ExxonMobil CEO: Proxy Activists in Lawsuit Are Not Responsible Shareholders

Darren Woods, speaking at the Council of Institutional Investors’ 2024 Fall Conference, said the architects of a spring shareholder resolution sought to destroy the value of the company.

ExxonMobil CEO Darren Woods told the Council of Institutional Investors’ 2024 Fall Conference on Tuesday that activist investors had abused the shareholder proposal process.

Woods, speaking at the Brooklyn, New York-based conference via Zoom, said during his talk that a group of activist investors which presented a shareholder resolution for Exxon to adopt emission-reduction targets was not seeking to improve the value of the energy company. Woods said the firms involved in the shareholder proposal, including Arjuna Capital LLC, are not responsible shareholders, and their goal was to see the value of ExxonMobil decline.

“The folks that we took litigation against, they’re not true investors in our company,” Woods said. “They are activists, and they’ve got an agenda that they’re trying to advance, and they’re using the shareholder proposal process to advance that agenda. They’ve been very clear that their objective is not to grow the value of ExxonMobil. They’ve talked about their proposals as being Trojan horses and a way to actually shrink the company and drive us out of business.”

ExxonMobil sued Arjuna Capital and investment firm Follow This in January, leading to an unsuccessful April shareholder proposal from Wespath Benefits and Investments and Mercy Investment Services to reject the reelection of Woods and several other members of the company’s board of directors.

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A consortium of institutional investors, including the California Public Employees’ Retirement System and the California Teachers’ Retirement System, supported the shareholder proposal, which was rejected by 95% of voters at the company’s May 29 annual shareholders meeting.

“We strongly disagreed with the course of action by ExxonMobil leaders in response to shareholder proposals they didn’t like, and we hope the issue is settled,” said CalPERS CEO Marcie Frost in a statement to CIO. “CalPERS believes all shareholders have the right to be heard, whether they agree or disagree with the actions of a company’s leaders. We believe that our actions regarding ExxonMobil’s anti-shareholder lawsuit successfully raised awareness about the vital role shareholders play in good corporate governance.”

In June, ExxonMobil’s complaint was dismissed after Arjuna Capital said it would not file the resolution against Exxon again (the complaint against Follow This, a Dutch company, had earlier been dismissed due to jurisdiction issues).

Woods also criticized the Securities and Exchange Commission, saying the regulator had changed its interpretation of the regulation on standing necessary to bring shareholder proposals. He accused the SEC of allowing what he believes to be “social proposals” to go through the shareholder proxy process without the same level of scrutiny as other proposals with less of a social focus.

“We felt, and still continue to feel, that the process was being abused to the detriment of the rest of our shareholders, and we wanted to stand up against that to make the point that we’re very supportive of shareholder proposals,” Woods said. “At the same time, we’re going to insist that the rules are followed for the benefit of all of our shareholders, not a few activists.”

Woods continued to criticize activist funds.

“We’ve seen that the activists use the proxy proposal process as cheap advertising, and it’s become more and more a business model to raise funds on,” Woods continued. “You’ve got activists who are charging fees to submit proposals. You’ve got activists raising funds based on their submitting proposals for a particular agenda. I think this is a system that’s well intended at the foundation, and the philosophy of it I think is sound, but like all things, they can be abused.”

Woods threatened further litigation against future shareholder proposals the company deems noncompliant.

“I would just say: We hope we don’t have to use that action in the future, but if we find that people continue to abuse the process, we’re going to hold them to the rules,” Woods said.

Woods’ panel was cut short following Wi-Fi connectivity issues. One day prior, a group of climate activists had interrupted a panel discussion which included New York City Comptroller Brad Lander, protesting alleged failures of New York City pension funds to divest from fossil fuels. In an email sent to attendees, CII noted a second intrusion took place during the Woods panel but was thwarted.

“During the altercation, which took place at 12:13, one member of CII staff was knocked to the ground as the disrupters attempted to make their way past the registration area. The police and our security personnel blocked their entry to [the] ballroom, and they were removed from the premises. Our staffer was not harmed during the incident,” the email stated.