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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 resolution.

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 resolution.

Campaign 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 competitors."

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 Keigwin.

"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."


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