CalSTRS Proxy Vote at ExxonMobil’s Annual Meeting
May 27, 2015
CalSTRS uses its Corporate Governance Principles and policies as guidelines to voting its proxies at its 7,000 portfolio companies. Not only is the voting of proxies a fiduciary duty, CalSTRS also believes that the execution of proxies is an important shareholder right and we always seek to exercise the right in a consistent fashion that is in the best interests of the beneficiaries.
CalSTRS Corporate Governance staff distinguishes itself as a thoughtful shareholder. CalSTRS staff thoroughly analyzes each proposal to ensure it conforms to CalSTRS established principles–whether it’s related to board composition, climate change, environmental risk, executive compensation or capitol allocation.
CalSTRS is committed to disclosing its Corporate Governance principles and its proxy votes. We believe by publicly disclosing our principles we can not only use the principles to advocate for better corporate governance but also provide a framework for our engagement activities.
At the ExxonMobil Corp. annual shareholder meeting May 27, 2015, CalSTRS voted its 12 million shares on the proxies in the following manner:
Board of Directors
- CalSTRS withheld its votes from the following Compensation Committee members because we voted against their executive compensation:
- Michael J. Boskin
- Jay S. Fishman
- William C. Weldon
- Chairman Samuel J. Palmisano
- CalSTRS withheld its votes for director nominee Ursula M. Burns because she is the CEO at Xerox and is also on the board of American Express.
- To devote the time and energy necessary to responsibly fulfill their commitment to the company and effectively represent shareholders’ interests, generally, CalSTRS believes that CEOs should not serve on more than one other public board.
- CalSTRS voted For the remaining board members.
- Peter Brabeck-Letmathe
- Larry R. Faulkner
- Henrietta H. Fore
- Kenneth C. Frazier
- Douglas R. Oberhelman
- Steven S. Reinemund
- Rex W. Tillerson
Ratification of Auditor
CalSTRS voted For the ratification of the auditor.
This year there were eight shareholder proposals on the ExxonMobil Corp. proxy. Here is CalSTRS’ vote.
Regarding independent chairman. Vote: For
- CalSTRS supports the concept of an independent, non-executive chairman, who has not had a substantive employment relationship with the company over the past five years.
- Regarding proxy access. Vote: For
- CalSTRS supports shareholder access to the nomination process of director candidates, known as proxy access.
- Regarding climate risk expertise. Vote: For
- ExxonMobil does not appear to articulate who among the board is experienced or knowledgeable on environmental risk matters associated with fossil fuel exploration and production. Considering the nature of the company’s operations, this would be a valuable skill to have inside the boardroom.
- Regarding board diversity. Vote: Against
- While CalSTRS supports corporate board diversity, this proposal is too prescriptive and requires ExxonMobil to meet specific targets for female board members. The company already has two female board members and has proven itself committed to board diversity.
- Regarding gender pay equity. Vote: Against
- ExxonMobil already has sufficient EEO (equal employment opportunity) policies and disclosure concerning hiring, promotion and wage & salary administration.
- Regarding lobbying disclosure. Vote: Against
- ExxonMobil appropriately discloses its policies, processes, payments and oversight mechanisms associated with political contributions and lobbying.
- Regarding greenhouse gas reporting. Vote: Against
- ExxonMobil adequately addresses and discloses efforts at managing its greenhouse gas emissions profile. The company is working to reduce these emissions.
- Regarding hydraulic fracturing risks. Vote: For
- ExxonMobil could provide more specificity on how it is managing risks associated with hydraulic fracturing. While they do a good job disclosing the water-related risks associated with hydraulic fracturing, there does not appear to be much discussion about controlling methane leaks.
Regarding the advisory vote on executive compensation (Say-on-Pay). Vote: Against
- There is significant disconnect between pay and performance.
- There are no performance-vesting, long-term incentive awards.
- The short-term incentive allocations are largely discretionary.
- There are no disclosed individual bonus limits.
- There are no executive stock ownership requirements.