Exxon Shareholders Seek Board Change, Lobbying Disclosure Votes

(Bloomberg) -- Two of the most proactive petitioners of Exxon Mobil Corp. on its climate record have asked shareholders to vote for changes to the oil supermajor’s board and lobbying policies.

The Church Commissioners for England and the New York State Common Retirement Fund called on Exxon investors to support splitting the chairman and CEO roles, and require the company to disclose its lobbying policies and expenditures. The petitioners also said they’ll be voting against re-election of the entire board.

Support for installing an independent chairman has been growing among Exxon investors: More than 40% voted yes at last year’s meeting, an increase from about 38% in 2018. A simple majority is required to pass such a resolution.

Splitting the chief executive and chairman is a perennial topic at Exxon’s annual gatherings and would represent a tectonic shift in the how the Western Hemisphere’s biggest oil explorer my market value is governed. For decades, a single executive has overseen boardroom deliberations as well as the small coterie of executives that oversees day-to-day operations.

‘Time Has Come’

In an open letter Friday, the church commissioners and the New York retirement group urged investors to use their votes at the company’s May 27 annual meeting because “the time has come for change in the governance and strategy of the corporation.”

Exxon is urging holders to reject the proposals. A spokesman pointed to the company’s proxy filing when in response to a request for comment.

“A combined Chairman and CEO role ensures items of greatest importance for the business are brought to the attention of, and reviewed by, the board in a timely manner,” the company said in its proxy statement. “As new issues arise, market dynamics change, or risk exposures evolve, the Chairman/CEO is best positioned, with deep company knowledge and industry experience, to highlight those issues with the board, ensuring appropriate oversight and discussion.”

Climate Criticism

Exxon also urged a no vote on the lobbying resolution, saying it already makes ample disclosure of its positions and expenditures via its website and through local, state and federal governmental filings.

Exxon has drawn criticism from climate activists and ESG investors for doing too little to minimize it’s impact on global warming, even as European rivals such as BP Plc and Royal Dutch Shell Plc have pledged to make large, long-term reductions in carbon emissions. Just last month, Exxon Chief Executive Officer Darren Woods dismissed those kinds of pledges as nothing more than a “beauty competition” that would do little to arrest climate change.

Even if the open letter galvanizes investor support, Exxon has already escaped a more invasive proposal. Last month, the U.S. Securities & Exchange Commission blocked for a second consecutive year an activist resolution to set strict climate goals. The measure asked if and how Exxon would align its business model with the Paris climate accord, and take responsibility for so-called Scope 3 emissions.

Governance Role

“As the world, Exxon Mobil’s peers, and investors confront the climate emergency, Exxon Mobil is carrying on as if nothing has changed,” Edward Mason, head of responsible investment for the Church Commissioners, said in the letter. ‘’It is crystal clear to us that Exxon Mobil’s inadequate response to climate change constitutes a broad failure of corporate governance and a specific failure of independent directors to oversee management.”

The Church Commissioners and the New York retirement fund lead engagement with Exxon as part of Climate Action 100+, a group of investors pressing the world’s biggest emitters of greenhouse gases to change their ways.

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