Holy Moley! Exxon’s Suit Vs. Former Proponents, Followed By A Three-Page Screed In Their Proxy Statement, Draws Anger – And Two Exempt Solicitations As The AGM Ramps Up. Who’ll Stop The Madness Here?

Initially, we were sort of on board with the lawsuits Exxon filed against two shareholder proponents to ‘teach them a lesson’ to be more thoughtful about filing shareholder proposals.

And yes, we are very much in sympathy with the idea that there are way too many shareholder proposals these days that have little chance of passing and that will not make any material difference in the day-to- day success of the company.

But when EXXON failed to withdraw the lawsuits after the proponents withdrew their resolutions, we thought “Whoa! This is going too far for anyone’s good.”

And THEN… in the 2024 Proxy Statement, came a scorching three-page screed against shareholder proposals in general, that seemed to us “intemperate” at best – misleading, and flat-out wrong in several respects. The call-out quote, in a prominent box: “The recent surge in ESG-related proposals adds unnecessary pressure on corporate boards, wastes corporate resources, and hinders informed decision making by retail investors, who must spend valuable time reading and evaluating these proposals.” - ESG Working Group, House Committee on Financial Services - seemed to be the ‘judgment of the Working Group’. Instead, this was almost word for word, Jim Jordan’s standard stump-speech on the supposed evils of proxy advisors.

As to the assertions that shareholder proposals had caused the company to incur “Total estimated cost to the Company Up to $21,000,000 in direct costs** ** Based on SEC estimates of up to $150,000 per proposal”. These were not the estimates of the SEC, and they have no factual basis behind them whatsoever that we can find. But if indeed there are companies that spend this kind of money, they have only themselves to blame. As we wrote to the SEC re: the costs of proxy solicitation, companies are fully in charge of the costs here - and actually might fare a lot better if, instead of protesting way too much, they’d simply print proposals as submitted and answer with a few brief sentences to say that in the opinion of the board, they would add nothing of value to what they are already doing. Was this intemperate language vetted and approved by the entire board, we wondered? Have they forgotten the lessons they should have learned two Meetings ago from Engine Number One, which replaced three board members, and where Exxon subsequently, and rightly touted major steps forward in terms of corporate governance? Didn’t anyone realize that posting this in their Proxy Statement was guaranteed to generate even more hostility when a bit of peacemaking on all sides would have been the smarter thing to do?

Within days, two prominent investors, Westpath Investors and Mercy Investment Services filed an Exempt Solicitation with the SEC – to solicit votes against Exxon’s Chairman – and its Independent Lead Director and, ouch, also the Governance Chair. A few days later ICCR posted an Open Letter to the Exxon Board and filed for an Exempt Solicitation of its own, presumably to do the same.

It’s time for Exxon Mobil to hit the re-set button for sure, we say. Let’s ALL go back to being ‘the grownups in the room’ and work towards fostering a civil discourse that reflects respect – and not disdain – for shareholders who are acting in good faith, as they have a right to do.

But activists, please re-think your strategies - and count to one hundred before filing Proposals with so few real benefits to companies and their shareholders, as most calls for additional reports, and for expensive new cost-benefit studies that are often false-fronts for what Anti-Good Governance actions really are.

Lastly, as faithful proxy voters and close observers of the voting scene, we are absolutely convinced that one of the major factors that is causing fewer and fewer retail investors to vote their proxies is the big rise in the number - and the lack of  usefulness - of shareholder proposals on the ballot – so SEC, please take note too.

Another Holy-Moley Moment – Tesla Directors Ask Shareholders To Approve Musk’s 2023 Pay-Plan After A Delaware Court Rejects It!

We are betting that shareholders will reject the plan, where, as more than one analyst noted, the stock, its earnings and its operating margins are at the lowest levels in years and Tesla is laying off people like mad. But if it should be approved, it’s back to court, we’d bet.