CONTACT:
Susana McDermott
Director of Communications
Interfaith Center on Corporate Responsibility (ICCR)
201-417-9060 (mobile)
smcdermott@iccr.org
NEW YORK, NY, WEDNESDAY, MAY 29, 2024 – As votes from today’s annual meeting of ExxonMobil shareholders were tallied and preliminary results announced, it became clear that the company’s hostile campaign directed towards its own shareholders had taken its toll.
While shareholder support for this company’s board of directors is generally taken for granted with votes in favor typically exceeding 95%, overall support for Exxon directors saw a drop this year as investors made clear their displeasure with Exxon’s board accountability over its treatment of its owners.
Exxon’s board has been on the defensive after the company brought a lawsuit against two of its shareholders, Arjuna Capital and FollowThis, for a proposal they filed requesting more expedited action on climate change. Rather than arguing to have the proposal omitted from its proxy at the SEC, the normal arbiter of proxy disputes, the company filed suit in federal court in Texas to block it, circumventing the SEC and presenting the proponents with an unreasonable financial burden should they choose to fight back through the courts. Moreover, even when the proponents withdrew the proposal, the company sought to continue its suit, a stance many investors found unnecessarily punitive.
As a result, proxy exempt solicitations and calls for votes against Exxon directors were submitted by numerous institutional investors, highlighting their displeasure with the unprecedented infringement on shareholder rights raised by the lawsuit. Several leading Exxon shareholders including Calpers, CalSTRS, the New York State Common Retirement Fund, and global funds such as Norges Bank Investment Management, Robeco SAM, and Brunel Pension Partnership Ltd. declared they were registering votes against the board. Further, influential proxy advisor Glass Lewis attributed its recommendation for a vote against Director Hooley to the “unusual and aggressive tactics” of the lawsuit against shareholders.
Said Tracey Rembert, ICCR’s Associate Director, Climate Change and Environmental Justice, “ExxonMobil and other companies should view shareholders’ questions about risk management as opportunities, not threats. The progress on GHG emissions reductions and other steps the company was touting during the AGM has been the subject of numerous shareholder proposals on climate filed by long-term investors, the same investors Exxon now characterizes as ‘serial proponents’.”
ICCR members Mercy Investment Services and Wespath Benefits and Investments submitted the first exempt solicitation calling for a ‘no vote’ against Chair Woods and Director Hooley. Said Andy Hendren, General Secretary and CEO of Wespath in a recent blog ahead of today’s vote, “Companies can object to shareholder resolutions through the SEC if they think shareholder proposals are inappropriate or redundant. Instead of taking this typical route, Exxon got litigious. In my eyes, that’s a form of corporate bullying and intimidation. And no one likes a bully.”
Said Mary Minette of Mercy Investment Services, “As long-term investors with a history of engagement with the company, we were surprised when ExxonMobil decided to circumvent the SEC process and took the extreme step of taking two of its shareholders to court to keep their proposal off the proxy ballot. We were shocked when the company elected to continue its lawsuit even after those shareholders had agreed to withdraw their proposal. But when the company’s 2024 proxy was released, characterizing shareholders with proposals going to a vote as ’serial proponents‘ with fringe concerns and attempting to make distinctions between ’investors, who are looking to ensure long-term economic value, and other shareholders, who may have acquired or borrowed a small number of shares to pursue their own agendas‘ we were, frankly, stunned. We view the significant support for a vote against directors Woods and Hooley voiced by so many investors as an appropriate response and hope it prompts some introspection among Exxon leadership, including re-embracing more productive methods for engaging with shareholders.”
Investors say they have been deeply concerned about the message that the Exxon suit sends to other companies who might be motivated to settle disagreements with their shareholders in the courts, rather than challenging their proposals at the SEC, as is the norm. Shareholder proposals are generally non-binding and companies are under no legal obligation to implement them even when they receive majority support. However, proponents believe this wave of investor opposition has put companies on notice that suing stockholders to block resolutions is costly and dangerous to a company’s reputation, and believe Exxon’s lawsuit may have had the unintended result of alerting investors and the public about the power of shareholder engagement.
Said Josh Zinner, ICCR’s CEO, “Investors and countless other stakeholders have implored oil and gas companies like Exxon to meaningfully respond to the climate crisis by shifting their business models away from an over-reliance on fossil fuels. Rather than responding to these calls and demonstrating the needed leadership, Exxon filed a “SLAPP suit” and published disparaging remarks on its proxy about those who dared to question its management of climate risks. These intimidation tactics are beneath a company of Exxon’s size and influence. Moreover, Exxon’s intransigence loads systemic risks into our financial markets that threaten the portfolios of all investors. Given the pronounced investor backlash to Exxon’s mistreatment of its shareholders this proxy season, we expect other companies to take note that legal threats and intimidation of shareholders won’t be tolerated.”
About the Interfaith Center on Corporate Responsibility (ICCR)
The Interfaith Center on Corporate Responsibility (ICCR) is a broad coalition of more than 300 institutional investors collectively representing over $4 trillion in invested capital. ICCR members, a cross-section of faith-based investors, asset managers, pension funds, foundations, and other long-term institutional investors, have over 50 years of experience engaging with companies on environmental, social, and governance (“ESG”) issues that are critical to long-term value creation. ICCR members engage hundreds of corporations annually to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter/X (@iccronline), LinkedIn, and Facebook.
