Financial Times | Wall Street’s top regulator has awarded ExxonMobil a powerful tool to short-circuit shareholder activism proposals, in the wake of campaigns targeting the oil major over climate change, governance and executive pay.
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Under Exxon’s proposal, retail investors who opt into the system would have their votes counted in favour of management unless they choose to opt out. The move comes four years after the company’s stunning defeat in a proxy battle at the hands of a tiny hedge fund seeking to reduce its carbon footprint.
Governance experts said this would provide Exxon management with a strong base of shareholder support at annual meetings, which would make it more difficult for activists to win votes on their proposals. The SEC’s guidance is likely to encourage other US companies to establish similar platforms, a trend that could reduce the influence of proxy advisers and activists to exert influence over votes, they said.
Exxon said this would allow the 40 per cent of its shareholder base who are retail investors “to be heard, and be counted”, noting that three-quarters of them typically do not vote due to the time it takes to read all shareholder proposals.
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Last year the oil major sued activist investors Follow This and Arjuna Capital in a high-profile legal case that green groups and some shareholders say was an attempt to “silence them”.
The lawsuit against Follow This was dismissed by a Texas judge on jurisdictional grounds, as the activist group is based in the Netherlands.
This will not go down well with institutional investors who will lose influence as owners of the company,”
Mark van Baal, Follow This
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Follow This said Exxon’s new voting platform appeared to be another attempt to “suppress the voices of critical investors”, in the aftermath of the oil group’s lawsuit against shareholders in 2024.
“Obviously, the goal is to suppress votes for change as Exxon wants to continue with fossil fuels for as long as possible. This will not go down well with institutional investors who will lose influence as owners of the company,” said Mark van Baal, founder of the Dutch activist investor.
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