Exxon Takes Activists To Court Over Emissions Proposal (techcrunch.com) 77
Exxon Mobil has filed a complaint in a Texas court seeking to block a climate proposal by activist investors from a shareholder vote in May. This marks Exxon's first legal action against such a proposal. Exxon argues the proposal, which urges adoption of emissions targets for Exxon's products, does not serve shareholder interests. The activist investors counter that Exxon is the only major oil company lacking these targets. TechCrunch: The problem Exxon faces is that the "basic rules of society," specifically "those embedded in ethical custom," are changing, and the company now finds itself on the wrong side of them. Two-thirds of Americans say we should prioritize alternative energy over fossil fuels, and 69% say the U.S. should move toward net-zero emissions by 2050, according to the Pew Research Center. Internationally, most people want their governments to do something about climate change.
Exxon would normally take its grievances to the SEC, filing a request with the regulator to omit the proposal from this year's proxy statement. But under the Biden administration, the SEC has been siding more frequently with shareholders. After all, who's the boss?
Exxon would normally take its grievances to the SEC, filing a request with the regulator to omit the proposal from this year's proxy statement. But under the Biden administration, the SEC has been siding more frequently with shareholders. After all, who's the boss?
Competitive Advantage (Score:1)
The activist investors counter that Exxon is the only major oil company lacking these [emission] targets
Sounds like this is a source of competitive advantage for Exxon if their competitors have emission targets while Exxon can ignore them and pollute to their hearts content. I don't see how this claims helps the activist's case. If emission targets are in Exxon's best interest it shouldn't matter whether other oil companies are doing it too.
Re:Competitive Advantage (Score:5, Interesting)
No doubt you are correct, but let's say Exxon implemented these emission targets...the net effect would be to cede fossil fuel production fully to BRICS members who are not and will not be bound by such limitations. Since the availability of cheap energy translates directly to national power and prosperity, figuring out the end result should be easy.
There is a dichotomy here - the military and industrial power required to enforce hegemonic will over the world to meet emission targets requires emitting to maintain.
Re:Competitive Advantage (Score:4, Insightful)
Since the availability of cheap energy translates directly to national power and prosperity, figuring out the end result should be easy.
Cheap energy does impact national power and prosperity, but so does R&D and innovation. A better argument than "everyone else is doing it" is that energy companies who are working hard to reduce emissions are going to be the companies who lead the world in even cheaper renewable energy in the future. That is the argument which actually points to something within ExxonMobile's owner's best interests, not "just" the world at large.
Re:Competitive Advantage (Score:5, Informative)
A better argument than "everyone else is doing it" is that energy companies who are working hard to reduce emissions are going to be the companies who lead the world in even cheaper renewable energy in the future. That is the argument which actually points to something within ExxonMobile's owner's best interests, not "just" the world at large.
Investing in renewables for the future does not intrinsically mean curtailing fossil fuel production now. Both can be profitable and a well run company would do both, maximizing profits today as well as planning for tomorrow. Activists seem to think it is an either or.
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I think what you are banking on is that the renewable energy will become cost-competitive with fossilized carbon. Unless you count in externalities like pollution, or fusion generation gets solved, I don't see how this happens. Our geopolitical opponents are not going to count in externalities. They'll worry about that later.
Best case, we'll be forced to march in lockstep with them burning our remaining carbon to remain competitive. Worst case, we lose geopolitically and our fossilized carbon is seized
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> Since the availability of cheap energy translates directly to national power and prosperity, figuring out the end result should be easy.
As an NPC Democrat can you spell this out for me? I think this means the USA is at a disadvantage and the nations unfriendly to the USA will prosper? As a self hating white liberal that wants to see the USA burn and be taken over by China, how is this a problem? I know, it's ironic because China will then use our factories to pollute more than the USA ever did, but
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Since the availability of cheap energy translates directly to national power and prosperity...
Is that why Nigeria, Russia and Indonesia are such wealthy global powerhouses?
