ExxonMobil chief says Calpers is neglecting members’ interests in AGM vote

ExxonMobil’s chief executive has accused Calpers, the largest public pension fund in the US, of neglecting its members’ interests by attempting to organise a shareholder revolt that could “stifle and punish” the oil supermajor.

The California fund was playing politics by attacking Exxon for suing two climate-focused investors, Darren Woods wrote in the Financial Times. The investors had submitted shareholder proposals calling on the energy company to do more to cut greenhouse gas emissions.

He alleged that the investors — US investment adviser Arjuna Capital and Dutch shareholder group Follow This — intended to “financially hurt” Exxon with their resolutions on climate action.

Exxon’s lawsuit was not “a challenge to shareholder rights”, but rather an attempt to clarify rules around shareholder proposals, wrote Woods, ahead of a critical shareholder vote at the oil major’s annual meeting on Wednesday.

“Calpers’ fiduciary duty is not furthered by their attack on our company (or any company). They should leave politics to the politicians,” he wrote in an article for the FT Energy Source newsletter.

The high-profile dispute between Exxon and a big investor over shareholder rights follows the company’s decision to persist with its lawsuit in US federal court even after Follow This and Arjuna withdrew their proposals. This has prompted some investors to accuse the oil company of trying to silence shareholders.

Last week Calpers — which owns about 0.2 per cent, or $1bn, of the oil company’s shares — said it would vote against the re-election of Woods and the rest of the Exxon board of directors in protest at their “reckless” legal action to “silence” shareholder voices. It urged other shareholders to follow its position “to send a message that our voices will not be silenced”. 

Since then, Norway’s oil fund has said it would vote against independent director Jay Hooley, who leads Exxon’s governance strategy. The $260bn New York State Common Retirement Fund also plans to vote against the re-election of all but two of the company’s directors.

In a separate opinion article in Energy Source, Marcie Frost, Calpers’ chief executive, alleged Exxon was pursuing an “anti-speech effort” by bypassing established procedures at the Securities and Exchange Commission to deal with shareholder proposals.

“Rather than petition the SEC for relief from votes on those measures, ExxonMobil has asked a US district judge to rewrite the rules,” she wrote.

“The company has sought to further mask its anti-speech effort by insisting it merely seeks court-ordered ‘clarity’ about the SEC’s rules for shareholder proposals. We believe the real intent is to tilt the balance of power towards corporate C-suites and boardrooms.”

Frost said Calpers had a sacred fiduciary duty to do all it could to improve the long-term success of its investments for members. This included holding corporate leaders accountable and engaging in “shareholder democracy” — a way to speak truth to power, she added.

“Calpers plays by the rules of shareholder democracy, no matter who’s in charge in Washington, DC. Why can’t ExxonMobil?” Frost asked.

Arjuna Capital has meanwhile sent a letter to Exxon promising not to file similar shareholder proposals in the future as it seeks to persuade either Exxon to drop its case or the Texas court to dismiss the lawsuit.

The letter said Arjuna expected “that Exxon will now, albeit belatedly, do what justice and a respect for the rights of shareholders require and withdraw its lawsuit”.