ExxonMobil is suing two activist investor groups in a Texas district court, aiming to block their climate proposals from going to a vote at the annual shareholder meeting later this year in the first such direct complaint to court instead of to the SEC.
Exxon filed late on Sunday a lawsuit at the U.S. District Court for the Northern District of Texas against U.S. activist investor Arjuna Capital and shareholder activist group Follow This. Those two investors have filed a proposal for Exxon’s shareholders to vote at the annual general meeting on May 29 to have Exxon commit to further emissions reductions, including Scope 3 – emissions from the product it sells.
Exxon is seeking for the first time a judgment from the court to exclude a proposal for an upcoming shareholders’ vote. Previously, the supermajor, and other publicly traded firms, have sought SEC advice on the merits of proposals to be included in the proxy statement for the shareholders meeting.
Arguing its case in the Texas district court, Exxon says that “Defendants are asking Exxon Mobil to change its day-to-day business by altering the mix of—or even eliminating—certain of the products that it sells,” as carried in The Wall Street Journal.
The goal of Arjuna Capital and Follow This is “to force Exxon Mobil to change the nature of its ordinary business or to go out of business entirely,” the supermajor says.
Exxon also argues that the two activist investors have “become shareholders solely to campaign for change through shareholder proposals that are calculated to diminish the company’s existing business.”
These investors “are aided in their efforts by a flawed shareholder proposal and proxy voting process that does not serve investors’ interests and has become ripe for abuse.”
Exxon also says in the complaint that under SEC rules, a firm can exclude a proposal from shareholder vote if it is basically the same as previous proposals of the past five years and doesn’t meet the criteria to be resubmitted.
Last year, a proposal to establish a Scope 3 emissions target and reduce hydrocarbon sales was rejected by Exxon’s shareholders with 89.5% votes against and 10.5% votes in favor. The threshold for resubmitting the proposal is 15% of votes in favor.
Oilprice.com
