Asset owners turn to SEC ahead of Exxon AGM
Ahead of Exxon Mobil’s AGM, a group of 39 investors representing more than $5trn in assets have turned to the SEC to voice their concerns about infringements on shareholder rights.
APG, PGGM, CalSTRS, Cardano, USS, and Railpen were among the investors who voiced their concerns about Exxon Mobil’s lawsuit against shareholders, a day ahead of the oil firm’s annual general meeting.
The group of 39 investors issued a joint statement calling on the US Securities and Exchange Commission to remain the preferred arbiter of shareholder proposals in the US.
This comes as Exxon Mobil has taken two shareholders, Follow This and Arjuna Capital, to court to prevent a climate resolution from being heard at its AGM. The usual procedure for US-listed companies wishing to prevent resolutions at their AGM is to file a “no action request” with the Securities and Exchange Commission.
This year, there has been a surge in no action requests. The SEC often favours listed firms, having prevented one other climate resolution from being heard at this year's Exxon AGM.
However, in the case of the Arjuna Capital / Follow This resolution, Exxon did not file a no action request but opted to take both parties to court, a process that could come at a significant cost to the shareholders.
This has been flagged as a key concern among asset owners such as CalPERS and Wespath, who pre-declared that they intend to vote against Exxon’s leadership at the AGM.
CalPERS, which holds approximately $1 billion in Exxon shares, stressed that this objection was primarily rooted in concerns about the future of shareholder rights in the US rather than Exxon’s handling of climate change.
“We believe that it will be to the detriment of long-term investors if the current system of shareholder advocacy in the United States is undermined and an increasing number of companies defer to the court system to settle disagreements on shareholder proposals. It is our view that the SEC is best placed to lead discussions between companies and investors, including on how to improve the proposal process,” the statement read.
Investors also raised concerns about an amicus brief, a written submission by Exxon to the Northern District Court of Texas, describing sustainability-related proposals as ideologically driven and detrimental to financial performance.
“We are concerned that these actions will deter the filing of proposals concerning the sustainability issues that are material to the performance of our equity and fixed income portfolios,” the investors warned.
Exxon Mobil’s AGM is due to be held on 29 May. It will take place digitally only. With no climate resolutions left to file, some of the asset owners in question are now opting to vote against the reappointment of Exxon’s leadership. This position has also been backed by proxy voting adviser Glass Lewis.
Exxon’s major shareholders, which include BlackRock, Vanguard, and State Street, have not pre-disclosed their votes.
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