{"id":271527,"date":"2021-06-11T00:18:00","date_gmt":"2021-06-10T21:18:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/opinion-memo-to-company-directors-deliver-for-shareholders-or-face-consequences\/"},"modified":"2021-06-11T00:18:00","modified_gmt":"2021-06-10T21:18:00","slug":"opinion-memo-to-company-directors-deliver-for-shareholders-or-face-consequences","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/opinion-memo-to-company-directors-deliver-for-shareholders-or-face-consequences\/","title":{"rendered":"#\n  Opinion: Memo to company directors: Deliver for shareholders or face consequences"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a4ef07dd0eba\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a4ef07dd0eba\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-memo-to-company-directors-deliver-for-shareholders-or-face-consequences\/#Investors_vote_to_put_activists_on_Exxon_Mobils_board_shows_corporate_democracy_in_action\" >Investors\u2019 vote to put activists on Exxon Mobil\u2019s board shows corporate democracy in action<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-memo-to-company-directors-deliver-for-shareholders-or-face-consequences\/#Lawrence_A_Cunningham\" >Lawrence A. Cunningham<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  Opinion: Memo to company directors: Deliver for shareholders or face consequences<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Investors_vote_to_put_activists_on_Exxon_Mobils_board_shows_corporate_democracy_in_action\"><\/span>\n  Investors\u2019 vote to put activists on Exxon Mobil\u2019s board shows corporate democracy in action<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\">\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000301479\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       At Exxon Mobil\u2019s<br \/>\n        XOM,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/204455864\/composite\" class=\"positive\">+0.16%<\/bg-quote><br \/>\n       annual shareholders\u2019 meeting in May, shareholders voted to replace three board members with the nominees from activist hedge-fund Engine No. 1, owner of less than 0.02% of the company\u2019s shares. The hard-fought battle pitted a small investment fund created just last year against an American icon.<\/p>\n<p> Besides agreement on the contest\u2019s scale and intensity, observers are interpreting the results in sharply different ways, from a\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/0828c80914837a2e1b44aca45121282c25f4e2ad?url=https%3A%2F%2Ffinance.yahoo.com%2Fnews%2Fexxon-mobil-shareholder-vote-a-watershed-moment-for-climate-change-205909507.html&amp;userId=1693566&amp;signature=4456afa2f593ca49\" class=\"icon none\">watershed<\/a>\u00a0or\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/fa1061a5c77e2e06907ee834ccb4136314783a96?url=https%3A%2F%2Fwww.economist.com%2Fbusiness%2F2021%2F05%2F23%2Fwhat-a-proxy-fight-at-exxonmobil-says-about-big-oil-and-climate-change&amp;userId=1693566&amp;signature=327a13022acd2d36\" class=\"icon none\">bombshell<\/a>\u00a0to a\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/b2c883de44157d238b4323c0fb674e47d22621a6?url=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fthe-proxy-coup-at-exxon-11622066709&amp;userId=1693566&amp;signature=209a0c5b280aff44\" class=\"icon none\">coup<\/a>\u00a0or a\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/ce9212a78e37c995fa79c68adba2249672040041?url=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fwhy-doing-good-is-no-longer-bad-business-11622818830&amp;userId=1693566&amp;signature=e1a1dfec0031052a\" class=\"icon none\">craze<\/a>. \u00a0<\/p>\n<div class=\"paywall\">\n       The reality is less dramatic but far more important for individual investors. Engine No. 1\u00a0argued\u00a0that its nominee will add unique experience in successful and profitable energy industry transformations. The fund says that\u2019s necessary to reverse Exxon Mobil\u2019s recent economic slide and assure its future profitability. The fund\u00a0stressed\u00a0the importance of giving shareholders a role in director nominations. Despite the incumbent board\u2019s opposition, Exxon Mobil\u2019s shareholders agreed.<\/p>\n<p>Environmentalists\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/1959c8d0fa793bc95c6ba33fe66b2e926c321a02?url=https%3A%2F%2Fwww.nytimes.com%2F2021%2F06%2F01%2Fopinion%2Fexxon-mobil-board.html&amp;userId=1693566&amp;signature=b437c37c2a15d702\" class=\"icon none\">present<\/a>\u00a0the board election as a triumph for aggressive green activism \u2014 ecology at any cost. While an understandable rallying point for their campaign, it is difficult to square with the rationales Engine No. 1 offered for its directors or goals of shareholders. \u00a0\u00a0<\/p>\n<p>Politically minded observers\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/aa7468ce3b5cb2b9acbbed66aeeb5fb3ac4bbd9c?url=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fthe-climate-yawns-at-exxon-coup-11622586147&amp;userId=1693566&amp;signature=3997627d29f97f04\" class=\"icon none\">question<\/a>\u00a0the large index funds whose votes helped seal Engine No. 1\u2019s victory. These critics say such influencers engage in virtue signaling, casting ballots according to prevailing political agendas, such as environmentalism.\u00a0 While plausible, such shareholders also must weigh systemic risks, and in fact it may be that preparing for energy transformation at Exxon Mobil will maximize shareholder value.<\/p>\n<p>Yet others\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/8caef641db14f965f2a737886bd4b186112a5436?url=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fwhy-doing-good-is-no-longer-bad-business-11622818830&amp;userId=1693566&amp;signature=29a4eb9f0394fc9e\" class=\"icon none\">see<\/a>\u00a0the outcome as\u00a0a new model of corporate leadership. CEOs are put on notice that they can no longer concentrate solely on business but must address political and <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social<\/a> issues. The debate on this is intense, but the merits of the argument Engine No. 1 put forth at Exxon Mobil focused on profits and shareholder voice, not policy preferences.