In Exxon’s Texas Move, Asset Manager Clout Eclipses Proxy Firms
If the asset managers backed the Exxon move, as the vote margin suggests, it could have major implications for other large cap public companies that are considering a Texas redomicile.
Exxon Mobil Corp.’s shareholder meeting last week seemed to signal that the major asset managers have turned the page on progressive-leaning corporate activism. The same can’t be said for the proxy advisory firms that continue to lead many investment managers and pension funds astray.
The oil and gas behemoth voted to move its legal home to Texas with 71.3% approval from shareholders. It was a stark rejection of advice from the two dominant proxy firms, Glass Lewis and Institutional Shareholder Services, which both opposed the move. Given that Vanguard Group Inc., BlackRock Inc., and State Street Corp. hold 22% of Exxon’s shares, it also seems clear that some or all of them ignored the proxy firms and got behind the Lone Star State migration.
If the asset managers backed the Exxon move, as the vote margin suggests, it could have major implications for other large cap public companies that are considering a Texas redomicile. The big three passive investors collectively own approximately 20% of the average S&P 500 company, making them the largest shareholder in nearly 90% of these companies. Moreover, the Exxon approach provides other widely-held public companies with a playbook for how to gain investor approval for a Texas redomicile, even over opposition from the proxy firm duopoly.
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