Glass Lewis & Co. recommends its institutional investor clients vote in favor of shareholder proposals at Exxon Mobil Corp. calling for climate-change risk reporting, proxy access and an independent chairman, said the proxy-voting firm's report on the company.
The $178.3 billion New York State Common Fund, Albany, sponsored the climate-reporting proposal co-filed by the London-based Church of England, whose assets total £6.7 billion ($9.8 billion); the $51.7 billion University of California Retirement Plan, Oakland; the $4 billion Vermont Retirement Systems, Montpelier; and other institutional investors. The proposal calls for an annual assessment of the long-term impact of climate-change policies on the company's operations assuming a globally agreed target of a 2-degree Celsius rise in temperatures
Glass Lewis in its report said, “we are not convinced that the company's current disclosure provides shareholders with sufficiently accessible or up-to-date information concerning the potential risks facing the company and its operations on account of possible climate change regulations.”
Thomas P. DiNapoli, New York state comptroller and sole trustee of the pension fund, said in a news release: “We're pleased that Glass Lewis recommends investors vote in favor of our request that Exxon Mobil take steps to address climate change. Investors have a right to know how Exxon Mobil plans to adjust to a lower carbon economy with reduced demand for its products. Companies that fail to address climate change, and the global effort to mitigate it, put themselves and their investors at risk.”
The New York City Retirement Systems, whose combined assets total $154 billion, sponsored the proxy-access proposal, which would enable a shareholder or a group of shareholders that hold a combined 3% of the company's shares for three years to nominate up to 25% of the 14-member Exxon Mobil board of directors.
In the report, Glass Lewis said when “a significant long-term shareholder believes the board's director selection process has not served shareholders well, it is reasonable to allow that shareholder to exercise judgment in nominating a new director. We believe shareholders would exercise the nomination right rarely, and rarer still would be the actual election of a dissident director, as other shareholders would need to vote in support of the dissident director nominee at the company.”
On the proposal for adoption of a company policy to require an independent chairman, Glass Lewis said in the report that “vesting a single person with both executive and board leadership concentrates too much responsibility in a single person and inhibits independent board oversight of executives on behalf of shareholders.”
Glass Lewis recommends clients vote against the eight other shareholder proposals.
Exxon Mobil opposes all the shareholder proposals.
On the climate-change reporting proposal, Exxon Mobil said in its proxy statement, “While the board agrees with the importance of assessing the resiliency of the company's resource portfolio, it believes the current (reporting and assessment) sufficiently test the portfolio to ensure long-term shareholder value.”
On the proxy-access proposal, its proxy statement said, “Our current governance practices provide strong board accountability and important shareholder rights. We believe that instead of strengthening our existing practices, the proposal could undermine the rigorous and effective processes we have in place.”
On the independent chairman proposal, the proxy statement said, “At the present time, the board believes that independent board leadership is effectively provided by the presiding director, who has authority to call, chair and determine the agenda for executive sessions of the non-employee directors and provide feedback to the chairman.”
Exxon Mobil's annual meeting is May 25.
