Exxon faced a revolt by ESG-oriented shareholder activists at its most recent annual shareholder meeting. As the meeting turned out, however, it was a clean sweep for Exxon. Despite activist opposition to reelecting two board members--chief executive Darren Woods and lead independent director Jay Hooley--all 12 of Exxon's board members were reelected. All directors got at least 87% of the vote.
ESG activists also put several proposals on the proxy statement. One requested that executive pay to emission reductions. Three requested reports by the board on, respectively, gender and racial pay gaps, the future of Exxon's plastic business, and the social impact of energy transition. All four lost.
Exxon CEO Woods reportedly stated that:
“Today, our investors sent a powerful message that rules and value-creation matter… we expect the activist crowd will try and claim victory on today’s vote, but common sense should tell you otherwise in light of the large margin of the loss."
I was particularly interested in this meeting, as I recently had an op-ed appear in the OC Register and its sister papers, CalPERS Continues to Play Politics Despite Poor Performance, attacking CalPERS announced it intended to support the ESG proposals.
Exxon’s recent track record suggests that it is focused on short and long term returns for their shareholders. In fact, Exxon earned a record profit $7.6 billion in 2022 and also posted strong performance in 2023, allowing the company to pay their investors nearly $15 billion in dividends in 2023 alone.
Unfortunately, California’s public workers are not as lucky as those invested directly in Exxon. CalPERS regularly succumbs to political pressure and has consistently bad performance. From mid-2022 to mid-2023, a report from the Pacific Legal Institute noted that CalPERS only achieved a 5.8 percent return on their investments versus the 17.6 percent return earned by investors in the S&P 500. This poor performance followed what CalPER’s investment chief dubbed as a “lost decade” for failing to invest in private equity and trailing peer pension funds in almost every asset class.
