Article
4 min read
• Feb. 29, 2024
Key takeaways:
- The intent of our lawsuit is simple – we want clarity on a process that has become ripe for abuse.
- The current process to get proxy proposals excluded is flawed.
- We believe activists with minimal or even no shares should not be permitted to re-submit proposals that do not grow long-term shareholder value.
Article
4 min read
• Feb. 29, 2024
ExxonMobil filed a lawsuit on Jan. 22, 2024, to exclude Arjuna Capital and Follow This’s shareholder proposal from our 2024 proxy statement. In each of the past two years, our shareholders overwhelmingly rejected proposals with substantially the same subject matter. This Arjuna Capital / Follow This proposal was simply another resubmission. Repeatedly submitting proposals that investors overwhelming reject is not in the interests of investors or a working shareholder proposal system. We have a responsibility to call attention to the misuse of proposals by professional activist groups who have publicly stated they do not care about growing shareholder value while they pursue their own agendas. We hope to continue the dialogue on these issues. The modified bulletin permits the SEC to deny no-action relief for companies facing activist proposals. This action immediately results in a decrease in no-action relief, while the number of proposals submitted continues to increase – SEC Commissioner Mark Uyeda has noted this action. Staff Legal Bulletin 14L points to a Follow This proposal to ConocoPhillips seeking emission-reduction targets as the prime example of proposals that would no longer receive no-action relief on Ordinary Business. The SEC denied no-action relief to ConocoPhillips on the proposal, which is the predecessor to the proposals we received from Arjuna Capital and Follow This for the 2022, 2023 and 2024 proxy seasons. The above examples show that before the rules came out, the standard had already been changed. We believe the increase in the number of proposals each year – coupled with the decrease in votes in favor of these proposals plus far fewer no-action requests being submitted in a system that no longer honors them – show a system that’s not serving the best interests of investors. To be clear, we support the rights of shareholders to submit proposals, but these rights are increasingly being infringed by activists masquerading as shareholders. The SEC has rules in place to stop this approach, and our lawsuit simply calls for the proxy rules be enforced as they were written. We believe all investors have a vested interested in clear interpretations, regardless of viewpoint. Related articles:Shareholder proposal lawsuit overview – Understanding the facts
2024 Shareholder proposal lawsuit: Timeline
1. The Ordinary Business exclusion;
2. The Relevance exclusion;
3. The Substantial Implementation exclusion; and
4. To repeal Staff Legal Bulletins 14I, 14J and 14K
1. The Ordinary Business exclusion;
2. The Relevance exclusion; and
3. The Substantial Implementation exclusion
1. The Ordinary Business exclusion;
2. The Relevance exclusion;
3. The Substantial Implementation exclusion (indirectly); and
4. To repeal Staff Legal Bulletins 14I, 14J and 14K
ExxonMobil’s position
Last updated February 29, 2024 – SEC link to ICCR website was updated to work
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