Exxon Mobil Corp. (XOM) shareholders again rejected a proposal to split the chairman and chief executive officer roles amid increasing investor scrutiny of board accountability in the energy industry.
Sixty-five percent of votes opposed the separation, down from 69 percent last year, according to a tally announced at the company’s annual meeting in Dallas today. This was the 11th consecutive year in which the shareholder resolution failed. Rex Tillerson has served in both roles for the Irving, Texas-based company since January 2006.
About 41 percent of the companies in the Standard & Poor’s 500 Index have separate chairmen and CEOs, according to Ram Trust Services, a Portland, Maine-based investment fund and lead sponsor of today’s resolution. Chesapeake Energy Corp. (CHK), the second-largest U.S. natural-gas producer after Exxon, announced May 1 that it will appoint an independent chairman and strip CEO Aubrey McClendon of the job after revelations that he personally borrowed money from the company’s financiers.
“A combined CEO-chair role potentially establishes an imperial CEO, lessening accountability,” Ram said in its written proposal. “Chairing and overseeing the board is a time- intensive responsibility, and a separate chair leaves the CEO free to manage the company and build effective business strategies.”
The proposal wouldn’t have forced Tillerson to surrender the chairman’s seat. It would’ve directed the board to find a new chairman when the next CEO is named.
Chesapeake is searching for a new chairman after starting an internal probe of McClendon’s personal finances. The Oklahoma City-based company’s annual shareholders’ meeting is scheduled for June 8.
Chevron Corp. (CVX), the second-largest U.S. oil company, said about 62 percent of votes cast at its annual meeting today were against a shareholder proposal that called for an independent chairman. About 64 percent of oil and gas producer Anadarko Petroleum Corp. (APC) shareholders rejected a proposal to make its chairman an independent director at the company’s May 15 annual meeting.
Exxon opposes splitting the roles on the grounds that directors should judge who is most qualified to fulfill the chairman and CEO roles.
“The board retains authority to amend the bylaws to separate the positions of chairman and CEO at any time,” according to an April 12 proxy statement. Exxon’s 11 board members were re-elected to their positions today. One member retired.
‘Insular Corporate Culture’
The proposal was supported by the AFL-CIO, which represents more than 12 million union workers, and activist investors including the Needmore Fund and several descendants of John D. Rockefeller, who founded Exxon’s predecessor companies in the 1880s.
Ram Trust held about 120,000 Exxon shares in the $168 million of equities it had under management as of March 31, according to a filing with the Securities & Exchange Commission.
Splitting the roles would break down Exxon’s “very insular corporate culture,” said Tracey Rembert, senior manager of investor engagement at Ceres, a sustainability advocacy group. “There really has to be an independent person leading the board.”
Other shareholder proposals, including a requirement that Exxon report on its political contributions and a company policy prohibiting discrimination based on sexual orientation, were also defeated at the meeting.
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