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.
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.
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.
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.
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.
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
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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