Exxon's Activist Shareholders Fall Short

This post first appeared on Minyanville.

Sometimes $40 billion just isn't enough.

Yesterday, Exxon Mobil (XOM) shareholders failed to pass a measure that would have created the role of independent chairman at the world's biggest refiner. The influential Rockefeller family led the push -- as it's done for several years -- which it hoped would encourage the company to focus more on environmental concerns.

In responding to the proposal, The Wall Street Journal reports Rex Tillerson, Exxon's chairman and chief executive, said the company has a "corporate responsibility to see that the world has enough fossil fuels for its growing energy demands." He acknowledged, however, that the company needs to do more to reduce its environmental footprint.

Even though the measure garnered the support of less than 40% of shareholders, some analysts still expect Exxon to split the chairman and CEO roles in two. The measure's popularity among activist shareholders may be enough to convince the company that, in order to avoid a more serious fight, decisive action is needed.

At issue is the disconnect between one company's legal responsibility to shareholders and its efforts to be a responsible environmental steward. Oil companies like Exxon and Chevron (CVX) regularly find themselves embroiled in conflicts over the impact of oil extraction. Pointing to fat bottom lines, dividends and consistent returns doesn't appease eco-minded shareholders.

Or, for that matter, all profit-minded shareholders. Some argue their push for change isn't just environmentally driven, its focused on the bottom line as well. Exxon, they argue, isn't doing enough to position itself for the future, when potential carbon legislation and supply constraints will force the company to do more to diversify away from its dependence on oil and gas revenues.

The vote may have failed to produce immediate change, but it should embolden shareholders of other companies to renew similar efforts. As owners of the companies, they do in fact have a say over how they're run.