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BRICS countries are going to have to deal with climate change, and at least China is making quite remarkable progress (but still not enough) on reducing emissions.
Thing is, if the developed world decides it doesn't want fossil fuels and products made with them, developing nations will follow. They already get a lot of things like cars imported as used, so if we switch to EVs they will too over time. They also export a lot of what they manufacture, so if developed nations have things like taxes on CO2 emissi
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Domestic ICE production is easy enough.
I think you are presuming things that are enforced by a military/industrial hegemony will happen all by themselves in the absence of that. I don't think so.
Re:Competitive Advantage (Score:5, Interesting)
Sounds like this is a source of competitive advantage for Exxon if their competitors have emission targets while Exxon can ignore them and pollute to their hearts content. I don't see how this claims helps the activist's case.
The activists' case is that their proposal should be brought to the annual meeting, like other proposals. Exxon's case is that it shouldn't be brought. I agree with what you say about it being a competitive advantage but I don't think it affects this case; it only would affect this case if there were some meta-rule, such as:
* "only proposals that align with shareholder interests should be brought to a shareholder vote" (which would be wrong because shareholder interest is measured by shareholder vote)
* "only proposals that the board thinks will do well for the company should be brought to a shareholder vote" (which would be wrong because it places the board above the shareholders and is vulnerable to conflict of interests e.g. if the board decide based on what's best for them)
* "only sensible proposals should be brought to shareholder vote" (this is where "competitors do it too" would support that the proposal is a sensible one).
Maybe instead of this case, you were talking about how likely the proposal is to be agreed upon by other shareholders. If other shareholders feel that following industry norms is an important way to future manage risk, then the claim will help the activists' case. If other shareholders feel that maximizing competitive advantage while they can is more important, then the claim will hurt the activists' case. I don't think you can assume one or the other until the proposal has been brought to shareholder vote.
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"only proposals that the board thinks will do well for the company should be brought to a shareholder vote" (which would be wrong because it places the board above the shareholders and is vulnerable to conflict of interests e.g. if the board decide based on what's best for them)
Can't shareholders just replace the board if they believe they are not doing their fiduciary duty? Indeed why have a board at all if shareholders are going to make the business plans on their own?
Re: Competitive Advantage (Score:2)
I vote against the board members every single year.
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Re: Competitive Advantage (Score:2)
Most major funds provide pass-through voting. That's not functionally different than holding a stock directly.
Re: Competitive Advantage (Score:4, Interesting)
Re: Competitive Advantage (Score:4, Insightful)
...in the long run it will probably hurt the company and share holders.
Remember when that used to actually matter to corporate leadership? It seems like getting rid of certain senior management perks like Golden Parachutes would go a long way to helping return us to a time of long-term strategizing.
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...in the long run it will probably hurt the company and share holders.
Remember when that used to actually matter to corporate leadership?
Me neither.
The notion that the C-levels don't care beyond the next quarter (and their bonuses) is far older than I am.
Re:Pretty clear evidence (Score:5, Insightful)
The admission of the SEC stepping in "in favor of shareholders" is pretty clear evidence of a fascistic control over corporations by the feds.
What kind of horseshit is this? A public company is duty bound to its shareholders. This is why they hold votes at AGMs. The fact that the company is complaining now that an item is on the ballot, and that the SEC is aligning with shareholders on such cases is not fascism. What next, are you going to say that it was fascist that Donald Trump had leave the White House simply because there was an election he didn't win? The horrors!
It is wrong headed to try to push the cart ahead of the horse with "green energy initiatives".
There's no cart before the horse here. A shareholder proposal is on the cards and it will be voted on. This is the normal course of business. Being duty bound to shareholders is the normal course of business. If Exxon thought this wasn't in the shareholder's best interest then they have nothing to fear because the shareholders will tell them so in the vote right?
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A public company is duty bound to its shareholders.
