Exxon Lies to Its Investors; Calls NLPC ‘Serial Proponents’ at Annual Meeting

National Legal and Policy Center presented a “Revisit Executive Pay Incentives for Greenhouse Gas Emission Reductions” proposal at the ExxonMobil Corporation‘s 2024 annual meeting of shareholders today.

The proposal asked the company to revisit its executive pay incentives and consider removing those tied to greenhouse gas emissions reductions. The company has only two paths to reducing such emissions: either by reducing oil and gas production, or investing in carbon capture and storage, an industry that relies on subsidies.

The company’s board of directors opposed our proposal, as explained on pages 83-84 of its 2024 proxy statement. NLPC’s response to the board’s opposition statement was filed with the Securities and Exchange Commission last month.

In Exxon’s opposition statement to our proposal — in its proxy and verbalized at the meeting — the board stated that NLPC is one of several “serial proponents” which “are professional proponents or representatives focused on advancing their own agenda and ideology versus long-term investor value. Serial proponents submitted approximately 70 proposals to ExxonMobil from 2014 to 2023.”

This is a blatant lie. Up until two years ago, NLPC had not sponsored a shareholder proposal at Exxon for many years, if ever. In 2021 we submitted a “board diversity” proposal — a very common type of proposal that addressed a governance issue, which would have been entertained at the 2022 meeting. However, the company (sort of) implemented the proposal’s request, so we withdrew it. Last year we did not submit a proposal, so to call us a “serial proponent” is a lie to Exxon’s investors.

NLPC also filed a separate proxy memo with the SEC urging investors to oppose the reelection of Lawrence “Larry” W. Kellner to the company’s board of directors.The NES argues:

Despite what were undoubtedly viewed by ExxonMobil directors as attractive qualifications in Mr. Kellner, his recent history as top director for Boeing highlights why he is unqualified and inappropriate to continue to serve on ExxonMobil’s board. Simply, Mr. Kellner’s entire tenure with Boeing, both as a board member and as Chairman, has been an unmitigated disaster. The aviation and defense contractor has flailed for well over a decade, and in the eyes of some observers, much longer.

Presenting NLPC’s proposal at the Exxon meeting was Luke Perlot, associate director of NLPC’s Corporate Integrity Project. His three-minute remarks can be heard here, and a transcript follows:

Good morning,

 

At its core, ExxonMobil is an oil and gas company.

 

While the company has made promises to diversify its operations into lower carbon energy initiatives, hydrocarbon energy production has always been its bread and butter. The modern ExxonMobil is the largest direct descendant of the famed Standard Oil.

 

The company’s revenue comes almost exclusively from oil and gas. Yet its current executive compensation structure includes incentives tied to aggressive greenhouse gas emission reductions. This misalignment not only strays from ExxonMobil’s core competencies but risks prioritizing unattainable environmental benchmarks over shareholder value. Shareholders should question whether anchoring compensation policies to greenhouse gas emissions reduction targets aligns with the long-term interests of the Company.

 

These carbon emissions reduction goals are based on a faulty understanding of climate science. The apocalyptic scenarios used to justify them are pushed by politicians, not scientists, and they are increasingly unlikely, yet the media portrays them as the default scenario.

 

The company has two paths to reducing greenhouse gas emissions – either by reducing hydrocarbon production, or by investing in carbon capture and storage or other projects that offset its carbon emissions. Both paths will destroy shareholder value.

 

Reducing hydrocarbon production directly contradicts the growing global demand for oil and gas, which is an opportunity for ExxonMobil to leverage its expertise and resources in the energy sector to generate shareholder value. Instead, the company’s existing executive pay structure actually encourages management to REDUCE oil and gas production, which is the exact opposite of shareholder interests.

 

On the other hand, investing heavily in carbon capture and storage technologies presents a significant financial risk. ExxonMobil has no competitive advantage in low carbon technology. Additionally, these technologies rely heavily on government subsidies and regulatory support, which may not be sustainable or reliable over the long term.

 

Either way, aligning executive compensation with aggressive greenhouse gas reduction targets creates a perverse incentive that endangers the company’s core business objectives.

 

Our proposal, Item 4, urges the Compensation Committee of the Board of Directors to revisit executive pay incentives and eliminate or reevaluate greenhouse gas reduction targets that do not align with legitimate fiduciary goals. This approach will help ensure that ExxonMobil remains focused on its core competencies and maintains its position as a leading energy producer.

 

For these reasons, we encourage shareholders to remove these misguided incentives and vote FOR Item 4.

Read NLPC’s shareholder proposal for the ExxonMobil annual meeting here.

Listen to Luke Perlot’s presentation of the proposal at the meeting here.

Read NLPC’s response, filed with the SEC, to the company’s opposition to our shareholder proposal, here.

Read NLPC’s opposition to Mr. Kellner, filed with the SEC, here. A video produced by NLPC about Kellner’s candidacy for the Exxon board can be watched below:

@Boeing is having a horrible year — so bad that Chairman Larry Kellner is leaving the board … So why does @exxonmobil want Kellner on their board?? … #Boeing #Boeing737 #Exxon #ExxonMobil #BigOil #energy pic.twitter.com/psExxOaKIV

— NLPC (@NLPC) May 9, 2024