Activists Use Shareholder Rights To Undermine Shareholders' Interests

Core Viewpoint - Activist investors, led by CalPERS, are opposing the re-election of ExxonMobil's CEO Darren Woods due to his pursuit of clarity on previously rejected shareholder proposals regarding greenhouse gas emissions [1][7] Group 1: Shareholder Proposals - ESG activist investors Arjuna Capital and Follow This attempted to resubmit a proposal for stricter greenhouse gas emission targets, which includes Scope 1, Scope 2, and Scope 3 emissions [1] - The proposal has been rejected by shareholders multiple times, indicating a lack of support for its implementation [3][7] - Resubmitting rejected proposals raises concerns about pushing a political agenda rather than focusing on financial impacts [4][5] Group 2: Financial Implications - The costs associated with carbon accounting reports can exceed $1 million annually, which would financially burden the company without guaranteeing actual emission reductions [2] - Accepting the proposal could lead to a focus on lower emissions at the expense of fundamental efficiency, negatively impacting financial performance [3] - The SEC notes that a single shareholder proposal can cost a company up to $150,000, which shareholders ultimately bear [4] Group 3: Corporate Governance and Legal Actions - The ongoing litigation by ExxonMobil aims to block the inclusion of the shareholder motion, highlighting the need for clarity on material issues [5][6] - CalPERS' opposition to the CEO's renomination is seen as prioritizing social policy over sound management principles, conflicting with fiduciary responsibilities [7] - The SEC's shift in policy allows more social issues to be raised at shareholder meetings, which could undermine the efficiency of capital markets and investor choices [8]