By Dean Seal


The country's largest public pension manager, Calpers, has voted against every sitting member of Exxon Mobil's board in response to their legal fight with sustainability-focused shareholders.

The California Public Employment Retirement System said last week that it wouldn't back the oil giant's board after it sued Arjuna Capital and Follow This in January to block a shareholder proposal that would commit Exxon to curbing greenhouse-gas emissions.

Calpers said Wednesday that the lawsuit is a dramatic break from the standard process for opposing investor proposals and threatens to strip away the rights of shareholders.

"Calpers did not take this vote lightly, but the significance of what's at stake can't be understated," said Marcie Frost, the fund's chief executive.

Exxon's lawsuit is unusual, as companies typically challenge investor proposals by submitting requests to the Securities and Exchange Commission.

The company claims the shareholder proposal from Arjuna Capital and Follow This is designed to undermine Exxon's existing business. Both firms have since withdrawn their proposal, but Exxon is pushing forward with its lawsuit.

Calpers responded Wednesday that Exxon should have stuck with the SEC review process, as the agency has been increasingly siding with companies. If Exxon's lawsuit is successful, more companies would be empowered to silence shareholders through litigation, according to Drew Hambly, Calpers' global equities investment director.

Calpers said it voted against the current board because of directors' failure to stand up for shareholders, rather than the climate focus of the proposal at issue.

"This could have been any company and we would have taken the same action," Frost said.


Write to Dean Seal at dean.seal@wsj.com


(END) Dow Jones Newswires

05-29-24 1108ET