Investments News & Events

The Wall Street Journal’s Editorial Misses the Mark, Perhaps on Purpose

A group of people at desks using computers. The individual desks form a circle. One desk is pulled out from the rest in the upper right corner.

By Marcie Frost, Chief Executive Officer, CalPERS

Casual readers may miss the real message in The Wall Street Journal’s sky-is-falling editorial about our decision to withhold support for ExxonMobil’s directors and CEO at next week’s annual shareholder meeting.

Set aside the hyperbole, though, and the message is crystal clear.

The May 21 editorial suggests that shareholders should be guaranteed rights only as long as they don’t ask any questions that anger a company’s executives. This breathtaking assertion is camouflaged by The Editorial Board’s attack on shareholders, maligned as unruly “agitators” who are wrongly focused on the issue of climate change.

Once again, for the record: CalPERS’ current disagreement with ExxonMobil isn’t about climate change. It’s about company executives seeking to silence shareholder speech that they don’t like.

From our initial comments in March until this week’s decision to vote against ExxonMobil’s leadership, we have been solely focused on the systemic danger presented by the anti-shareholder lawsuit.

Perhaps there wouldn’t be so much confusion if the dispute didn’t involve an oil and gas company or if a prominent news organization didn’t rely on alarmist commentary to sidestep the real issue.

Here are the facts.

The Editorial Board wrongly states that failed shareholder efforts have sought to “force” ExxonMobil to change its operations. The proposals were non-binding – just like thousands of other shareholder proposals that investors like CalPERS consider at U.S. companies every year.

The Editorial Board wrings its collective hands over what it suggests is an unreasonable glut of climate change proposals that are drowning companies in paperwork. Hardly. The vast majority of proposals, other than those concerning the election of directors, involve topics like executive compensation and whether board members are truly independent of company executives.

ExxonMobil and The Wall Street Journal’s editorial writers cite costs of $150,000 to bring a shareholder proposal up for an official vote, but that’s only a broad estimate provided by the U.S. Securities & Exchange Commission. And for context, we would point out that ExxonMobil’s net profits last year were more than $36 billion.

The cost of upholding the fundamental tenets of shareholder democracy is small. The cost to effective corporate governance imposed by a sweeping court ruling, one that would limit shareholder rights or even intimidate investors from speaking up, would be far greater.

We are puzzled that no one has addressed the dispute’s core question: Why didn’t ExxonMobil ask the SEC for relief from bringing the shareholder proposals up for a vote? Data from the Shareholder Rights Group, a prominent consortium of investors, shows that 68% of company requests for relief have been granted this year.

The only motivation we see for going to court is to change the rules in favor of corporate America.

ExxonMobil should drop its anti-shareholder lawsuit. Its directors were elected by shareholders and should be held accountable. The Editorial Board’s indifference to the rights of investors is appalling.