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April 04, 2002

SEC Requires ExxonMobil to Include Shareowner Resolutions on Proxy
    by William Baue

The SEC denied ExxonMobil’s request to omit three shareowner resolutions from its proxy, but allowed it to omit two other proposals.

SocialFunds.com -- U.S. Securities and Exchange Commission regulations allow a company to petition the SEC to exclude a shareowner resolution from its proxy statement by citing specific rules that the resolution breaches. However, the SEC can also require the company to include the resolution on its proxy, confirming that the resolution complies with SEC regulations. Every shareowner of a company has an opportunity to vote on resolutions on its proxy statement before its annual meeting. Resolutions that receive support from a large number of shareowners can lead to changes in company policy.

Recently, the SEC required ExxonMobil (XOM) to include shareowner resolutions concerning executive compensation, renewable energy, and human rights on its proxy. The SEC allowed ExxonMobil to exclude resolutions on board diversity and splitting the job functions of the CEO and Chairman. The SEC has yet to announce its decision on resolutions dealing with the Arctic National Wildlife Refuge and sexual orientation discrimination.

One resolution that passed the SEC’s review calls on the oil company to adopt renewable energy sources in its energy mix, which is now heavily concentrated in fossil fuels. The resolution cites evidence linking the burning of fossil fuels to global warming, a conclusion widely accepted in the scientific community but actively denied by ExxonMobil.

“Rather than address concerns about ExxonMobil’s environmental accountability directly, ExxonMobil chose to go to the SEC to try to cut off debate,” said Reverend Michael Crosby of the Province of St. Joseph of the Capuchin Order, the primary shareowner filer of a resolution on renewable energy. “This company simply refuses to address these issues head on in a responsible manner.”

Last month, in an interview with the Financial Times, ExxonMobil CEO and Chairman Lee Raymond dismissed the value of renewable energy. In the early 1980s, Exxon spent $500 million researching solar, wind and battery power, and concluded that none of these energy sources warranted further investment.

“We’ve been there, done that,” said Mr. Raymond.

Sister Patricia A. Daly of the Dominican Sisters of Caldwell, New Jersey, which filed a resolution linking executive compensation to environmental and social performance, illustrated her opinion of Mr. Raymond’s stance through analogy.

“Who can imagine a company rejecting computers because they looked unattractive the last time they looked­ twenty years ago?” said Sister Daly.

The executive compensation resolution specifically accused ExxonMobil of deception regarding global warming.

“We believe that ExxonMobil has misinformed shareholders about global warming with inaccurate statements and unreliable information,” stated the resolution.

The SEC ruled that this statement, as well as one other, should be deleted from the proposal, as it “may be materially false or misleading.” However, the commission rejected ExxonMobil’s claim that the entire proposal could be omitted for this reason, and it also disagreed with the company’s claim that it had already substantially implemented the proposal.

The SEC had only one amendment to the third shareowner resolution that will appear on ExxonMobil’s proxy, which was filed by Amnesty International and involved human rights. The words “we believe” must appear before the resolution’s statement that the company does not possess a comprehensive human rights policy.

News Brief (April 10, 2002):

ExxonMobil must retain two more shareowner resolutions on its 2002 proxy in accordance with recent rulings by the Securities and Exchange Commission (SEC). One of the resolutions asks the company to refrain from drilling for oil in the Arctic National Wildlife Refuge (ANWR), and the other asks the company to explicitly prohibit sexual orientation discrimination in its equal employment opportunity policy. Of the seven shareowner resolutions that ExxonMobil contested, the SEC upheld five resolutions as meriting inclusion on the proxy, while allowing the company to omit two proposals.

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