Exxon Faces Proxy Access Showdown, Again
21 May 2016 - 8:00PM
Dow Jones News
By Joann S. Lublin
A showdown looms Wednesday for Exxon Mobil Corp. over proxy
access, the latest push by investors seeking greater influence at
the board level.
Shareholders at the annual meeting of the world's largest
publicly traded oil company will decide whether they favor giving
investors greater power to propose director candidates. Proxy
access was backed by 49.4% of votes cast last year. The resolution
may pass this year, following a significant shift by Vanguard
Group, Exxon's biggest institutional investor.
A number of major U.S. companies already have opened up their
corporate elections via proxy access, which gives shareholders more
power to oust directors and influence corporate strategy by listing
competing board candidates on official ballots for annual meetings.
About 36% of S&P 500 companies have embraced proxy access, up
from about 1% in 2014, said Institutional Shareholder Services, a
proxy-advisory firm.
Among the big businesses doing so last year were General
Electric Co., AT&T Inc., Apple Inc., Citigroup Inc. and
McDonald's Corp. Companies handing investors the keys to their
boardrooms typically changed corporate bylaws so owners with at
least a 3% stake for at least three years can nominate several
board members.
Exxon remains the only one of the five largest U.S. oil-and-gas
concerns without proxy access.
"This is the most important vote of the 2016 proxy season," said
New York City Comptroller Scott M. Stringer, who oversees $153.8
billion in pension funds. He is leading a campaign that initially
challenged Exxon and 73 other companies to adopt or improve proxy
access this year. Exxon "is the biggest company targeted," Mr.
Stringer said.
Fifty-one of those targets endorsed the idea ahead of their 2016
annual meetings. Shareholders' support averaged 60.2% at the nine
companies whose latest meeting already has occurred. Mr. Stringer
waged a similar proxy-access drive in 2015, assisted by an
influential bloc of public pension funds.
"Many companies that had close calls in their votes last year
ended up adopting some form of proxy access in advance of this
(proxy) season," said Patrick S. McGurn, special counsel for
ISS.
Exxon remains opposed to proxy access. Board members don't see
any meaningful evidence "that proxy access would improve corporate
governance or enhance market capitalization," the company's latest
proxy statement said.
Proxy access instead could increase the influence of
special-interest groups and "undermine a business model that has
long served the interests of our shareholders well," according to
the statement.
Shareholder resolutions rarely garner majority support at Exxon.
Indeed, environmentally minded investors have sought for decades to
use its annual meeting as a bully pulpit, usually with limited
success. They will try again this year with climate-change-related
proposals.
Only one Exxon investor resolution has passed since 2003,
according to Alan T. Jeffers, a company spokesman. The successful
2006 measure urged Exxon to require that board members obtain most
of the vote to get re-elected. Directors soon implemented majority
voting.
Proxy access could win approval this week at Exxon, partly due
to a February policy change by Vanguard, which owned 6.3% of Exxon
shares as of Dec. 31. The mutual-fund firm now favors allowing
proxy access by investors holding as little as 3% of a company's
shares, as stated in the Exxon proposal. Vanguard voted against the
proposal at Exxon last year, when the firm supported a 5%
threshold.
Exxon's Mr. Jeffers declined to comment about how directors
would respond if proxy access gets majority support this week. A
shareholder proposal opposed by board members but blessed by
investors would be reconsidered by the board, Exxon's governance
guidelines state.
Write to Joann S. Lublin at joann.lublin@wsj.com
(END) Dow Jones Newswires
May 21, 2016 05:45 ET (09:45 GMT)
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