ExxonMobil vows further legal action against activists misusing proxy processes

September 18th, 2024

ExxonMobil has defended its legal action against shareholders, pledging to continue doing so to ensure that shareholder resolution processes are used responsibly and without causing harm.

Speaking to the Council of Institutional Investors in New York, Woods warned that Exxon Mobil is prepared to take further legal action if shareholders “abuse” the proxy proposal process again.

The move follows ExxonMobil’s lawsuit against activist investment firms Arjuna Capital and Follow This for submitting a proposal urging the oil giant to accelerate its emissions reduction plans.

In the complaint, ExxonMobil argued that the proposal would “diminish the company’s existing business” and claimed that shareholder proposal and proxy voting processes have become “ripe for abuse by activists.”

The lawsuit was ultimately dismissed by US District Court Judge Mark Pittman, who ruled that ExxonMobil’s claim was moot and dismissed the lawsuit without prejudice.

The legal action faced criticism from some institutional investors, including the California Public Employees’ Retirement System, which argued that ExxonMobil’s actions threatened to weaken shareholder rights and stifle debate.

Despite claims that ExxonMobil had been “unusually aggressive” when handling shareholder activism cases, CEO Darren Woods dismissed such assertions as ExxonMobil was simply following the established rules and processes.

He further defended ExxonMobil’s lawsuit, describing the activist proposals as “trojan horses” that are designed to undermine the company’s business.

He said the misuse of the shareholder resolution process ultimately harmed other investors and the stance was a necessary measure to protect the interests of its broader shareholder base.

He said: “We think the process was being abused to the detriment of the rest of the shareholders.”

Woods added that ExxonMobil is ready to pursue similar actions in the future if proposals do not follow established protocols and regulatory guidance.

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