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ExxonMobil Defeats Rockefeller Initiatives

June 2, 2008
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Strong support by descendants of John D. Rockefeller, who founded forerunner Standard Oil, failed to persuade ExxonMobil Corp. shareholders last week to vote in favor of creating an independent chairman. Shareholders also defeated measures that would have required the oil giant to set goals to reduce greenhouse gas (GHG) emissions.

At ExxonMobil's annual meeting, 39.5% of shareholders voted to create an independent post, which was nearly identical to the 40% support the measure received in 2007. Rex Tillerson has served as both chairman and CEO since 2006; his compensation package in 2007 was worth an estimated $21.7 million.

ExxonMobil in 2007 posted $40.6 billion in profit, the largest annual profit by a U.S.-based company. It also reported earning $10.9 billion in the first three months of this year, which was the second largest U.S. quarterly profit ever.

The management team had opposed the proposal to split the top job, stating that "there is no single best organizational model that would be most effective in all circumstances." European-based BP plc and Royal Dutch Shell both have separate chairs and CEOs.

The idea to split the two jobs has been on the company's proxy ballot for several years. However, the proposal gained attention after 15 members of the Rockefeller family signed as either filers or co-filers in support of the measure.

"Our goal from the outset of this effort was to get shareholders more engaged with ExxonMobil management and vice versa," said Rockefeller family members Peter O'Neill and Neva Rockefeller Goodwin. "In view of the unprecedented outreach effort mounted by ExxonMobil to solicit votes from institutional and retail investors, we have succeeded in doing that in a way that appears to herald the long-overdue beginning of two-way communications between our company and its owners. While it is ironic that this is what it took for ExxonMobil to start interacting with shareholders, it is at least the beginning of a dialogue -- and that is what we were seeking."

In addition to losing their attempt to split the top job, members of the Rockefeller family and several institutional investors lost in their efforts to require ExxonMobil to establish goals related to alternative fuels and GHG emissions. Critics of the company have said they are concerned that the Irving, TX-based major focuses too much on short-term gains and should instead invest in cleaner fuels and technology for the future.

A proposal to require ExxonMobil to set goals to reduce GHG emissions was supported by only 30.9% of the shareholders. Another proposal to require ExxonMobil to set a policy to increase support for renewable energy research was defeated with only 27.4% supporting the measure.

In his speech to shareholders, Tillerson called the past year a "record for our corporation by nearly every measure." He also outlined the company's efforts to protect the environment by reducing GHG emissions, preventing spills and protecting biodiversity.

"Energy security, economic growth and environmental impacts are increasingly on the minds of people today," he said. "We're focused on safely and reliably meeting the growing energy demand while working to reduce our impact on the environment."

According to Tillerson, ExxonMobil has spent more than $2 billion over the past five years on initiatives to reduce GHG emissions and improve efficiency, and it plans to spend another $1 billion by 2010. Through actions taken in 2006 and 2007, he estimated that the company reduced GHG emissions by about 5 million metric tons in 2007.

"We have the same concerns as people everywhere -- and that is how to provide the world with the energy it needs while reducing greenhouse gas emissions," said the CEO.

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