ExxonMobil Proxy Fight Seems Motivated By Too Much Success

In the corporate world, efforts to oust board members by investors are a regular occurrence, to normally be expected when a company is experiencing hard financial times. But in a bit of irony, ExxonMobilExxonMobil CEO Darren Woods and the company’s lead independent director, Joseph Hooley, find themselves under attack from activist investors at a time when the company has achieved record profits, record stock performance, and record market capitalization after the just-completed $60 billion acquisition of Pioneer Natural ResourcesPioneer Natural Resources.

Over the last few weeks, the California pension system (CalPERS), New York State Common Retirement Fund, California and Illinois Treasurers, and their affiliate activist investor networks have ramped up efforts to recruit other shareholders to oppose the re-election of Woods and Hooley to the Board. Reuters reports that CalPERS intends to oppose all 12 Exxon board members, while the publication Pensions & Investments quotes New York officials saying they will oppose all but two.

The complaints by CalPERS, state treasurers, and the activist investors revolve around ExxonMobil’s decision to sue two activist shareholders (Arjuna Capital and Follow This) in January.  Exxon’s complaint contends that initiatives virtually identical to the ones sought by Arjuna and Follow This have been brought repeatedly in prior years and were resoundingly rejected in prior shareholder votes. The company contends that raising them again this year is an obvious waste of time and resources and amounts to little more than harassment. Faced with an SEC-based decision process on contested shareholder proposals that it believes has become a rubber stamp exercise in favor of activist shareholders in recent years, Exxon chose to seek relief in federal court instead.