ExxonMobil's shareholder meeting next week should be a doozy.
The giant oil and gas company -- ranked No. 2 behind Wal-Mart on the 2007 FORTUNE 500 but by far the most profitable with $39.5 billion in earnings -- is provoking a lot of shareholder discontent despite that very impressive bottom line.
It faces a long list of shareholder resolutions on issues ranging from climate change to CEO pay to corporate governance practices to gay rights.
Today, several big institutional investors went further, saying they will withhold their votes for an Exxon director -- a Stanford University professor named Michael Boskin -- because, they say, he and other XOM directors have been "unavailable and unaccountable." Boskin is singled out because he chairs the board's public issues committee.
"Your failure and unwillingness to communicate with your shareholders speaks volumes about your corporate governance policies," said California's state controller John Chiang on a conference call.
Robert A.G. Monks, the longtime shareholder activist who holds 100,000 XOM shares through a family trust, said ExxonMobil is "unwilling to acknowledge that they live in a world where they are accountable."
"It is a closed company," said Monks, who's been a regular at the company's shareholder confabs. "It is a company that listens only to itself."
Among the institutional owners who say they will withhold their votes for Boskin are the California state teachers retirement fund, and public pension funds from New York state, New York City, Illinois, Maine, Maryland, North Carolina and Connecticut, as well as labor union funds. Not an insignificant group.
These owners can't just sell Exxon stock and put their money in companies more to their liking because many of their holdings are indexed. Denise Nappier, the activist state treasurer of Connecticut, said XOM is the state pension fund's largest holding.
Much of the shareholder frustration directed at Exxon has to do with climate change. Chiang, the California official, said XOM has shown a "cavalier attitude and sluggish response" to the issue, and has engaged in "obfuscation on climate science."
In fact, the company has been slower than its peers -- BP, Shell, Conoco-Phillips and Chevron -- to acknowledge the reality of climate change or endorse public policies to do something about it. Conoco-Phillips and BP joined USCAP, a corporate/NGO group calling for strong regulation of carbon emissions. By contrast, Greenpeace says that ExxonMobil still supports groups that say climate change is a hoax or worse. (I blogged last week about that.)
Bob Monks read from a letter written last fall by U.S. Sens. Snowe of Maine and Rockefeller of West Virginia, both Exxon shareholders, that condemned the company for its willingness to sow confusion around the climate change. Among other things, the letter says:
we are persuaded that the climate change denial strategy carried out by and for ExxonMobil has helped foster the perception that the United States is insensitive to a matter of great urgency for all of mankind, and has thus damaged the stature of our nation internationally.
As Monks noted, that's an extraordinary statement from two senators (who depend on corporate campaign donations) and it would be interesting to know how Boskin and other Exxon directors have responded.
On other issues, too, ExxonMobil insists on going its own way. It opposes Monks' resolution asking the company to separate the jobs of chairman and CEO -- another question of accountability. It doesn't want to give its owners or independent directors any special powers to curb CEO pay. (Harvard prof Lucian Bebchuk filed a resolution on that issue.) Meanwhile, the San Jose Mercury News reports that that Stanford University, which takes Exxon's grants for climate change research, will vote its shares with a group of nuns and against XOM management on a climate resolution.
You won't be surprised to hear that ExxonMobil will again stubbornly oppose a resolution asking the company to adopte in writing a non-discrimination policy against gays and lesbians. All but two FORTUNE 500 companies have done that. Exxon says it opposes discrimination. But what kind of a signal does XOM's refusal to codify its stance send to GLBT employees or prospective employees?
This week, as it happens, ExxonMobil published its corporate citizenship report. There are a handful of encouraging signs. The company says that it is reducing its own emissions and that it is prudent to come up with ways to address the risk of climate change. It says that it is engaging in regular dialogues with shareholders and NGOs. And Exxon is doing a great job of generating energy to drive the world economy and generating profits for its shareholder-neither of which are small matters. By all accounts, its operations are well-managed. You can't say that about BP.
At the same time, ExxonMobil remains out of step, it seems to me, with where the world is headed on climate change, corporate governance and gay rights. Society expects more of business than short-term profits. It expects companies to serve the common good -- in Exxon's case, to deliver energy AND to address the risk of climate change AND to welcome all kinds of employees AND to be accountable. Yes, it's a lot to ask. At the very least, we can ask the company to do a better job of explaining itself and listening, with some humility, to its owners.
By the way, I emailed Michael Boskin this afternoon to see what he thought about all this. I'll let you know if I hear back.
This post originally appeared at MarcGunther.com