Exxon shareholders vote to back the board
Exxon’s shareholders have voted to re-elect all directors, including chairman Darren Woods and lead director Joseph Hooley, despite an investor campaign against their leadership
At the Exxon AGM on 29 May, shareholders of the oil firm voted with an average of 95% to back the 12 nominees in the proxy statement, with support for individual directors ranging from 87% to 98%, Exxon said. This result is marginally lower than last year’s, where directors gained between 91% and 99%, but falls short of the shareholder rebellion many asset owners had called for.
Ahead of the vote, some of the world’s largest asset owners, including Norges Bank Investment Management and CalPERS, had pre-declared that they intended to vote against the board in protest against Exxon’s court case against two shareholders who had taken the oil giant to court. CalPERS CEO Marcie Frost had stressed ahead of the AGM that this was a stance predominantly motivated by Exxon’s infringement on shareholder rights, rather than concerns about Exxon’s position on climate change.
Doubling down
Exxon celebrated the vote as “a powerful message that rules and value-creation matter.”
“We expect the activist crowd will try and claim victory on today’s vote, but common sense should tell you otherwise in light of the large margin of the loss,” the firm said in a statement.
Prior to the AGM, Joseph Hooley, who was one of the targets of the investor campaign, doubled down on his criticisms by directly calling out proxy voting adviser Glass Lewis for recommending a vote against him. Hooley, former CEO of State Street, said that the adviser had a conflict of interest because it counted climate-focused investors as its clients.
While Exxon has not yet disclosed the breakdown of votes, it is required to do so within four business days. Its critics point out that it is highly unusual for an uncontested S&P 500 director to receive less than 90% support.
Yesterday, a group of asset owners representing more than $5 trillion in assets had called on the SEC to act as the primary arbiter in shareholder disputes, in protest against Exxon taking legal action against shareholders. Ultimately, they appeared to hold insufficient shares to sway the vote, while the firm’s largest shareholders, BlackRock, State Street, and Vanguard, did not yet disclose their votes.
Jason Opeña Disterhoft, investor engagement manager at Majority Action, welcomed that asset owners had demonstrated remarkable leadership in holding the board accountable. “Unfortunately, asset managers appear to have undermined that leadership. The reported director vote results suggest that the largest asset managers likely stood with Exxon in its attack on shareholder rights,” he pointed out.
"Today, the largest asset managers showed us which side they’re on. Any asset manager that stood with Exxon endorsed its attacks on the shareholder proposal process, which has done much to grow shareholder value over the years. They will have to answer hard questions from key clients about their misalignment on fundamental questions of corporate governance,” he stressed.
Turning point
But Andrew Behar, CEO of As You Sow, said that he believed the campaign against Exxon’s leadership still marked a turning point. “Exxon’s attack on its own shareholders has catalysed and unified investors to an extent not seen since the Engine No.1 board vote in 2021,” he said.
“Exxon brought this upon themselves by circumventing the SEC process and being unwilling to respond to its shareholder request for the most basic material disclosures. The board reports to us – that is how capitalism works. Today we saw shareholder democracy in action and our hope is that this is just the beginning of shareholders standing shoulder-to-shoulder,” Behar added.
Lindsey Stewart, director of Investment Stewardship Research at Morningstar, said that Exxon’s strong stance should come as no surprise: “Exxon is a company that has a decades-long history of taking pretty strong action to defend itself against what it sees as opposition to the oil and gas business,” he warned. He also acknowledged that investors may need to reconsider their stewardship strategies. “Now might be a good time to start asking, what is the value in having this large volume of pro and anti-ESG shareholder resolutions put forward by organisations which are not necessarily fiduciaries and certainly not ones that boards can see eye to eye with,” he challenged.
He suggested that investment fiduciaries such as pension funds should take more initiative in putting forward the resolutions, rather than leaving smaller campaign groups such as Follow This exposed to potential legal threats.
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