Proxy advisory firms Glass Lewis and Institutional Shareholder Services (ISS) have instructed investors in Exxon Mobil and Chevron to reject specific board proposals and candidates, raising governance questions ahead of both companies' annual shareholder meetings scheduled for May 27.
The advisers' reports focus on a mix of corporate governance and shareholder voting access issues. Both U.S. oil companies have frequently faced shareholder proposals that press them to better assess climate and human rights risks, and guidance from proxy firms is closely followed by institutional and retail investors.
Exxon Mobil
- Redomicile proposal: Glass Lewis and ISS recommended that shareholders vote against Exxon's proposal to change its state of incorporation from New Jersey to Texas, citing concerns that the move could limit stockholder rights and make legal recourse more difficult.
- Retail voting options: ISS further recommended approval of a shareholder proposal to expand Exxon's retail voting program to include additional options, one of which would allow retail investors to automatically vote against the board's recommendations.
- Company response: In a filing, Exxon rebutted criticism from the New York City Comptroller's Office, which had advanced the retail voting proposal, saying the comptroller's critiques were politically motivated. Exxon also described Glass Lewis' recommendation opposing the Texas redomicile as "ill-informed."
Chevron
- Board composition and time commitment: Glass Lewis advised shareholders not to reelect Jon Huntsman Jr., citing his executive role at Mastercard and a board seat at Ford Motor as factors that could limit his ability to fully commit time to Chevron duties.
- Independent chair proposal: Glass Lewis recommended that Chevron investors support a proposal to establish an independent board chair separate from the CEO role, arguing this structure promotes a more proactive and effective board.
- Chevron's stance: In its proxy filing, Chevron stated that the board should retain flexibility to determine its own leadership structure.
These recommendations from Glass Lewis and ISS signal proxy-adviser scrutiny on governance choices at two of the largest U.S. oil producers. Investors will weigh these advisories as they prepare for the May 27 meetings, where contested governance items and votes on shareholder proposals will be decided.
Because both companies have regularly been the subject of proposals related to climate and human rights evaluation, the advisers' guidance adds a layer of influence on how investors approach voting this year. The firms' positions address both procedural aspects - such as the legal implications of changing a company's state of incorporation - and governance practices - including board independence and director time commitments.
Shareholders and market participants will be watching the outcomes of the votes to see whether proxy-adviser recommendations carry weight in the final tallies at each company's annual meeting.