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Pension funds line up in favor of climate change disclosure proposal at Exxon Mobil

A number of large pension funds are voting in favor of a climate change risk disclosure proposal at Exxon Mobil Corp.

The proposal, filed by the $192 billion New York State Common Retirement Fund, Albany, calls for the oil and gas company to evaluate and disclose the viability of its portfolio under the 2-degrees scenario, the concept of limiting the average global temperature increase to 2 degrees Celsius.

Exxon’s annual shareholder meeting is May 31. A similar proposal was supported by 38.2% of shareholders at Exxon’s 2016 meeting.

The $202.8 billion California State Teachers’ Retirement System, West Sacramento; C$316.7 billion ($230.8 billion) Canada Pension Plan Investment Board, Toronto; $189.4 billion Florida State Board of Administration, Tallahassee; $133.2 billion Texas Teacher Retirement System, Austin; and the $175.6 billion Ontario Teachers’ Pension Plan, Toronto, are all voting in favor of the climate proposal, according to their proxy-voting disclosures.

All five entities are also voting in favor a shareholder proposal that calls for Exxon to provide an annual report on its efforts to minimize methane emissions from its hydraulic fracturing operations, along with another shareholder proposal that calls for an independent board chairman to be appointed in the next CEO transition.

CalSTRS, CPPIB, Florida SBA and Texas Teachers also indicated that they are voting against the compensation of Rex W. Tillerson, Exxon’s former chairman and CEO, and four other named executives. Ontario Teachers supports the executives’ compensation.

Mr. Tillerson’s total compensation was $27.4 million in 2016, up from $27.3 million in 2015. The total compensation for the four other executives ranged from $16.8 million to $15.6 million in 2016, up from a range of $10.3 million to $14.7 million in 2015. He became President Donald Trump’s secretary of state earlier this year.

In an April report, proxy-advisory firm Institutional Shareholder Services recommended that shareholders vote against ratifying the executives’ compensation, stating: “The lack of any performance vesting criteria on executives' sizable grants makes Exxon's equity program an outlier amongst S&P 500 firms, notwithstanding the fact that the company utilizes unusually long vesting periods. There are also concerns regarding the lack of specificity in disclosure surrounding goals and performance assessments that the board used to inform both annual bonus and equity award decisions. Notably, the number of shares underlying former CEO Tillerson's equity grants has been unchanged since as far back as 2008, despite widely varying performance over that time — this seems incongruous with the company's assertion that the number of shares at grant is determined by an assessment of pre-determined metrics. Without better disclosure, there is no clear way to resolve this apparent disconnect.”

ISS recommended in the same report that shareholders vote in favor of the climate risk reporting, methane reporting and independent board chairman proposals. Exxon recommended in its proxy statement that shareholders vote against all three proposals.

An Exxon spokesman could not immediately be reached for additional information.