Which shareholders?
and that the SEC is aligning with shareholders
Again, which shareholders? At this point, it seems that the SEC needs to recuse itself on this topic.
because the shareholders will tell them so in the vote right?
Have you ever been a shareholder of a company involved in a hostile takeover? Half a dozen phone calls a day from activists is nothing. Wait until the threats start.
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The ones that hold shares with voting rights. This is that difficult of a concept for you?
The SEC needs to recuse itself because it believes that in general shareholders should be able to put up and vote upon shareholder initiatives rather than merely be slaves to executive management?
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Yes, yes. We all know about that time that activists kidnapped your family in order to force you to vote your shares to save the mudskipper.
Fortunately, if you have a problem, if no one else can help, and if you can find them.... maybe you can hire The A-Team.
Nice. (Score:2)
I love it when a plan comes together.
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Which shareholders?
You do understand how an AGM works right? Exxon's shareholders. You don't get to vote on something if you don't have a vested interest in a company as a shareholder. The fact that some shareholders are activists and put something on a ballot is irrelevant. They have as much of a say as anyone else. There's no activists out there that can buy a controlling stake in an oil company.
At this point, it seems that the SEC needs to recuse itself on this topic.
I'm sorry but what in the actual fuck are you on about. This stuff is the SEC's job. It's their reason for existing.
Have you ever been a shareholder of a company involved in a hostile takeover?
Yes I have. A
Re:Pretty clear evidence (Score:5, Insightful)
Too many of the people supporting green energy are anti-human zealots who would love to see an economic collapse (and subsequent die off through war and famine).
"Too many of the people against green energy and deny climate change are anti-human zealots who would love to see an economic collapse (and subsequent die off through war and famine)."
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The thing is, if we don't manage to switch to a less polluting way of powering our stuff, we'll eventually have to pull the emergency brake on the whole deal because we do need a planet that is hospitable to human life for survival.
The planet is the ultimate tragedy of the commons. Since everyone is dependent on it, nobody is responsible for it, everyone uses as much as they can because they know if they don't, someone else will and they will fall behind. The problem is, though, that at some point there won
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Weird, last I checked car companies are for-profit enterprises that would produce what sells, not what makes someone feel good. They ain't exactly known for their charity ambitions.
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Why appease when you can just buy them?
We're still talking about one of the biggest industries that is left in the US after all.
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And just how sad would America be if China, India, Africa got hit really hard by climate change? Even if it also meant Florida got swamped and Texas deserted, the colder northern states might even cheer for a warmer world.
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True, true... but the pressure from people trying to push into the country from Mexico will probably become pretty unbearable pretty soon because their own countries become uninhabitable.
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You mean the ones who come to America because America is hiring them to do stuff? The ones America could easily get rid of by fining the companies that are bribing them to come?
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No, more the kind that Europe has right now, desperate people who spent everything they have to get in or die trying, without any relevant skill whatsoever since goats and the necessity to herd them is rather rarely a high in demand skill in your country.
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So you're saying that global warming is not only taking out potential future economic superpowers, but also the current biggest non-American economic superpower.
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Global warming is a global problem.
I ... wasn't aware that this isn't common knowledge yet?
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What I'm trying to say is, some countries on this map are green. https://www.businessinsider.co... [businessinsider.com]
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So? People are not going to stay where they cannot survive and will try to get to places where they can.
But why "will", it's not like this doesn't already happen.
Shareholder Primacy (Score:1)
This article is written like a gotcha, with "Hang on a minute, aren’t shareholders supposed to be sacrosanct?" by gosh it even references Friedman.
Missing from the article is why a proposal from two activist investors who don't own even 1% of the company should set the direction of the company. I think even Friedman might also say that it takes a majority of shareholders to decide on corporate direction. If they were majority shareholders or there was a shareholder vote on corporate actions, that woul
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"Hang on a minute, aren’t shareholders supposed to be sacrosanct?"
Legally speaking, the board of directors is responsible to the corporation, not the shareholders, though the difference may not always be obvious.
