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May 14, 2009
Activist Shareowners Take to the Web to Challenge ExxonMobil
by Robert Kropp
Web site assists investors in contacting mutual funds to express support for shareowner resolutions
addressing climate change and corporate governance.
SocialFunds.com --
During a 2008 press conference in New York City, Neva Rockefeller Goodwin, an economist and
great-granddaughter of John D. Rockefeller, said of her family's relationship with the oil giant
ExxonMobil, "As the oldest continuous shareholders of the Exxon Mobil corporation, we almost define
the long-term investors." John D. Rockefeller founded Standard Oil, which much later became
ExxonMobil, in the nineteenth century.
While Goodwin and other investors acknowledge that
the management of ExxonMobil has been successful in the planning and implementation of projects
that have led to conspicuous profitability, they have expressed concerns that the insular corporate
culture at the company has resulted in a refusal by CEO Rex Tillerson and other management to
engage with activist shareowners over such critical long-term issues as climate change and board
independence.
As a result, Goodwin, along with Robert A.G. Monks, a shareowner activist
and advisor on issues of corporate governance, have been instrumental in the formation of a web
site named ExxonMutualFundShares.org, where investors in the
25 largest mutual fund families in the US can send messages to those mutual funds, expressing
support for four shareowner proposals scheduled for votes at the company's proxy meeting on May
29th.
The mutual fund companies targeted by the web site include the three largest: the
Vanguard Group, American Funds Investment, and Fidelity Investments.
One of the shareowner
resolutions, written by Sister Patricia Daly of the Caldwell Dominican Sisters, asks the company to
set a firm date for reporting on its progress to reduce greenhouse gas (GHG) emissions. Arguing
that shareowners' "repeated request for emission reduction goals reiterates ExxonMobil’s own
Environmental Business Planning process," the resolution further states that "ExxonMobil has not
adequately assessed or disclosed the financial effects of climate regulation or industry-changing
technologies."
ExxonMobil’s Board of Directors recommended that shareowners vote against
the proposal, arguing in its proxy
statement that it "does not believe that setting absolute goals to reduce emissions from
operations and product use is the most effective way to manage climate risks."
A second
resolution, filed by Ms. Goodwin, asks that ExxonMobil establish a task force to report on the
consequences of climate change for developing nations, as well as for poor communities in both
those nations and developed nations. The resolution cites studies by the Intergovernmental Panel on Climate Change (IPCC) and others, that
predict severe costs to the economies of the poorest countries if climate change is not adequately
addressed.
Arguing that it "does not believe an additional report is warranted," the
ExxonMobil Board recommended that shareowners vote against the proposal.
A third
resolution asks that ExxonMobil adopt a policy for renewable energy research, development and
sourcing, and report to investors on the progress of its policy in 2010. Filed by Stephen
Viederman, a writer and shareowner activist, the resolution states that "no policy statement on
renewable energy research, renewable energy development, or renewable energy sourcing, can be found
on ExxonMobil's web site." Instead, the company projects that the demand for oil and gas will
increase until 2030.
2009 marks the second year that the renewable energy policy has been
presented to shareowners for a proxy vote. In 2008, 27.5% of shareowners voted in favor of the
resolution.
Again, the ExxonMobil Board argued against passage of the resolution, stating
that "oil and natural gas demand is expected to grow and remain close to 60% of global energy
supplies. This reflects their abundance, availability, and affordability to meet consumer needs, as
well as environmental advantages versus coal, the most carbon-intensive energy source."
The fourth proxy item, sponsored by Mr. Monks, calls for the creation of an independent board
chair. On a web site created by Mr. Monks
to publicize the issue, he wrote, "Separating the CEO and Chairman of the Board positions will
enable the CEO to focus on delivering positive results to shareholders while empowering the
Chairman and the Board to objectively analyze the long term challenges and opportunities facing the
Company." Currently, Mr. Tillerman occupies both positions at ExxonMobil.
The resolution
calling for an independent board chair has won 40% of shareowner votes in the past two years. This
year, the resolution has been changed from nonbinding to a binding by-law change proposal.
Explaining the change on the ExxonMutualFundShares.org web site, Mr. Monks wrote, "Do the owners of
Exxon want a real—in the sense of commitment and capacity to perform statutory duties—board of
directors?"
In its response, ExxonMobil stated, "The Board believes that the most
effective leadership structure for ExxonMobil at the present time is for Mr. Tillerson to serve as
both Chairman and CEO."
The ExxonMutualFundShares.org web site provides check-off boxes
where investors can identify the mutual funds companies in which their investments have been made.
It also provides the text of a letter to be transmitted to the companies addressed by investors.
The letter states in part, "We have seen all too much evidence in recent months about how even the
biggest, the most powerful and the best-known banking, insurance, auto and securities firm can be
brought to their knees by failing to take the steps needed to address management weaknesses and
risks that they mistakenly thought that they could ignore."
The sponsors of the web site
plan to issue an update in advance of the May 29th proxy vote to report on the number of investors
who have used the website, as well as any public statements made about the resolutions by the
targeted mutual fund companies.
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SRI World Group, Inc. All Rights Reserved.
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