Mrinalika Roy and Isla Binny
(Reuters) – CalPERS, the largest U.S. public pension plan, said on Monday it would vote against all Exxon Mobil (NYSE:) at its upcoming annual meeting on May 29, citing the oil company’s lawsuit against activist investors.
Exxon, which is often at the center of critical shareholder decisions, filed a lawsuit earlier this year seeking to block a vote on a climate proposal submitted by two small activist investors, bypassing the normal regulatory process to fend off such measures.
The investors withdrew their decision, but Exxon continued the lawsuit, seeking legal fees and other damages.
CalPERS, which has about $490 billion in assets, said in a statement that the lawsuit could limit investor rights.
The vote is “more than symbolic,” although there is no alternative set of directors, CalPERS CEO Marcie Frost told reporters. She sought to let the board know that “if they don’t want to manage, they should step aside,” Frost said.
Exxon said in a statement that its “efforts are focused on providing clarity to the rules and creating an environment for open and meaningful shareholder dialogue.”
The company added that it has engaged with CalPERS, which it believes made a “poor fiduciary decision.”
CalPERS owns 8.45 million Exxon shares, giving it a stake of about 0.19%, according to LSEG. She has been influential in previous director elections, particularly in 2021 when she supported the board’s successful challenge to better position the firm for the energy transition.
Frost said she has spoken with Exxon CEO Darren Woods and, as far as she knows, the lawsuit is still ongoing at this time.
Activist groups have been asking CalPERS to divest from Exxon shares for years. Frost said she wanted to distinguish between a commitment to asking Exxon to change its climate policies and encouraging it to drop the lawsuit.
“I want to bring our attention to the shareholder aspects of Exxon’s decision,” she said. “The problem with selling assets when you’re at CalPERS is that you lose your voice completely.”
Trusted adviser Glass Lewis recommended shareholders vote against the re-election of Exxon’s lead independent director, citing what he called the company’s “unusual and aggressive tactics.”
But Exxon has won support from business lobbying groups, the U.S. Chamber of Commerce Roundtable, which said the case “is an example of activist groups taking control of the shareholder proposal process to score ideological points.”