December 21, 2001
Resolution Urges ExxonMobil to Strip Chair from its CEO, a Global Warming Naysayer
by William Baue
Robert Monks' resolution claims that ExxonMobil Chairman and CEO Lee Raymond's denial of global
warming is harming the company's reputation and shareowner value.
When shareowners act to sway company policy on environmental and social issues, they have
increasingly appealed to the financial implications and benefits of supporting such causes.
Corporate governance watchdog and Director of Ram
Trust Services Robert A. G. Monks has turned this strategy on its head. In a shareowner
resolution filed with ExxonMobil
(ticker: XOM) by December 18, Mr. Monks appealed to an environmental cause to support his case for
transforming corporate structure.
Mr. Monks, who manages 125,000 shares of
ExxonMobil stock through Ram, uses building blocks to advance his argument. First, the resolution
correlates a company's reputational erosion with declining shareowner value. Next, it documents
the reputational damage of ExxonMobil's denial of global warming, tracing this dynamic directly to
Chairman and CEO Lee Raymond. Mr. Monks quotes the Wall Street Journal and O'Dwyer's PR
Weekly as mortar to secure the blocks together.
"ExxonMobil's stubborn refusal to
acknowledge the fact that burning fossil fuels has a role in global warming is creating a PR
backlash against the world's biggest company," stated O'Dwyer's PR Weekly, as quoted in the
Interestingly, the resolution does not call for a shift in ExxonMobil's
environmental policies. Instead, it requests the uncoupling of Mr. Raymond's dual roles as
chairman of the board and chief executive officer. ExxonMobil would retain him as CEO, but replace
him as board chairman with "a non-executive and independent director as Chairman," according to the
ExxonMobil (CEM), a coalition of 42 religious and environmental organizations in 17 states,
immediately announced its support for the resolution. CEM National Coordinator Peter Altman
believes the resolution may receive broad support from shareowners.
"Given that Bob Monks
comes at this as a longtime successful and influential investor rather than as an environmentalist
or a person of faith, there's probably going to be a very good reception for this resolution," Mr.
Altman said. He paraphrased Mr. Monks' argument thus: "I see this company shooting itself in the
foot for no good reason over a totally untenable position, and the board of directors is not doing
its job [of holding the CEO accountable], and our shareholder value is at risk for no good reason."
In response, ExxonMobil is seeking to engage in dialog with the resolution's sponsors,
according to ExxonMobil spokesperson Tom Cirigliano. The company's response statement acknowledges
the climate change issue, but not global warming.
"Climate change is an important issue to
us, and one we take very seriously. We don't believe that the current lack of scientific, economic
and technical certainty is a reason for inaction. So we are taking actions now and working with
others to create long term solutions," reads ExxonMobil's statement. "For example, we're investing
money in research," it continues. "We spend approximately $120 million a year on advanced
technologies devoted to environment, health, and safety programs--far more than any of our
CEM has pointed out that ExxonMobil funded organizations such as the Global
Climate Coalition and the American Petroleum Institute, both of which have actively challenged the
scientific consensus that global warming is a real consequence of human activity. CEM also exposes
ExxonMobil's manipulation of existing research. Mr. Raymond cited a 1996 Sargasso Sea study as
evidence against global warming. CEM materials quote the response of the study's author, Dr. Lloyd
"I believe ExxonMobil has been misleading in its use of the Sargasso Sea data,"
Dr. Keigwin wrote. "I think the sad thing is that a company with the resources of ExxonMobil is
exploiting the data for political purposes when they could actually get much better press by
supporting research into the role of the ocean in climate change."
CEM agrees that
ExxonMobil could contribute much more constructively to the global warming dialog. To support its
position, the campaign quotes the Economist.
"If the world biggest purveyor of
fossil fuels [ExxonMobil] ever accepts openly that global warming is real, that may turn out to be
more important to the planet than any Kyoto deal."