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SEC allows Exxon's auto-voting plan for retail investors

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New mechanism may help Exxon counter activists

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Retail investors hold significant shares but can have low

voting

turnout

By Sheila Dang and Ross Kerber

HOUSTON/BOSTON, Sept 15 (Reuters) - Exxon Mobil ( XOM )

is introducing a unique shareholder voting mechanism that will

allow retail investors to automatically cast ballots in step

with board recommendations during annual meetings, a move that

may help the top U.S. oil producer fend off activist campaigns.

On Monday, the U.S. Securities and Exchange Commission said

in a filing that it did not object to the plan from Exxon, which

could prompt other companies to follow suit.

The oil major has fought back aggressively against activists

in recent years, and could shore up more support from its

unusually large base of retail shareholders - who typically have

lower turnout rates but vote overwhelmingly in support of

Exxon's board.

Individual investors currently "lack access to numerous

services that make voting fast and easy for larger institutional

investors. Activist groups often exploit this gap to push

political goals at the expense of shareholder value," Exxon said

in a statement.

In the coming weeks, retail investors will be notified

through their brokerages that they can enroll in a free program

to vote their shares in line with management recommendations,

Exxon said in a statement.

If investors change their minds, they can override the

program and cast their votes manually according to instructions

in the proxy materials. Exxon said it is the first U.S. company

to offer such an option.

"As a matter of fairness, it's time to level the playing

field," the company said.

Nearly 40% of the company's shares are held by individuals

but just a quarter of them vote during proxy season, though they

mostly support the board, Exxon said.

Retail investors hold about 30% of most large U.S.

companies. They are a sought-after pool when companies face

close board elections or campaigns for ideologically charged

shareholder resolutions. Only a few other iconic U.S. brands

approach Exxon's level of retail ownership including Apple and

Tesla.

FIGHTING BACK AGAINST ACTIVISTS

Exxon has faced several high-profile activist shareholder

campaigns tied to climate issues in recent years, notably in

2021 when three dissident directors were elected to its board.

Last year, it continued to pursue litigation against

activist investors Arjuna Capital and Follow This, even after

the groups withdrew their proposal calling on Exxon to cut its

greenhouse gas emissions.

In a statement in May last year after a judge dismissed

Exxon's lawsuit against Follow This, founder Mark van Baal said

Exxon was attacking the rights of all shareholders to put forth

proposals about emissions, the cause of climate change.

Exxon's most recent annual meeting in May featured no

qualifying shareholder resolutions for the first time since

1958, following its aggressive campaign against

resolution-filers.

In the statement, Exxon noted a number of top fund managers

have created similar options allowing their investors to vote

with corporate boards, although the fund firms also allow users

to select other policies like choices that support more climate

and social measures.

During an energy conference in Austin on Friday, Exxon CEO

Darren Woods said the company wanted to stop activists from

submitting the same proposal year after year.

"My view is, if you're going to play that game, we can play

too," Woods said.