Energy
Tuesday, May 21st, 2024 5:12 pm EDT
Key Points
- CalPERS Opposition: The California Public Employees’ Retirement System (CalPERS) will vote against all of Exxon’s 12 director nominees, including CEO Darren Woods, in response to Exxon’s lawsuit against environmentally focused activist investors Arjuna Capital and Follow This.
- Activist Proposal and Lawsuit: The activist investors proposed a plan to reduce Exxon’s direct and supply chain emissions, but Exxon sued them in federal court, leading to the proposal’s withdrawal. Despite this, Exxon continues to pursue the lawsuit to prevent future proposals.
- Shareholder Democracy at Risk: CalPERS criticizes Exxon’s actions as a threat to shareholder activism on various issues and urges other shareholders to oppose the board nominees, emphasizing that Exxon’s litigation undermines shareholder democracy and corporate responsibility.
Exxon Mobil is currently engaged in a prolonged battle with two environmentally focused activist investors, Arjuna Capital and Follow This, which has led to significant repercussions, including losing the support of the California Public Employees’ Retirement System (CalPERS). CalPERS, a substantial $484 billion pension fund manager with a $1 billion stake in Exxon, announced in an open letter that it would vote against all of Exxon’s 12 director nominees, including CEO Darren Woods, at the upcoming shareholder meeting. This decision stems from Exxon’s aggressive legal actions against the activists who had proposed a shareholder initiative to reduce direct emissions and set emission reduction targets for suppliers and customers.
In January, Exxon sued the activists in Texas federal court, leading to the withdrawal of the proposal. Despite this, Exxon continued its lawsuit to permanently bar the activists from submitting similar proposals in the future. Exxon argues that these activists are attempting to undermine the will of the majority of its shareholders, who had previously rejected the proposal. In contrast, CalPERS views Exxon’s lawsuit as a dangerous precedent that threatens shareholder activism across various issues, including worker safety and executive compensation.
CalPERS’ CEO Marcie Frost and board President Theresa Taylor emphasized in their letter that Exxon’s actions undermine shareholder democracy and called on other shareholders to join them in opposing the company’s board nominees. Exxon responded by asserting that it had engaged with CalPERS and could not understand the fund’s stance, defending its board’s role in creating significant shareholder value. The company could have potentially avoided the public dispute by seeking an exclusion from the Securities and Exchange Commission but chose to pursue litigation for what it claims is a process ripe for abuse by activists with minimal shares.
Exxon has a history of clashes with activist investors. In 2021, Engine No. 1’s campaign led to the election of three board members, supported by institutional investors including CalPERS, aiming to overhaul Exxon’s disclosure standards and reevaluate its position in a zero-carbon future. Ironically, CalPERS is now opposing the same directors it previously helped elect, reflecting its disapproval of Exxon’s current stance on shareholder proposals and environmental issues. CalPERS concluded its letter by urging Exxon’s directors to reconsider the lawsuit, describing it as an act more befitting of “schoolyard bullying” than corporate leadership.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/20/exxon-activist-lawsuit-calpers-proxy-vote.html
