Exxon case against activist investor over proxy filing

Jun 19, 2024 News

(Reuters) A U.S. judge on Monday dismissed a lawsuit Exxon Mobil had filed against activist group Arjuna Capital after the group had agreed not to pursue future proxy filings at the company’s annual meetings.

The lawsuit by the largest U.S. oil company had raised alarm among activists and public pension investors who argued it would muzzle debate among shareholders and public companies.

U.S. District Court Judge Mark Pittman ruled Exxon’s claim was no longer valid after Arjuna “unconditionally and irrevocably” agreed not to submit a future proposal regarding Exxon’s greenhouse gas emissions.

Arjuna’s pledge not to file a similar resolution in the future “has eliminated any case or controversy,” Pittman wrote in dismissing the case without prejudice, meaning Exxon could refile in the future.

“Our lawsuit put a spotlight on the abuse of the shareholder-access system,” Exxon said in a statement. “The court has made absolutely clear that Arjuna cannot continue abusing the process. Shareholder democracy is only as strong as the rules that govern it, which must be fairly and consistently applied.”

Arjuna did not respond to requests for comment.

Arjuna and Follow This, a Netherlands-based environmental group, had proposed a stockholder vote for the oil major to set new targets for reducing some of its greenhouse gas emissions.

Exxon sued the pair in January and refused to drop the case after they agreed not to bring the petition forward, citing “the likelihood” the two could file similar resolutions in the future. Pittman last month had dropped Follow This from the case as the group was outside his court’s jurisdiction.

“Unfortunately, we expect the company to continue this aggressive agenda rather than returning to their past practice of constructive dialogue with their owners,” said Tim Smith, a senior policy adviser for the Interfaith Center on Corporate Responsibility, whose members include Arjuna.

While investors likely will be relieved by the dismissal, Exxon “used the proxy and the shareholder meeting to denigrate any proponents presenting resolutions as well as challenging the authority of the SEC (Securities and Exchange Commission) in the proxy process,” Smith said, reiterating concerns raised by the shareholder advocacy group earlier this year.

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activist investor, Exxon, lawsuit, proxy filing

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