Exxon Faces a Proxy-Access Vote -- WSJ
May 23 2016 - 3:03AM
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 this week's 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."
Fifty-one of those targets endorsed the idea ahead of their 2016
annual meetings. Proxy access gained majority support at six of the
10 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 favored 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 23, 2016 02:48 ET (06:48 GMT)
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