Exxon CEO Warns Activist Shareholders

By Ross Kerber and Svea Herbst-Bayliss

NEW YORK (Reuters) – Exxon CEO Darren Woods warned activist shareholders against mimicking those who proposed a climate-related resolution at Exxon, the largest U.S. oil company.

Woods indicated that Exxon is prepared to take legal action against investors he believes might “abuse” the proxy proposal process. He remarked, “We hope we don’t have to use that action in the future. But if we find people continue to abuse the process, we’re going to hold them to the rules.”

Speaking via video link at the Council of Institutional Investors meeting in New York, which represents pension funds and other institutional investors, he reflected on Exxon’s previous legal actions against activist investors.

Earlier this year, Exxon sued Follow This and Arjuna Capital for filing a climate-related resolution for the company’s annual meeting in May. Although a judge dismissed the lawsuit in June, the defendants withdrew their proposal and agreed not to resubmit similar resolutions.

Woods defended the need for a fair process, saying, “We are not opposed to the shareholder proposal process… but we will insist it is used appropriately.” However, he acknowledged concerns that the proxy system could be exploited under current regulations.

Despite skepticism from some fund managers, Exxon directors, including Woods, were re-elected with votes from large investors like BlackRock and Vanguard. Critics, including Marcie Frost, CEO of the California Public Employees’ Retirement System, emphasized the importance of all shareholders being heard.

Attorney Sanford Lewis noted that Exxon’s lawsuit might deter small shareholders from filing resolutions in the future, while Jessica Wirth Strine observed a more conciliatory tone from Woods compared to the annual meeting.

Woods also discussed Exxon’s climate strategy, stating that the focus should be on reducing carbon emissions rather than eliminating oil and gas. He suggested the establishment of a carbon accounting system could make a significant impact.

Amid tensions, eight protesters were prevented from entering the event, leading to a scuffle with security personnel. Fortunately, no injuries were reported.

Summary

Exxon CEO Darren Woods warned activist shareholders against misuse of proxy proposals, emphasizing legal readiness and the need to balance emissions concerns with economic growth.