Showdown in Dallas: ExxonMobil faces shareholder revolt

Showdown in Dallas: ExxonMobil faces shareholder revolt
By Rob Lever AFP - Monday, May 26 12:34 am

WASHINGTON (AFP) - It is the biggest American company with the fattest profits. But ExxonMobil faces an uprising from shareholders claiming the oil titan is failing to live up to its responsibility as a corporate citizen.

A showdown looms at the company's annual shareholders meeting Wednesday in Dallas, Texas, with a series of proposals aimed at changing ExxonMobil's corporate structure and pushing the company toward more environmentally friendly energy sources.

While activist shareholder resolutions are not uncommon, the move at ExxonMobil is unusual in that it has support from major institutional investors as well as the storied Rockefeller family, whose ancestor John D. Rockefeller created Standard Oil, the main forerunner of the current company.

A majority of Rockefeller family members announced in April they supported a shareholder drive to require an independent chairman at the Irving, Texas-based firm.

ExxonMobil chief executive Rex Tillerson currently serves as the chairman of the company's board, despite a movement among some firms to separate the jobs.

The Rockefeller family members also are backing resolutions urging ExxonMobil to look beyond its current focus on oil and gas to "more effectively" address a rapidly evolving energy industry, particularly renewables and alternative fuels.

The shareholder rebellion has been joined by at least 19 institutional investors, including some of ExxonMobil's largest stakeholders, who will press for resolutions to address climate change and to separate the jobs of chairman and CEO.

That investor coalition, with over 91 million shares of ExxonMobil, includes the California Public Employees's Retirement System (CalPERS), California State Teachers's Retirement System (CalSTRS), and state-operated pension funds from New York, Connecticut, Maine and Vermont, along with labor pension trustees and others.

"ExxonMobil's go-slow approach in addressing greenhouse gas reductions and investments in renewable energy sources places long-term shareholder value at risk," said California state Treasurer Bill Lockyer, who serves on the board at CalPERS and CalSTRS.

"Instead of dragging its feet, ExxonMobil should be taking the lead in providing long-term climate solutions."

"ExxonMobil has long evinced a culture of defiance and indifference to many important concerns of long-term shareholders," said New York City Comptroller William Thompson.

"The company can take the first step to reforming itself by separating the positions of CEO and chairman of the board. Absent this reform, the board will continue to follow rather than lead, and shareholders will continue to be frustrated by their unresponsiveness to their important concerns."

Much of the movement is coordinated by a group called Ceres, a national network of investors, environmental organizations and public interest groups that pressed companies to address issues related to sustainability.

Some resolutions meanwhile are being sponsored by Robert Monks, a Maine lawyer who is active in shareholder issues. Monks says it is likely that a majority will support the effort to split the job of chairman and CEO, which would follow similar moves by British based BP and Anglo-Dutch Shell.

"The current Exxon board is full of capable and smart people, and we as shareholders would like to see them take more leadership," Monks said.

With an independent chair, "the board can thoroughly analyze changing trends without being encumbered by the preferences and old experiences of the current management ... and craft a course of action that will keep our company in a position of leadership in the energy business," he said.

Henry Hu, a corporate governance scholar at the University of Texas, said the notion of splitting the top jobs has gained momentum in recent years amid fears of an "imperial CEO" but that it does not make sense for all firms.

Creating a non-executive chairman in some cases may lead to a person "who has a managerial role and may not have a full base" of information, Hu said.

Although activists have been around for years, Hu argued that "the core objective of a publicly held company is maximizing shareholder welfare" or profits.

ExxonMobil could not be reached for comment on the proposals. But in its annual "corporate citizenship report" Wednesday, it said it has "improved its environmental, economic and social performance while continuing to supply energy necessary for economic growth and improved living standards."

ExxonMobil's first-quarter profit rose 17 percent from a year ago to a record 10.89 billion dollars.

Its 2007 profit of 40.6 billion dollars was the largest US corporate annual profit in history, but sparked criticism that it was benefiting from troubles of consumers seeing record energy prices. Industry leaders say oil profits are in line with other industries given the massive investment required.