Exxon lawsuit against shareholder activist voided
June 21st, 2024
A federal judge has tossed ExxonMobil’s lawsuit against activist ESG shareholder Arjuna Capital.
US District Court Judge Mark Pittman concluded that ExxonMobil’s claim is moot and dismissed the lawsuit without prejudice, as Arjuna had withdrawn its contentious proposal.
ExxonMobil filed the lawsuit against Arjuna Capital alongside a second activist investor Follow This in January after the two investors submitted a proposal calling for an acceleration in ExxonMobil’s emissions reduction plans.
The complaint stated that the pair only became shareholders in the company to put forward proposals that would “diminish the company’s existing business” and said the shareholder proposal and proxy voting process has become “ripe for abuse by activists”.
The claim against Follow This was dismissed as the shareholder is based in the Netherlands, but ExxonMobil pushed forward with the claim against Arjuna, despite the firm withdrawing the proposal.
Arjuna moved to dismiss ExxonMobil’s lawsuit when it withdrew the proposal, but the court denied the motion because its withdrawal did not prevent Arjuna from putting similar proposals forward in the future.
Arjuna then “unconditionally and irrevocably” promised to stop submitting proposals regarding ExxonMobil’s greenhouse gas emissions, but the company argued Arjuna was untrustworthy and the scope of its promise was unclear, and a judge allowed the case to move forward.
This was met with widespread criticism from ExxonMobil’s other shareholders, including CalPERS and the New York City Police Pension Fund.
The investors released plans to vote against re-electing ExxonMobil’s board of directors in May ahead of the firm’s AGM in protest and urged ExxonMobil to withdraw its lawsuit, highlighting the threat to shareholder rights that it could represent.
Last Updated: 21 June 2024