Financial Times | An epic legal clash involving ExxonMobil and two climate-focused shareholder groups that holds important implications for shareholder rights and corporate accountability.
The back-story: In January Exxon sued Follow This, a Dutch climate activist group, and investor Arjuna Capital to block a climate resolution the groups had submitted ahead of the company’s annual meeting, which is due to be held tomorrow. The resolution would have let shareholders vote on whether to accelerate Exxon’s reductions in greenhouse gas emissions.
Both climate groups withdrew their proposals following Exxon’s suit but the oil supermajor is pressing ahead, hoping to win a ruling that would set a precedent for such cases.
Last week the judge dismissed the lawsuit against Follow This, because of jurisdictional issues as it is based in the Netherlands — but the case against Arjuna will proceed.
Exxon says it needs to take a stand against efforts to manipulate shareholder activism. Shareholder groups, however, have alleged the company is “bullying” investors and say that if Exxon’s action succeeds, shareholder rights would be suppressed.
Exxon’s lawsuit has prompted a revolt from some shareholders. Calpers, the largest public pension fund in the US, has said it will vote against the re-election of Exxon’s board members, including chief executive Darren Woods. Norway’s oil fund said last week it would vote against independent director Jay Hooley, who leads Exxon’s governance strategy.
Calpers CEO Marcie Frost said:
‘ExxonMobil’s lawsuit puts shareholder democracy at stake. ExxonMobil’s decision to sue a group of shareholders strikes at the very heart of our mission as a public pension fund. […] When we exercise our rights as shareholders in some 6,000 US companies, we engage in what’s often called “shareholder democracy”, a way to speak truth to power. The process is overseen by the US Securities and Exchange Commission. Calpers plays by the rules of shareholder democracy, no matter who’s in charge in Washington, DC. Why can’t ExxonMobil?’
[…]
‘Don’t be distracted by outlandish claims that this is a fight over politics or a valiant effort to stave off radical climate activism. This fight is entirely about whether shareholders will keep their existing rights to speak out on topics they believe are material to a company’s long-term profitability.’
[…]
‘ExxonMobil’s decision to bypass the SEC and go straight to a Texas federal court, to say nothing of pushing ahead on the lawsuit even after the shareholder groups dropped their proposals in February, strikes us as a tell-tale sign that something bigger is at play.’
[…]
‘ExxonMobil’s lawsuit is a shocking overreaction to a pair of non-binding shareholder proposals — advisory measures seeking to have a dialogue, not to impose directives. Meanwhile, a company that reported net profits last year of more than $36bn complains about the cost of preparing shareholder proposals for a formal vote, broadly estimated by the SEC to sometimes total $150,000.
That’s a small price to pay to uphold the fundamental tenets of shareholder democracy, while the cost to shareholders’ rights if ExxonMobil’s lawsuit prevails is priceless.’
Read the letter to Calpers members:
Why CalPERS Is Voting Against ExxonMobil’s Board of Directors
