Exxon pursues lawsuit despite activist investor climb-down
(Reuters) - Exxon Mobil said Friday it will continue to pursue a lawsuit against two activist investors even after they withdrew a shareholder proposal on climate change, setting up a clash over what constitutes legitimate debate between a public company and its owners.
Exxon XOM.N had taken the rare step in January of filing the lawsuit to block the shareholder measure from being voted on at its annual meeting.
In response, activist investors Arjuna Capital and Follow This said Friday that they had withdrawn the proposal, which called on Exxon to reduce its emissions.
But Exxon said it would continue with the suit, which questions the motivations of the investors and notes the rising number of resolutions being filed for corporate ballots.
“We believe there are still important issues for the court to resolve. There is no change to our plans, the suit is continuing,” Exxon said in an emailed statement.
In addition to seeking approval to skip a vote on the resolution, Exxon had sought attorneys’ fees and expenses and that the court enter “other and further relief as the Court may deem just and proper.”
Exxon’s unusual legal action has been closely watched by investor activists worried the move could lead other companies to block shareholder resolutions in court, rather than through the usual process of appealing to regulators.
The case was assigned to a judge with a track record of ruling in favour of conservative causes and could set a precedent for similar investors’ claims.
Natasha Lamb, chief investment officer of Massachusetts-based Arjuna Capital, said via email that “there is no basis for Exxon to continue this attack” once the proposal was pulled back.
“This amounts to tactics of intimidation and bullying” to silence investors, she said.
Mark van Baal, founder of Amsterdam-based Follow This, said it had promised not to refile the proposal with Exxon, so the company “has no reason to continue
the lawsuit.”
Their investor proposal had called for Exxon to set targets to reduce emissions, including those produced by the burning of its products, known as Scope 3 emissions. Exxon is the only one of the five Western oil majors which does not have such targets.
Exxon has said Arjuna and Follow This were driven by an “extreme agenda” and that their proposals do not serve investors’ interests. The company has had rocky relations with investors at times, including in 2021 when three directors were replaced in a shareholder campaign.
Shareholder resolutions calling on companies to take steps on environmental, social and corporate-governance (ESG) issues have drawn increasing attention at corporate annual meetings as investors pay more attention to climate change and workforce diversity.
Top U.S. fund firms, however, have cooled their support for many of the resolutions, amid pressure from conservative politicians who say the ideas can distract companies from their main duty to earn profits.
Traditionally at this time of year companies appeal to the U.S. Securities and Exchange Commission (SEC) for permission to leave scores of resolutions off their ballots. Various business groups had argued the SEC was allowing too many resolutions to go to a vote, and Exxon had argued that the agency’s current application of its rules was not serving investors’ interests.
Exxon, however, has also said it supported the resolutions process broadly and was in talks with the proponents of other shareholder measures. Agency disclosures show Exxon has filed traditional appeals with the SEC to skip votes on subjects including plastics pollution and climate-related asset sales.