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Legally speaking, the board answers to the chairman, as he is the one who can replace them. The chairman answers to the (major) shareholders, as they are the ones who can replace him.
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Legally speaking, the board answers to the chairman, as he is the one who can replace them. The chairman answers to the (major) shareholders, as they are the ones who can replace him.
Are you sure you aren't generalizing a special case? I don't think removing board members is a power that many chairmen have. In certain companies, the founder, CEO, majority shareholder and chairman of the board may all be the same person. More generally they don't have to be and often aren't. A person who founded a company and retained control, resisting the temptation to sell too much of the ownership or share positions of authority will obviously have almost complete control over all decisions.
Board mem
Re:Shareholder Primacy (Score:5, Informative)
why a proposal from two activist investors who don't own even 1% of the company should set the direction of the company.
You seem to misunderstand something. Some shareholders want the proposal on the ballot. The company management does not. If it's on the ballot, then all shareholders get to decide wether to support it or not. Only if accepted does it set the direction of the company.
Bigger picture (Score:2, Insightful)
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By that reasoning, the activists could name a presidential candidate, claim that only that candidate's policies keep us from being dead, or even just that only that candidate will get us a healthy economy. The company's priority would then have to be electing the presidential candidate.
Short-term, immediate, effects on the company's profit are much harder to fudge than "do this policy or we're dead" or "do this policy or the economy's toast". Especially when you're trying to compare the costs of different
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What the fuck is hard to understand about that. Jesus Christ people read!
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Look how it went with cigarette companies. After a bout of record-setting judgments against them, they took steps to promote cessation,
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The company's priority would then have to be electing the presidential candidate.
Like this?
https://www.opensecrets.org/or... [opensecrets.org]
Not true (Score:2, Insightful)
Making money is not a company's only priority
The only purpose of a company is to maximise shareholder value. First, last, always.
How they go about achieving that goal is why they have "mission statements", "environmental policies", "social impact reports" and all the other PR tinsel.
For example, many large corporations chose to manufacture their products using child labour in off-shore sweat-shops rather than use local labour, as this maximised shareholder value. Only when this behaviour become public knowledge and threaten to reduce shareholder value
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Cancer as a business model (Score:3, Interesting)
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Face it, humanity is a parasite.
But don't worry, it's gonna work out like in the old joke:
Two planets meet.
A: "You look terrible, what's wrong?"
B: "I have homo sapiens"
A: "Ah, yeah, don't you worry. It will pass"
Good for Exxon (Score:2)
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The US doesn't recognize the International Court of Justice.
The US does recognize the International Court of Justice, but it doesn't recognize the International Criminal Court.
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Why are the courts involved? (Score:2)
Does ExxonMobil have rules about shareholder proposals? If so, use them.
Does the SEC have rules about shareholder proposals that would override company-set rules? If so, use them
The activists *might* have a claim that ExxonMobil isn't following its own rules, or the SEC rules, whichever applies.
What doesn't get to happen is that ExxonMobil doesn't like what it has to do according to its own rules, and tries to get the court to override them.
Is shareholder interest a legal principle? (Score:2, Insightful)
Is the idea that shareholder proposals must be in their interest a legal principle? That is, is there either a statute or at least common law precedent that allows a court to rule in this manner?
Furthermore, is there a statute or precedent that allows a judge to overrule shareholder decisions about what is in their best interests by substituting his personal beliefs in place of the personal beliefs of the shareholders? If a judge has this power, imagine the utter chaos that could result. For example, the
Re:Is shareholder interest a legal principle? (Score:5, Informative)
Shareholders are submitting a proposal to be voted on in shareholders meeting.
Exxon does not like proposal and wants to exclude it from shareholders vote.
Exxon typically goes to the SEC to get proposals excluded from shareholders vote but since SEC has sided with shareholders more frequently, SEC may rule against Exxon.
