Dive Brief:
- A group of state finance officials and pension fund trustees are urging major asset managers to vote against ExxonMobil’s slate of board directors and CEO at its annual shareholder meeting, citing the oil company’s ongoing lawsuit against two activist shareholders.
- The coalition of 13 representatives — which include New York City Comptroller Brad Lander and California State Treasurer Fiona Ma — said Exxon’s “unprecedented attacks” against investors Arjuna Capital and Follow This “threaten the very corporate governance system that many stewardship efforts rely on,” in a securities filing Tuesday.
- The group said in an exempt solicitation with the Securities and Exchange Commission that the votes of large asset managers were “critical” in directing the results of Exxon’s May 29 shareholder meeting as their holdings amount to a 38% stake in the oil company. Versions of the letter were also sent to JPMorgan Chase, Goldman Sachs, BlackRock and other asset managers that are shareholders of the company.
Dive Insight:
The group pushed for asset managers to vote in a manner that held Exxon’s director nominees — especially CEO Darren Woods and lead independent director Joseph Hooley — accountable for the company’s attempts to suppress shareholder rights.
The May 21 letter comes a day after the California Public Employees’ Retirement System, the country’s largest pension fund, announced it would vote against all 12 members of Exxon’s board of directors and CEO during the company’s annual shareholder meeting. The fund criticized the Texas-based oil giant for waging a “reckless” lawsuit against its shareholders in court, despite Arjuna Capital and Follow This withdrawing their climate-focused proposal in February.
Following the pair’s 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 Texas District Court announced it would not dismiss Exxon’s lawsuit against the pro-ESG proposal filed by its activist investors on Wednesday. However, the court dismissed Follow This from the suit as the Dutch organization is outside the court’s jurisdiction.
The case will continue with Arjuna Capital.
The group of public fiduciaries also criticized Exxon for side-stepping the SEC’s no-action process and directly taking Arjuna Capital and Follow This to court. Historically, companies that are looking to have shareholder proposals excluded from the proxy ballot approach the agency, which frequently provides relief. The exempt solicitation letter noted Exxon’s decision to not have the SEC intervene could be used as a template by other companies who “may likewise opt for litigation over actually engaging their investors.”
“We believe that ExxonMobil’s attempts to undermine shareholder rights reflect a fundamental failure of board oversight and a waste of corporate assets on litigation,” the group wrote.
The letter is also backed by the state treasurers of Connecticut, Nevada, Oregon, Vermont, Washington; the Maryland State Comptroller; trustees of the United Steelworkers International Union Staff Pension Plan and the AFL-CIO Staff Retirement Plan and three CalPERS board members.
