HOUSTON (Reuters) – Exxon Mobil Corp said on Wednesday its board had ended a prohibition on outside directors meeting with shareholders, halting a long-standing policy that rankled big investors and led some to vote against key directors.
The decision, which came days after Exxon’s board acceded to shareholder calls for an annual review of climate-related risks to its business, reflects a less confrontational tone toward shareholder pressures under Chief Executive Darren Woods.
Exxon, the largest U.S. oil company, said in a statement that its board made the change to allow members to “engage directly” with key shareholders and “to address areas of interest.” In the past, it funneled shareholder communications with its board through a company-run website.
John Roe, a managing director and head of analytics at proxy advisor Institutional Shareholder Services, said Exxon was belatedly recognizing that big shareholders were more willing to back activist resolutions since the 2008 financial crisis. He called acceptance of shareholder-director meetings “quite a normal practice” at many companies.
Exxon’s board has been under pressure for years from investors unhappy with a policy that effectively barred independent directors from speaking directly with shareholders.
Top asset manager BlackRock Inc earlier this year said it voted against two directors at Exxon’s annual meeting on May 31, “In line with our expectations that the lead independent director should be available to shareholders.” A BlackRock spokesman did not immediately reply to a message on Wednesday.
A group of investors recently said they were considering a resolution to challenge the policy at Exxon’s 2018 shareholder meeting. In a Dec. 5 letter to Exxon’s board, Illinois State Treasurer Michael Frerichs and other shareholder representatives had urged an end to the practice of barring direct board interactions with shareholders.
On Wednesday, Frerichs called the decision “a positive step for investors and the environment,” and called for additional governance changes.
“The next step is to revise the director-nominating process, director compensation, and executive pay to ensure that ExxonMobil is well‑positioned to address climate-related risks and capitalize on fresh, innovative ideas,” he said.