Instead, Exxon argues that SEC allows the company to toss petitions that “deal with matters relating to the company’s ordinary business operations” and is excluding proposal unilaterally.
Exxon is also suing shareholders "in an effort to secure a “declaration” from a judge supporting its move to exclude the proposal."
It is typical corporate stuff. Really nothing to see here other than a double standard: go to the SEC when want favorable ruling, don't go when you won't get a favorable ruling.
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It is typical corporate stuff.
Suing shareholders because they a proposing a ballot inclusion for vote at an AGM is not in any way remotely "typical corporate stuff". Typical corporate stuff is a simple marketing campaign to shareholders to vote no on the ballot initiative. And I say "typical" in the sense of this is what literally every other western oil company has done to similar activist shareholder ballots. Bp and Total went through this in 2022, Shell in 2023.
If something is actually in shareholder interests the shareholders will v
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" For example, the election was won by Candidate 1, but the judge rules that putting Candidate 2 in office is in the best interests of the voters."
You mean like Bush v Gore where, regardless of the actual outcome of the election, the US Supreme Court overstepped its bounds and waded into state law to end the recount and assign a winner?
RICO time! (Score:1)
"After all, who's the boss?" (Score:2)
The consumers are clearly the boss. And they have spoken.
https://www.statista.com/stati... [statista.com]
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Oil demand will do as it will.
I worked for a company that did a lot of Oil drilling and we actually did have emmission targets. Now, that doesn't mean we reduced drilling (And yes, I thought it was incredibly hypocritical to be spouting emmissions reduction while still being in the oil game, but thats another topic) it meant that the process of extracting the oil and refining it have its emissions reduced to as low as nothing as is feasibly possible with the remainder offset via various carbon offset scheme
They left out the real statistics (Score:2, Interesting)
From the Pew Research Center study referred to by the article:
37% of Americans say addressing climate change should be a top priority
52% of respondents say the country should never stop using oil, coal and natural gas
The support for wind and solar has actually gone DOWN over the past seven years, while support for offshore drilling, nuclear, and fracking have gone UP.
https://www.pewresearch.org/sc... [pewresearch.org]
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Are you bad at reading or did you intentionally leave out the context of numbers?
52% of the people who responded "use a mix" to a previous question think that the country should never stop using fossil fuels. The previous question, however, shows that 64% of people responded "use a mix"
52% of 64% is 33.28%. Only 33.28% of the survey respondents think that the country should never stop using fossil fuels.
Re:They left out the real statistics (Score:4, Funny)
Are you bad at reading or did you intentionally leave out the context of numbers?
52% of the people who responded "use a mix" to a previous question think that the country should never stop using fossil fuels. The previous question, however, shows that 64% of people responded "use a mix"
52% of 64% is 33.28%. Only 33.28% of the survey respondents think that the country should never stop using fossil fuels.
Wow you're right! It's actually even worse for you.
Out of the 68% of the population that say "use a mix", 52% say "never stop using fossil fuels", and 47% more say "stop someday, but we aren't ready yet". Either way, it's "drill baby drill" for the foreseeable future. Thanks for pointing it out, much appreciated.
Any other insightful thoughts on the drop in support for renewables over the last 7-8 years?
Buy their shares back (Score:2)
if you don't like what a company is doing. (Score:2)
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Remember that dumping stock has a very limited effect on share prices and such, and doesn't effect their profits at all. Bud Light was a boycott that was surprisingly effective. Not the same thing.
Or you take the opposite tact: Buy voting stocks and do what is happening here: get your desires voted on to ACTUALLY change the course of the company.
Or, to put it another way: If you don't like how California or Texas is being run, rather than moving out, get your desires on the ballet. Either new politici
"Basic rules of society" (Score:2)
I'm very curious as to who establishes these "basic rules of society". I have some proposals of my own. I haven't gotten very far up to now with my "On-demand blowjobs from supermodels for beleaguered husbands" idea, but if the committee setting these "basic rules of society" has enough power I might be able to get it thr
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