A pension fund is suing to stop Exxon Mobil Corp.’s new retail shareholder voting program, which would automate retail investor support for management in annual proxy votes.
The City of Hollywood Police Officers’ Retirement System has filed a proposed class action in U.S. district court on behalf of Exxon shareholders, against the company and its board of directors, alleging that they are breaching their fiduciary duties in connection with the company’s adoption of its “retail voting program.”
The program, which was approved by the U.S. Securities and Exchange Commission (SEC) last month, enables the company to automate retail investors’ votes in favour of management.
The proposed lawsuit is seeking an injunction to prevent the company from introducing the program, which it alleges infringes on shareholders’ voting rights and is designed to stifle shareholder dissent and entrench management.
It argues that the program impairs the voting rights of shareholders that opt into the program, “based on inadequate disclosures.” It also argues that the votes of shareholders that can’t or don’t opt in will be diluted.
By adopting the program, the lawsuit alleges that the company’s directors breached their fiduciary duties.
“By attempting to weaponize a largely disengaged body of retail shareholders … the [program] affirmatively violates federal law, and constitutes both an unlawful entrenchment device and a breach of fiduciary duty under New Jersey law,” the plaintiffs’ filing alleged.
The allegations have not been proven, the case has not been certified as a class action and the company has not yet filed a defence.