Business
Column: Exxon Mobil is suing its shareholders to silence them about global warming
You wouldn’t think that Exxon Mobil has to worry much about being harried by a couple of shareholder groups owning a few thousand dollars worth of shares between them — not with its $529-billion market value and its stature as the world’s biggest oil company.
But then you might not have factored in the company’s stature as the world’s biggest corporate bully.
In February, Exxon Mobil sued the U.S. investment firm Arjuna Capital and Netherlands-based green shareholder firm Follow This to keep a shareholder resolution they sponsored from appearing on the agenda of its May 29 annual meeting. The resolution urged Exxon Mobil to work harder to reduce the greenhouse gas emissions of its products.
Exxon has more resources than just about anybody; ‘overkill’ doesn’t begin to describe the imbalance of power.
— Shareholder advocate Nell Minow
The company’s legal threat worked: Days after the lawsuit was filed, the shareholder groups, weighing their relative strength against an oil behemoth, withdrew the proposal and pledged not to refile it in the future.
Yet even though the proposal no longer exists, the company is still pursuing the lawsuit, running up its own and its adversaries’ legal bills. Its goal isn’t hard to fathom.
“What purpose does this have other than sending a chill down the spines of other investors to keep them from speaking up and filing resolutions?” asks Illinois State Treasurer Michael W. Frerichs, who oversees public investment portfolios, including the state’s retirement and college savings funds, worth more than $35 billion.
In response to the lawsuit, Frerichs has urged Exxon Mobil shareholders to vote against the reelection to the board of Chairman and Chief Executive Darren W. Woods and lead independent director Joseph L. Hooley at the annual meeting.
He’s not alone. The $496-billion California Public Employees’ Retirement System, or CalPERS, the nation’s largest public pension fund, is considering a vote against Woods, according to the fund’s chief operating investment officer, Michael Cohen.
“Exxon has gone well beyond any other company that we’re aware of in terms of suing shareholders for trying to bring forward a proposal,” Cohen told the Financial Times. “There doesn’t seem to be anything other than an agenda of sending a message of shutting down shareholders’ ability to speak their mind.”
California Treasurer Fiona Ma, a CalPERS board member, backs a vote against Woods. “As the largest public pension fund in the country, we have a responsibility to lead on issues that threaten to undermine shareowners,” she says.
The proxy advisory firm Glass Lewis & Co., which helps institutional investors decide how to vote on shareholder proposals and board elections, has counseled a vote against Hooley, citing Exxon Mobil’s “unusual and aggressive tactics” in fighting activist investors.
Exxon Mobil’s action against Arjuna and Follow This opens a new chapter in the long battle between corporate managements and shareholder gadflies.
Fossil fuel companies have been especially touchy about shareholder resolutions calling on them to take firmer action on global warming and to be more transparent about the effects their products have on climate.
In part that may be the result of some significant victories by activist shareholders. In 2021, nearly 61% of Chevron shareholders voted for the company to “substantially” reduce its greenhouse gas emissions — a shockingly large majority for a shareholder vote on any issue. That same year, the activist hedge fund Engine No. 1 led a campaign that unseated three Exxon Mobil board members and replaced them with directors more sensitive to climate risk.
Exxon Mobil also subjected the San Diego County community of Imperial Beach to a campaign of legal harassment over the city’s participation in a lawsuit aimed at forcing the company and others in the oil industry to pay compensation for the cost of global warming, which stems from the burning of the companies’ products.
Even in that context, Exxon Mobil’s campaign against Arjuna and Follow This represents a high-water mark in corporate cynicism.
The lawsuit asserts that the investment funds’ proposed resolution violated standards set forth by the Securities and Exchange Commission governing the propriety of such resolutions — it was related to “the company’s ordinary business operations” and closely resembled resolutions on similar topics that had failed to exceed threshold votes at the company’s 2022 and 2023 annual meetings. Both standards allow a company to block a resolution from the meeting agenda, or proxy.
