Wespath’s Schoeppner: why we are calling for a vote against Exxon’s CEO

It has become increasingly tough for investors to raise their climate concerns at AGM’s. Right at the beginning of this year, US oil giant Exxon took two of its shareholders, the campaign group Follow This and Arjuna Capital to court for filing a climate resolution. This treat has prompted the investors to retract their resolution.

Simultaneously, corporates “no action” requests with the SEC also surged from just over a 100 last year to more than 200 to date, as previously reported on Net Zero Investor. Another climate resolution put forward by campaign group As You Sow was successfully challenged by Exxon with a no action request, leaving to climate resolutions to be raised at the upcoming Exxon AGM on 29 May.

Given this impasse, the $26bn Wespath Pensions and Investments and Mercy Investment Services have decided to up the ante by filing a notice exempt solicitation calling on fellow investors to vote against the reappointment of CEO Darren W. Woods and Governance Committee Chair Joseph L. Hooley.

The investors said that this was due to their oversight of the company's hostile treatment of shareholders.

While proxy solicitations have become a popular weapon for activist investors such as Carl Icahn, it is rare for institutions such as pension funds to directly challenge the leadership of a particular company. Using the notice exempt solicitation, the two investors were exempt from the SEC's usual rules on soliciting ahead of AGM's. 

Wespath and Mercy’s initiative appears to resonate with other asset owners. UK pension fund Brunel confirmed last week that they intended to vote against Exxon’s leadership.

The powerful Norwegian sovereign wealth fund NBIM expressed dismay at Exxon’s stance but did not yet disclose its voting intentions, neither did CalPERS, whose CEO has also spoken out against the lawsuit.

Net Zero Investor caught up with Lucas Schoeppner, who co-filed the proxy solicitation to find out more.

What prompted you to file this notice exempt solicitation?

We think Exxon’s recent lawsuit against shareholders represents a potential threat to all shareholders. We believe the shareholder resolution process is an important tool for investors with the objective of advancing changes in policy that will make Exxon a more resilient company, one better positioned for success in the decades to come. The potential chilling effect of the lawsuit that Exxon filed could reduce the rights of shareholders and their ability to promote increased transparency and seek to mitigate financial risk arising from significant issues including climate change.

I noticed you have co-filed this with Mercy Investment Services and your call has since been backed by ICCR, have you had responses from other asset owners / investors on this?

Investors like Robeco have recently predeclared their voting intentions on Exxon stating that they will vote against Exxon’s CEO-chairman for lack of scope 3 targets and because of the shareholder lawsuit, as they stated in their disclosure this week.

As we mention in the solicitation, Nicolai Tangen, the chief executive of Norway’s $1.5 trillion oil fund and owner of 1.4% of Exxon’s stock, also told the Financial Times: “We think it is very aggressive and we are concerned about the implications for shareholder rights.”

Many climate activist resolutions don’t tend to get the backing of a majority of shareholders, what would success look like?

Some shareholder resolutions at Exxon have received a majority vote. But even for those that don’t, if there is a call for disclosure, or a transparency report, supported by a significant minority of shareholders - say 20-30% -- we don’t think it is wise for a company to be ignoring a fourth of their investor base, for example.

How significant is your exposure to Exxon?

As of the end of Q4 2023, Wespath held over USD 50 million in ExxonMobil stock and bonds.

At home, you are facing calls to divest from Exxon. Would that be your escalation strategy?

Right now, we are focused on sending a clear message to Exxon that the SEC shareholder resolution process should be respected.

More on this:

Rebellion brewing ahead of Exxon AGM

Brunel to vote against Exxon's board

SEC no action requests: ordinary business or business as usual?