Exxon Action: Shareholders Launch Lawsuit Over Retail Voting Program

21 October 2025

---

By Jack Grogan-Fenn

Oil and gas giant ExxonMobil has been sued by shareholders in an attempt to stop the company’s controversial Retail Voting Program (RVP) which was recently ratified by the US Securities and Exchange Commission (SEC).

In a proposed class action lawsuit, Florida police pension fund the City of Hollywood Police Officers’ Retirement System argued that the programme constitutes a breach of fiduciary duty by adopting a mechanism that purportedly tilts outcomes towards management, contains inadequate disclosures and creates vote dilution concerns for shareholders who do not opt in.

The complaint alleged that the RVP “violates federal law, unlawfully impairs the voting rights of Exxon’s public shareholders, and constitutes an unlawful entrenchment device meant to perpetuate Defendants’ control over the Company”, with the plaintiff also seeking an injunction against Exxon directly to prevent the company from proceeding with this “unlawful solicitation”.

The lawsuit also names the 12 people on Exxon’s board of directors, with the filing stating that the Director Defendants have “unlawfully impaired the voting rights not only of Exxon’s shareholders who opt-in to the program based on inadequate disclosures, but also of Exxon’s shareholders who either are not eligible or choose not to opt-in, but whose votes would be diluted through the votes of illegally solicited proxies”.

The plaintiff has demanded a trial by jury so that all issues flagged are triable, though next steps for the case from here are not yet clear, with the case yet to be certified as a class action and the company having not filed a defence to date.

Exxon received approval from the SEC last month to introduce the new retail investor-focused voting mechanism that will allow retail investors to automatically cast ballots in line with board recommendations during annual meetings, as reported by Minerva Analytics. Many think that other companies will follow Exxon’s lead in introducing similar programmes, thus this test of whether auto-aligned standing voting instructions for retail holders are deemed to either entrench boards or enhance participation will set a precedent.

It is important to note that it appears investors would actively have to opt into Exxon’s RVP rather than being auto-enrolled and will have the ability and choice to opt out and cancel the standing voting instruction at no cost. The SEC has additionally stated that retail shareholders who have opted in to the Retail Voting Program will receive an annual reminder of their opt-in status and selection and a reminder that they can opt out and cancel their standing voting instruction.

Concerns were raised that the programme could be Exxon looking to capitalise on “laziness” from some non-activist and less engaged investors, and could provide an example of a system for other companies to adopt. While a definitive link is not clear at this stage, some have also suggested that the move could be an attempt to counter shareholder activism.

Exxon has a rocky recent history with some of its shareholders. The company has been subject to several campaigns from activist shareholders, with the highest profile example being three dissident directors being elected to its board. Exxon has also previously faced allegations of lobbying against climate change legislation and the oil and gas giant could well take a public anti-ESG stance given the current regulatory and political picture.

Last year, Exxon filed a complaint against activist investment firms Arjuna Capital and Follow This over an ESG vote at its AGM, as reported by Minerva Analytics, with the company alleging that the shareholders had only to put forward proposals that would “diminish the company’s existing business”. The two groups had submitted a proposal calling for an acceleration in Exxon’s emissions reduction plans which would be voted on at its 2024 AGM. The action saw Arjuna withdraw its shareholder proposal, as reported by Minerva Analytics.

Exxon doubled down on that decision in September 2024, defending its legal action against shareholders and pledging to continue taking steps to ensure that shareholder resolution processes are used responsibly and without causing harm, as reported by Minerva Analytics. The lawsuit noted this saga, stating that “having lost at the ballot box, Exxon’s Board turned to the courts to stifle shareholder engagement”.

“The Board’s adoption of the RVP is just the latest move in the Company’s efforts to quash voices of shareholders who have not uniformly supported the Board’s decisions,” the lawsuit read. “By attempting to weaponize a largely disengaged body of retail shareholders, however, the RVP affirmatively violates federal law, and constitutes both an unlawful entrenchment device and a breach of fiduciary duty under New Jersey law.”

It added that the RVP is “is intended to stifle shareholder dissent and to perpetuate Board control free of what the Director Defendants perceive as a threat to their job security from troublesome investors”.

Earlier this month, the Best Practice Principles Oversight Committee’s Annual Forum 2025 saw discussion of concept of ‘robovoting’ in the context of Exxon’s retail investor-focused programme, as reported by Minerva Analytics. “While we appreciate their expanding retail shareholder participation in voting is a good goal, we’re deeply concerned about the risks in some of the implementation,” said Jen Sisson, CEO of the International Corporate Governance Network, speaking at the event. “We don’t want to see companies having the ability to set up their retail shareholders to default vote with management on a perpetual basis.”

She added that “we need to make sure that safeguards are in place, that annual renewal is needed with clear and easy ways to change your mind, or there is the ability to make case by case considerations and that’s particularly important in the case of contested meetings, M&As or other key issues that might arise”.

As You Sow and the Interfaith Center for Corporate Responsibility (ICCR) last month filed a request with the SEC to rescind its recent “effective approval” of Exxon’s RVP, as reported by Minerva Analytics. As You Sow and ICCR argued that “under the guise of ‘assisting’ retail voters” Exxon are looking to encourage retail shareholders to opt into a programme that “would cast their votes in favour of management for all future meetings, unless and until shareholders take steps to opt-out”.  

As You Sow’s CEO Andrew Behar branded the programme as being a “direct attack on shareholder rights”, adding that retail voters currently hold roughly 40% of Exxon shares and nearly 75% of those shareholders currently do not vote. “A standing proxy in favour of management therefore significantly increases the odds of a perpetual management advantage,” said Behar. “This goal is underscored by the fact that Exxon fails to make available an equivalent standing vote against management”.

You can read more of our articles by clicking here.

Last Updated: 21 October 2025