Exxon Mobil Corp. shareholders voted down all shareholder proposals presented at the company's annual meeting today in Dallas, including a measure calling for the company to expressly prohibit discrimination based on sexual orientation. That proposal, which had drawn increased scrutiny from activists in recent weeks, drew the support of 20 percent of shares voted. Shareholder proposals calling for increased disclosures of environmental impacts, including greenhouse gas emissions, were supported by 30 percent or fewer shares cast.
The meeting included an extended response by CEO Rex Tillerson to supporters of the greenhouse gas measure, which asked the nation's biggest energy company to set specific goals for reducing emissions and addressing risks from climate change. "We view climate change as a serious issue. It does present serious risks," Tillerson said. But he maintained that climate models are limited in their "ability to understand all the feedback loops" affecting global temperatures, calling the effort "one of the grand challenges" facing scientists today. At the same time, he said, "there is no ready replacement" for fossil fuels to meet growing energy demand around the world.
The Rev. Michael Crosby, a Franciscan friar from Milwaukee, challenged Tillerson to accept that as carbon dioxide levels in the atmosphere have exceeded 350 parts per billion, it represents a threat "that needs to be addressed right now." Climate researchers recently noted that the average CO2 concentration in the atmosphere topped 400 ppb. But Tillerson said there is "nothing magical" about the 350 ppb threshold, even though it represents a "base case" that should be pursued by policymakers. "But to suggest that 350 vs. 450 is a known outcome," he said, overstates the ability of climate models to predict the impact on temperatures. "We do not see a viable pathway" to reducing CO2 concentration to 350 "without a devastating impact" on living standards around the world, Tillerson said.
Exxon's 2010 acquisition of Fort Worth-based XTO Energy came up in Tillerson's response to a shareholder's question about why Exxon has not outperformed its peers in the past five years. The company's presentation included a graphic showing that returns to shareholders shares outpaced both the broader U.S. market as well as competitors over 20-year and 10-year periods.
Tillerson said Exxon has made unprecedented investments since 2008, some of which will take years to pay off. According to the company, it has spent $162 billion in the past five years, including $40 billion in 2012 alone, on capital projects. And, he said, "the XTO merger had an effect" when U.S. natural gas prices fell to decade-low levels last year. While Exxon expected gas prices to fall from their peak in 2008, "they stayed low much longer than we expected" because the recession hurt demand and smaller producers continued to develop new supplies.
"Maybe we were off a year or two" in the timing of the $41 billion deal, he said. But that's not significant in the perspective of a longer view over 30 to 40 years, he said.
Among other corporate business, a shareholder resolution calling for all directors standing for election to garner a majority of votes cast drew the most support, with 45 percent, followed by 35 support who supported a measure to separate the posts of chairman and chief executive officer.
Other measures and their votes in favor included requiring the company to prepare a formal report on the risks of natural gas development (30 percent), set greenhouse gas emissions goals (27 percent), disclose all lobbying memberships and payments (25 percent), limit the number of boards Exxon directors can serve on (6 percent) and prohibit contributions to influence an election (6 percent).
A non-binding "say on pay" measure that expresses shareholder approval of executive compensation gathered just under 71 percent. Exxon CEO Rex Tillerson, addressing the vote in a session after the vote with reporters, said that was less than the 76 percent a year earlier but just slightly more than two years earlier. Tillerson said the change from 2012's vote likely represented one large institutional shareholder and indicates that more than 70 percent of shareholders are satisfied with the company's pay levels.
-- Jim Fuquay