\u00a0\u00a0\u00a0<\/p>\n<p>Another\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/d2e621379dd54ed6c00281ab2d64f1f866209c55?url=https%3A%2F%2Fwww.barrons.com%2Farticles%2Fexxons-shareholder-revolt-is-a-warning-shot-for-boards-everywhere-51622143164&amp;userId=1693566&amp;signature=1cb41bd3ac4be6ce\" class=\"icon none\">view<\/a>\u00a0invokes broader trends, such as shareholder proposals winning more votes in recent years. In this view, shareholders are signaling to boards their increased interest in having corporations weigh in on contentious issues, from board diversity to corporate political lobbying. Although plausible, this view reflects the more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a> power of shareholder voice than relative merits of any particular social or political issue, on which shareholders can be expected to divide just as the general population does.<\/p>\n<p>Yet another take looks at how the contest will influence shareholder activism. It may become common practice for activists to add hot-button policy issues to an investment thesis, to attract more votes. Yet while that works for policy issues tied to strategy \u2014 such as ecology at energy companies \u2014 it is harder to tie board diversity or lobbying limits to particular corporate strategies. \u00a0<\/p>\n<p>The most plausible interpretation, and most reassuring to ordinary investors, is one of old-fashioned corporate governance. Shareholders elect boards, who set strategy and <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>oint officers. When companies perform satisfactorily, directors can expect to be re-elected. Otherwise, expect change. That puts the case of Exxon Mobil in a class with the 350 other election contests shareholders have mounted over the past seven years, including targeting titans such as DuPont<br \/>\n        DD,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/203606582\/composite\" class=\"negative\">-1.62%<\/bg-quote><span>,<\/span><br \/>\n       Honeywell International<br \/>\n        HON,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/205583690\/composite\" class=\"negative\">-0.68%<\/bg-quote><span>,<\/span><br \/>\n       Procter &amp; Gamble<br \/>\n        PG,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/202894679\/composite\" class=\"positive\">+0.74%<\/bg-quote><br \/>\n       and Starbucks<br \/>\n        SBUX,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/207508890\/composite\" class=\"positive\">+0.74%<\/bg-quote><span>.<\/span>\n      <\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>In this telling, the Exxon Mobil contest is less dramatic than portrayed, but more important. The company\u2019s shareholders chose change. The wisdom of their choice will be determined by the performance of these directors. Serve Exxon Mobil and its shareholders as faithful stewards, and directors can expect reelection; fail to deliver shareholder returns and expect to be turned out of office. That\u2019s corporate democracy, which continues to thrive even at Exxon Mobil.\u00a0\u00a0<\/p>\n<p><em>Lawrence A.\u00a0Cunningham\u00a0is a professor at George Washington University, founder of the\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/8bab124ee5041cdec5e54065accaf0d6a54babf7?url=https%3A%2F%2Fqualityshareholdersgroup.com%2F&amp;userId=1693566&amp;signature=0be78841d89f993b\" class=\"icon none\">Quality Shareholders Group<\/a>, and publisher, since 1997, of\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/9f062e727b15d1b788047d58a6a392a6cf4a7981?url=https%3A%2F%2Fwww.amazon.com%2FEssays-Warren-Buffett-Lessons-Corporate-dp-1531017509%2Fdp%2F1531017509%2Fref%3Dmt_other%3F_encoding%3DUTF8%26me%3D%26qid%3D&amp;userId=1693566&amp;signature=0b64bbc6f735d54c\" class=\"icon none\">The Essays of Warren Buffett: Lessons for Corporate America<\/a>. For updates on his research about quality shareholders,\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailtrack.io\/trace\/link\/2b0a08d4a3aed81d6af746cbe73f04fa4e3fa1f9?url=https%3A%2F%2Fapp.e2ma.net%2Fapp2%2Faudience%2Fsignup%2F1924447%2F1918303%2F&amp;userId=1693566&amp;signature=0b85328489081998\" class=\"icon none\">sign up here<\/a>.<\/em><\/p>\n<p><strong>More: <\/strong>\u00a0Is an activist hedge fund\u2019s climate-linked coup of Exxon\u2019s board simply a case of \u2018greenwashing\u2019?<\/p>\n<p><strong>Plus: <\/strong>These cool, high-quality stocks are just right for this overheated, overvalued market<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Lawrence A. Cunningham\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Lawrence_A_Cunningham\"><\/span>Lawrence A. Cunningham<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<div class=\"mw-author-contributor\">MarketWatch Contributor Network<\/div>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-7499-A70428EC4A34%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Opinion: Memo to company directors: Deliver for shareholders or face consequences &#8221; Investors\u2019 vote to put activists on Exxon Mobil\u2019s board shows corporate democracy in action At Exxon Mobil\u2019s XOM, +0.16% annual shareholders\u2019 meeting in May, shareholders voted to replace three board members with the nominees from activist hedge-fund Engine No. 1, owner of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":271528,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-271527","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/271527","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=271527"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/271527\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/271528"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=271527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=271527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=271527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}