Latest update January 9th, 2025 4:09 AM
U.S Judge clears way for Exxon to pursue lawsuit on shareholder
CEO, Exxon Mobil Corporation, Darren Woods
Kaieteur News – Exxon Mobil Corporation (XOM) will be pursuing legal action against its shareholder ‘Arjuna Capital’.
The U.S oil super major obtained a green light from the Court on Wednesday that allows it to take action following a proxy resolution filed by two shareholders with the company, focused on carbon emissions.
Although the proposal was withdrawn by the group, Exxon is adamant that the pair could file similar resolutions in the future, Reuters reported on Wednesday. The U.S. District Judge Mark Pittman ruled that while Exxon could continue its case against Arjuna Capital, citing jurisdiction to hear the case over a U.S.-based firm, it could not pursue its claim against Netherlands-based climate activist group ‘Follow This’, as it was outside the court’s jurisdiction.
The activist groups argued that Exxon’s legal strategy would allow the company to “haul its shareholders into any court in the United States.” “This is an unwarranted and cynical attack on shareholder rights in the world’s leading capital market,” Follow This founder Mark Van Baal said.
California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the United States, and another shareholder in the company, said it was “disappointed, but not surprised” the lawsuit will continue. “Exxon’s dangerous legal gambit, if successful, would undermine shareholder rights and allow corporate leaders to stifle the ideas of investors with impunity,” CEO Marcie Frost said.
Exxon’s annual shareholder meeting will be held on May 29. Arjuna Capital and Follow This had asked Exxon to adopt so-called Scope 3 targets to reduce emissions produced by users of its products. Exxon is the only one of the five Western oil majors which does not have such targets. Notably, two other shareholders of the Fortune 500 Company in April submitted a proposal calling on investors of the company to vote against the election of Executive Chair and Chief Executive Officer (CEO) Darren Woods at the upcoming Annual Meeting, stemming from the legal action filed against investors.
Westpath Benefits and Investments and Mercy Investment Services Inc. in a Notice to shareholders, through a Securities and Exchange Commission (SEC) filing, pointed out that Woods and Lead Independent Director and Nominating and Governance Chair, Joseph Hooley have demonstrated disdain for the voice of shareholders and are willing to use the threat of lawsuits to silence them.
The investors described Exxon’s treatment of shareholders as “hostile” pointing to the legal action taken by the company they believe is intended to silence constructive discussion of its strategy. Exxon filed a lawsuit on January 22, 2024, against its two shareholders. Westpath and Mercy reasoned, “We believe the action taken by Exxon represents a broader threat to shareholder rights amid continued concern regarding the company’s management of climate risk.”
The decades-long investors of the company have therefore recommended that shareholders vote against the election of the duo. They explained, “Shareholders should be able to offer constructive solutions through shareholder proposals that strengthen the company’s ability to sustainably deliver on its shareholders’ expectations.” However, they pointed out that the company’s unprecedented lawsuit against investors undermines this important lever of accountability available to the owners of Exxon shares.
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