XOM Exxon Mobil Corp

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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