It’s been six months since a veritable coup was staged in the Exxon Mobil board room. Three new directors that were seated over objections of company leaders are committed to addressing climate change as a business risk for a company that’s all about oil. This is a big deal, and highlights the power that shareholders have—but rarely exercise—over companies in which they have a stake.
Voting power at these annual meetings is based on shares of stock held. This is the one form of democracy in which votes are openly bought and sold in the market. Every share equals one vote, and company insiders often make it a point to hold enough shares to block any unpopular action—often, but not always. The activists who lead the hedge fund Engine No. 1 had just two-hundredths of a percent of all the outstanding Exxon shares, yet they were able to get the votes to pull this off. That’s even more impressive given how these decisions are framed: the proxy statement in which board candidates and other matters are laid out always have a board recommendation next to each choice. Any candidate or question supported by board members includes a recommendation to vote for the proposal, and it’s easy for an uninformed shareholder to assume that board recommendations are the way to go. That’s a lot of headwind to overcome, yet that’s what happened.
Forcing the addition of three outsiders to the Exxon Mobil board easily could go nowhere; these energy transition experts are just a quarter of the full board, after all. Convincing the other nine directors of this corporation to make such a big shift in course also faces stiff headwinds. Momentum seems still to be building, though; another investor group believes change must come faster. Energy is building.
Mostly, people think only of the money that can be made by investing in corporate stock. The fact that shareholders are owners of these companies, and as such have power to effect change, tends to be overlooked. Thankfully, that’s not the case now, because we need every tool at our disposal. Owning even fractional shares in companies like Exxon Mobil makes it possible to have a say. Directors will always resist change, saying that their first duty is to make money for shareholders; when shareholders are the ones asking for change, they are replying that profit isn’t everything.
I now have a tiny sliver of several companies with problematic histories in my portfolio, including Exxon Mobil, Volkswagen, and Microsoft. Whether those modest investments make or lose money does not matter to me. The dollars I spent are a component in larger spells to change the world. By my will, let it be done.