ExxonMobil Shareholder Resolutions Nearly Double in 2003
Shareholders have filed 23 shareholder resolutions with ExxonMobil, up sharply from just 12 in 2002. Global warming and separation of the CEO/chair positions are among the major issues addressed in the proxy measures. The resolution filings were announced today by State of Connecticut Treasurer Denise Nappier, well-known shareholder activist Robert A.G. Monks, the Tri-State Coalition for Responsible Investing and Campaign ExxonMobil.
As many as 17 of the 23 resolutions could end up being voted on by shareholders at the ExxonMobil annual meeting on May 28, 2003 in Irving, Texas. This compares to just eight out of 12 filed resolutions voted on last year.
A resolution filed by the State of Connecticut and the Sisters of St. Dominic of Caldwell, N.J. calls on the Board "to prepare a report by September 2003 describing any operating, financial and reputational risks to the company associated with climate change and explaining how the company will mitigate those risks."
"It's penny wise and pound foolish not to take seriously the long-term risks and liabilities as well as the opportunities for companies like ExxonMobil," said Connecticut Treasurer Denise L. Nappier. “Shareholders need a full and complete evaluation of proposed regulatory, legislative and competitive responses to climate change, as well as a plan to mitigate those risks before any damage - financial or otherwise - is done."
"There are countless indicators that climate change poses a real threat to corporations - and the world's citizens," said Sister Pat Daly, president of the Tri-State Coalition for Responsible Investing. "Many other companies - even companies in the fossil fuel industry - are looking towards the future and beginning to develop plans for alternative energy and emissions reductions. We ask that ExxonMobil join the rest of the corporate world in considering how it is that climate change my affect their bottom line, as well as what they can do now to protect their shareholders from those negative consequences."
The resolution filed by Robert Monks, who is publisher of RAGM.com and founder of Institutional Shareholder Services, calls on ExxonMobil to separate the positions of chairman of the board and CEO. Separation of these positions, the resolution states, "will provide greater accountability of management to the shareholders, and provide more independent oversight of management, including the CEO, by the board of directors." The chair and CEO positions are both currently held at ExxonMobil by Lee Raymond.
Commenting on the resolution, Monks said: "There is a particular need for the board of directors of the largest company in the world be chaired by a fully independent person who has the authority, experience and responsibility for preparing a proper agenda and presiding over the meeting. Large corporations need the perspective of an independent board, as well as an operating management. This cannot be accomplished under a single leader."
ExxonMobil faces more than one resolution that addresses the question of the company's lack of a renewable energy strategy. The resolution filed by the Province of St. Joseph of the Capuchin Order and the New York City Firefighters Fund filed a resolution asks "the Board (to) prepare a report by September 2003 explaining how the company will respond to rising regulatory, competitive and public pressure to significantly develop renewable energy resources… [including] full disclosure of the company's plans to meet growing demand for diversified energy sources and explanation of the company's reasoning for not forming such plans."
Campaign ExxonMobil National Coordinator Peter Altman said: "The shareholding community has focused on Exxon's climate position because the company is doing decidedly little to respond to climate change. Currently, the company places absolutely no economic value on climate risk. By doing so, they're placing the company at grave risk by not being prepared for the possible scenarios. While other companies are disclosing to their shareholders and the public a wide array of climate risk mitigation strategies, ExxonMobil is articulating no apparent strategy of its own."
Background On Key Resolutions
- Climate Change Risk. ExxonMobil has long rejected the notion of global
warming, in the face of growing evidence and public support for the theory
that human activity has contributed to changing climate patterns across the
globe. Globally, public policies mandating alternative energy, emissions
reductions and emissions trading are increasing. Former Chase Investment
Bank director Mark Mansley found that ExxonMobil's handling of global
warming exposes the company to unnecessary risks including reputational
risk, litigation risks and risks from sudden policy changes and missed
ExxonMobil's competitors report several of the following strategies to manage climate risk: transparent targets, timetables and reports on emissions and reductions; participation in trading schemes; carbon valuation in project planning; sequestration; and outside auditors to verify some information. ExxonMobil has failed to adequately disclose how it will address the risks and opportunities global warming poses. Additionally, the company provides little detail concerning the challenge of reconciling production growth with stabilized or reduced emissions, and the leaves shareholders virtually in the dark as to how ExxonMobil will protect shareholder value from climate change.
- Renewable Energy. ExxonMobil has rejected renewable energy investment in recent years despite growing worldwide mandates for renewables and despite investments by competitors - it risks higher diversification costs due to delay and risks potential damage to reputation - yet the company has refused to fully disclose to investors its rationale for this decision. All of ExxonMobil's major competitors (ChevronTexaco, BP, Royal Dutch Shell, Total Elf Fina) have investments in renewable energy, while ExxonMobil by its own admission has virtually none. Global requirements for renewables are growing. Several U.S. states require renewables to generate a portion of electricity, including Texas (3 percent) and California (20 percent).
- CEO/Chairman Separation. Corporate governance experts have questioned how
one person serving as both Chairman of the Board and CEO can effectively
monitor and evaluate his or her own performance. The NACD Blue Ribbon
Commission on Directors' Professionalism has recommended that an independent
director should be charged with "organizing the board's evaluation of the
CEO and provide ongoing feedback; chairing executive sessions of the board;
setting the agenda and leading the board in anticipating and responding to
crises." ExxonMobil itself states that one of the Board's responsibilities
is "setting the scope of [the CEO's] authority to manage the company's
business day to day, and evaluating his performance."
The filers believe that this responsibility would be best served if the CEO, whose authority is set and whose performance is evaluated by the Board of Directors, is not a member of that Board. The concern for the Board's ability to independently evaluate the performance of the CEO is particularly compromised if the individual serving as CEO is also the Chairman of the very Board that is charged with evaluating his or her performance. Additionally, the filers that the independence of the Board of Directors would best be ensured if the office of CEO remains independent of the Board, the body that is responsible for overseeing management, and that the position of Chairman of the Board be held by an independent director, a non-employee of ExxonMobil.