Dive Brief:
- The California Public Employees’ Retirement System said Monday it would vote against all 12 members of ExxonMobil’s board of directors and CEO during the oil major’s May 29 shareholder meeting.
- The country’s largest pension fund, which has over $483 billion in assets under management, cited Exxon’s “reckless” lawsuit against activist shareholders Arjuna Capital and Follow This. CalPERS executives called the ongoing legal action an act of “intimidation” that is “upending the rules of shareholder democracy.”
- In a letter addressed to its members, CalPERS said it had urged Exxon to drop the lawsuit and asked other shareholders to vote against the company’s director nominees and CEO Darren Woods as well. The California fund said if the oil company succeeded in its suit against its two shareholders — who asked Exxon for more climate-focused commitments — it would lead to “devastating” repercussions.
Dive Insight:
CalPERS’ statement, written by fund CEO Marcie Frost and the president of its Board of Administration Theresa Taylor, called Exxon’s course of legal action a “destructive effort” that was “designed to punish two small groups that dared to speak truth to power.”
Exxon filed the lawsuit against ESG-focused investors Arjuna Capital and Follow This in January, asking the court to exclude a shareholder proposal the two groups filed that requested the company to ramp up its scope 1 and scope 2 greenhouse gas emissions reduction efforts and set scope 3 targets similar to its peers in the oil and gas industry. Exxon also alleged the pair were in violation of federal securities laws.
Though the activist investors withdrew their climate-focused proposal in February, after Exxon attempted to have it excluded from its annual proxy ballot, they still face legal action from the oil major. Following Arjuna Capital and Follow This’ decision to backtrack, Exxon asked Texas’ Northern District Court — which is overseeing the suit — to still rule on the case and said that a ruling would prevent the ESG-focused shareholders from submitting a similar proposal in the future.
The CalPERS executives also critiqued Exxon’s decision to directly pursue the issue in court instead of going to the Securities and Exchange Commission to intervene. Historically, companies that are looking to have shareholder proposals excluded from the proxy ballot approach the agency, which frequently provides relief. Frost and Taylor said the SEC has approved “two-thirds” of such requests this year.
“If ExxonMobil succeeds in silencing voices and upending the rules of shareholder democracy, what other subjects will the leaders of any company make off limits? Worker safety? Excessive executive compensation?” the pair wrote.
CalPERS concluded with its hopes Exxon will reconsider its lawsuit against Arjuna Capital and Follow This.
