US shareholder groups have requested the US securities regulator reverse its approval of ExxonMobil’s bid to allow retail votes at AGMs on grounds it would give management a permanent majority.
As You Sow and the Interfaith Center for Corporate Responsibility (ICCR) filed a request with the US Securities and Exchange Commission (SEC) to rescind its backing for a ‘retail voting program’ proposed by the oil and gas giant. The scheme would allow retail investors to vote on the side of management on all shareholder resolutions at future meetings, unless or until shareholders exercise an opt-out.
“Currently retail voters hold roughly 40% of Exxon shares and nearly 75% of those shareholders currently do not vote. A standing proxy in favour of management therefore significantly increases the odds of a perpetual management advantage. This goal is underscored by the fact that Exxon fails to make available an equivalent standing vote against management,” said Andrew Behar, CEO of As You Sow.
The two groups claim that the proposal contravenes existing rules preventing the right to vote on a shareholder’s behalf for more than a single AGM. Last year, Exxon took legal action against two minority shareholders after they brought a proposal asking the firm to set medium-term decarbonisation targets. A number of major shareholders, including US pension scheme Calpers, protested the move by voting against directors at its 2024 shareholder meeting.
ExxonMobil have characterised the programme as giving retail shareholders more influence, similar to voter choice initiatives launched recently by asset managers Vanguard and BlackRock, as well as As You Sow’s own ‘As You Vote’ offering. These services typically offer retail and institutional investors a range of voting options, including policy templates to be exercised across their portfolio holdings in line with their broad priorities and preferences.
Exxon described its plan as an important step forward for American shareholder democracy”.
“Under Exxon’s proposed programme, retail investors would relinquish their rights to evaluate company performance annually and cast their votes accordingly, thereby potentially granting management carte blanche on critical governance issues such as contested board contests, CEO pay votes, and other matters. The Exxon scheme assumes that investors prefer to be passive when what is clearly needed to ensure successful companies are more engaged, active investors.” said Josh Zinner, CEO of ICCR.
