-styled ‘green’ or ‘progressive’ groups to the ‘anti-ESG’ organizations that oppose them,” ExxonMobil wrote in its proxy statement to investors.
In its proxy materials, ExxonMobil also blasted the Interfaith Center on Corporate Responsibility (ICCR), a faith-based investor coalition that offered up 40% of all shareholder proposals over the last decade, as well as ESG advocacy group Proxy Impact and California climate nonprofit As You Sow, which have pushed their own proposals.
In response, ICCR wrote in a shareholder letter that ExxonMobil’s language “signals a growing hostility and open contempt for the legitimate concerns of investors regarding the company’s management of climate-related financial risk”.
Majority Action, a US nonprofit that focuses on corporate accountability, wrote its own letter criticising ExxonMobil for calling out Arjuna and Follow This by name and intimidating climate activists.
“ExxonMobil’s lawsuit sets a potentially dangerous precedent for other climate-recalcitrant companies, who may similarly sidestep the SEC and litigate against proponents,” the group wrote.
“The National Association of Manufacturers, a trade group representing fossil fuel interests, has admitted that corporations are watching the ExxonMobil case for precisely this reason.”
Meanwhile, a letter from For the Long Term — the coalition of state financial officers urging votes against Woods and Hooley — said ExxonMobil’s choice to “bypass the SEC’s no-action process is being used to set the stage for other companies, who may likewise opt for litigation over actually engaging their investors”.
In response, financial officers from 19 states, most of which are led by Republican governors, sent a letter to BlackRock chief executive Larry Fink pushing him not to vote against any ExxonMobil board members because of the Arjuna Capital lawsuit.
BlackRock owns about 5.7% of ExxonMobil's shares, making it the company's second-largest stockholder, according to MarketScreener.
“You and Exxon are in the same boat, besieged by the same serial proponents with the same demands repackaged in slightly different forms year after year,” the letter to BlackRock said. “Non-activist investors are in the same boat too.”
(Copyright)