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 Led by New York City Comptroller Scott Stringer and proposed at 75
U.S. companies in various industries this year, the so-called proxy
access measure would give investor groups who own 3 percent of a
company for more than three years the right to nominate directors.
At the 19 oil and gas companies targeted, the aim was to demand more
accountability on global warming.
While the non-binding measure passed at two-thirds of all the
companies targeted, and at 15 of the 19 energy companies, some took
unusual steps to block it. Oilfield services provider Nabors
Industries Ltd, for example, counted non-votes from brokers as votes
against the proposal. Still, the measure passed at Nabors, which
didn’t respond to requests for comment.
Shale oil company Pioneer Natural Resources Co filed a last-minute
counterproposal calling for a higher ownership threshold of 5
percent, which institutional investors say is much harder to obtain.
Pioneer said it gave shareholders extra time to vote. Stringer's
proposal failed.
Exxon Mobil Corp and Chevron Corp tried to block the proposal by
arguing the New York City pension funds behind it had not shown
proof of owning their shares for a full year. The proposal passed at
Chevron and narrowly failed at Exxon.
The 15 victories at energy companies show that investors think the
companies must do more to address climate change risks - which range
from shortages of water needed for drilling to hefty carbon taxes
governments could impose on fossil fuel producers, fund managers
said.
"ExxonMobil received this (proxy access) proposal due to its
exposure to risk related to climate change," James Andrus, a
representative from Calpers, told Exxon's annual meeting.
The outcome also shows companies miscalculated the groundswell of
support for more climate accountability ahead of the U.N. conference
on global warming in December, fund managers said.
A simple majority was needed for the non-binding proposal to pass.
Of the 19 targeted energy companies, all opposed the measure, except
for shale oil producers Apache Corp and Whiting Petroleum Corp.. The
other two companies where the measure failed were Cabot Oil and Gas
Corp and Noble Energy Inc.
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'PETTY LEGAL ACTIONS'
Stringer characterized Chevron and Exxon's maneuvers as "petty legal
actions" in a statement made in February. The U.S. Securities and
Exchange Commission sided with New York.
Because the measures are non-binding, corporate boards can either
ignore the results of the votes or decide to change their bylaws.
While most companies say their boards' nominating committees are
best suited to pick nominees for director, energy companies in
particular likely do not want the type of board candidates that
labor pension funds might promote, said Erik Gordon, clinical
assistant professor at the University of Michigan's Ross School of
Business.
"Companies fear that the nominees will be single issue candidates
who focus solely on a labor or environmental issue such as executive
compensation or global warming," said Gordon. "In fact, the
Comptroller's office has targeted companies that it feels have done
too little to address climate change, and that frightens energy
companies."
Steven Mueller, chief executive officer of Southwestern Energy Co,
told Reuters that his board opposed the proxy access proposal
because Southwestern was unfairly targeted because it produces oil
and natural gas. The proposal passed at Southwestern.
"We didn't believe it was a governance issue," said Mueller, who
said Southwestern's board is working on how to respond to the
proposal.
(Reporting by Anna Driver; editing by Terry Wade and John
Pickering.)
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