May 21, 2024 - Energy & Environment

The widening battle over Exxon's shareholder lawsuit

Illustration of cracking oil barrel with fists and megaphone.

Illustration: Eniola Odetunde/Axios

This week brought the clearest sign that Exxon's lawsuit against climate-focused investors has become a wider showdown over activist shareholders, and their ability to seek big corporate strategy changes.

State of play: CalPERS, the nation's biggest public pension fund, on Monday said it will oppose all Exxon board members and CEO Darren Woods at the company's annual meeting next week.

Why it matters: The fund's public announcement is a high-profile response to Exxon's ongoing case against Arjuna Capital and Follow This over a climate resolution they have since withdrawn.

Friction point: CalPERS said the lawsuit's repercussions could be "devastating."

  • "If ExxonMobil succeeds in silencing voices and upending the rules of shareholder democracy, what other subjects will the leaders of any company make off limits? Worker safety? Excessive executive compensation?" they wrote.

The other side: The oil giant filed suit in January over the resolution that sought far more expansive climate targets. It alleges an "extreme agenda" that would force it to "change the nature of its ordinary business or to go out of business."

  • Exxon has said it's pressing the case because the current SEC process fails to exclude resolutions that would hurt companies, instead of boosting shareholder value.
  • "Far from having a chilling effect on shareholder proposals, our efforts are intended to get clarity on the rules to foster an environment for open and meaningful shareholder dialogue," Exxon said following CalPERS' move.

Catch up quick: Powerful business groups — including the U.S. Chamber of Commerce and the Business Roundtable — joined the lawsuit on Exxon's side in February.

The bottom line: CalPERS move is highly unlikely to upend Exxon's ranks, but the vote tally will help gauge shareholders' views of the case.

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