For weeks the gathering had been hailed as a contest of wills between two heirs of legendary 19th century oilman John D. Rockefeller—on one side his blood descendants, and on the other the stewards of ExxonMobil (XOM), the successor to his Standard Oil.
But the outcome of the ExxonMobil annual shareholders meeting on May 28 in Dallas was anticlimactic. The stoic ExxonMobil management, acting like the bearer of Rockefeller's tough mantle, easily defeated proposals to weaken the grip of Chairman and CEO Rex Tillerson and turn the company more toward the production of renewable fuels and the reduction of greenhouse gases.
Indeed, if this was a test of whether investors are more concerned about return on capital or carbon caps, chalk one up for the capitalists. Shareholders, mindful that on May 1 Exxon had reported first-quarter net income of $10.9 billion—a near-record quarterly result second only to the company's fourth-quarter '07 mark of $11.7 billion—went along with management on every vote taken. That included the rejection of four resolutions spearheaded by Neva Rockefeller Goodwin, a Tufts economics professor and one of Rockefeller's great-granddaughters.
Among the proposals, Goodwin sought a commitment to push into alternative fuels, a reduction in greenhouse gases, and the appointment of an independent company chairman, which would have left Tillerson with just the job of CEO. That last resolution won 39.5% of the vote, a bit less than the 40% the same proposal obtained last year absent any public Rockefeller campaign.
Indeed, the loudest applause of the meeting greeted Steven Milloy, managing director of Action Fund Management, who proposed a prohibition on shareholder resolutions such as those proposed by the Rockefellers. Those calling for public action against greenhouse gases are practicing "junk science," Milloy asserted, and ExxonMobil should steer clear of renewable fuels. "Exxon sells gas," he said, "not moonshine."
In a statement released afterward, Goodwin and a Rockefeller cousin, Peter O'Neill, tried to put the best face on the results. They said that the company had won after an "unprecedented outreach effort…to solicit votes from institutional and retail investors."
"Today's vote makes it clear that ExxonMobil must respect the views of the shareholders and take account of the changing world outside the doors of its executive suite," the two Rockefeller heirs said. "We are pleased to have played a role in sending a wake-up call to ExxonMobil's management and its board of directors. This is a major achievement in our book. We believe that the days are now past when ExxonMobil and its board can continue to operate in an insular fashion."
Well, sort of. Speaking to reporters after the gathering, Tillerson diplomatically noted the size of the vote to split the chairman and CEO positions, and said the company needs to do a better job of communicating its position to the public, to shareholders, and to the U.S. government. "We have to keep working at that," he said. He acknowledged that the company had gotten in touch with many shareholders so that they would "understand our views" about the resolutions presented at the annual meeting. But, in the end shareholders "vote how they want to vote," he said.
Tillerson was politely defiant in defense of the company's financial performance. He noted that the company last year achieved a profit of 32% on capital employed, a standard measure of corporate health, which he said was some 40% higher than its Big Oil rivals. Moreover, he said, the company is not ignoring greenhouse gases, nor technological advances in renewable fuels, as some critics contend.
Rather, he argued, the jury is out on how to deal with global warming. "Anyone who tells you they have it figured out isn't being truthful," he said. He also asserted that none of the renewable technologies is yet commercially viable. But ExxonMobil is studying them. "We are playing in a lot of technological spaces that people don't know about," Tillerson said. "We don't talk about it until we're ready. That's our culture."
Unlike his often outspoken predecessor, Lee Raymond, Tillerson was firm but not rude. He seemed to calibrate his presentation carefully with an eye on current politics favoring some governmental movement to reduce greenhouse gases and produce biofuels.
And, at least among shareholders Wednesday, the sentiment was largely with him.