That may be so, but the conventional practice is for managements to seek approval from the SEC to exclude such resolutions through the issuance of what’s known as an agency “no action” letter.
Exxon Mobil hasn’t taken that step. Instead, it filed its lawsuit in federal court in Forth Worth, where the case was certain to be heard by one of the only two judges in that courthouse, both conservatives appointed by Republican presidents — a crystalline example of partisan “judge shopping.” The case came before Trump appointee Mark T. Pittman, who has allowed it to proceed.
The company hasn’t said why it followed that course. “The U.S. system for shareholder access is the best in the world,” company spokeswoman Elise Otten told me by email. “To make sure it stays that way, the rules must be enforced or the abuse by activists masquerading as shareholders will continue threatening the system.”
In practice, however, the SEC has been quite strict about requiring that shareholder proposals meet its standards. “There can only be one reason” for the lawsuit, says shareholder advocate Nell Minow — “it’s to crush the shareholder. Exxon has more resources than just about anybody; ‘overkill’ doesn’t begin to describe the imbalance of power.”
The company accused Arjuna and Follow This of aiming not “to improve ExxonMobil’s business performance or increase shareholder value,” but of pursuing the goal of “disrupting ExxonMobil’s investments and development of fossil fuel assets and causing ExxonMobil to change its business model, regardless of the benefits, costs, or the world’s needs.”
The company maintained that the shareholder groups aimed to “force ExxonMobil to change the nature of its ordinary business or to go out of business entirely.”
That’s flatly untrue. The resolution observed that the company’s “cost of capital may substantially increase if it fails to control transition risks by significantly reducing absolute emissions.”
That judgment is shared by many institutional investors and government regulators, and points to a path for preserving Exxon Mobil’s business prospects, not destroying them.
In any case, what Exxon Mobil failed to note is that shareholder resolutions are always advisory — they can’t require management to do anything.
In its lawsuit, the company whined about the sheer burden of handling an increase in shareholder resolutions, especially those on fraught topics such as the environment and social issues. Using what it described as an SEC estimate that it costs corporations $150,000 to deal with every submitted resolution, its annual meeting statement calculated that it has spent $21 million to manage 140 submitted resolutions.
A couple of points about that. First, the SEC didn’t estimate that every resolution costs $150,000 to manage. The SEC actually cites a range of $20,000 to $150,000 each.
Second, a quick look at the company’s financial statements gives the lie to its claim that shareholder resolutions are some sort of cataclysmic burden. Its statistics applied to the entire 10-year period from 2014 through 2023, not just a single year.
Over that decade, Exxon Mobil reported total profits of $204.3 billion. In other words, processing those 140 proposals — using the SEC’s highest estimate to arrive at $21 million — cost Exxon Mobil one one-hundredth of a percent of its profits, at most, to deal with shareholder proposals.
And it’s not as if those proposals clog up the annual meeting proxy — for this year’s meeting, only four proposals will be submitted to shareholder votes. Management opposes all four, big surprise.
As for whether companies such as Exxon Mobil have better uses for their money, the proxy statement doesn’t make a great case for every expenditure.
Last year, for instance, the company paid nearly $1.5 million in relocation expenses for its top executives, including about $500,000 for Woods, in connection with the move of its headquarters from the Dallas suburbs to the Houston suburbs, about a three-hour drive away. Over the last three years, Woods collected more than $81 million in compensation, so one can see why moving house would leave him strapped.
“As a shareholder, the one thing you ask for is to look at every expenditure in terms of its return on investment,” Minow told me. “It’s unfathomable that the return on investment of this lawsuit is in any way beneficial to the company.” She’s right: It’s certain that Exxon’s legal fees on this case already exceed the putative $150,000 expense it incurred dealing with the withdrawn proposal.
Exxon Mobil’s punitive lawsuit only hints at the lengths that the fossil fuel industry will go to preserve a business model facing an inexorable decline. The companies haven’t been shy about enlisting politicians to rid them of their turbulent shareholders (to paraphrase the medieval King Henry II).
In February, Sen. Bill Hagerty (R-Tenn.) introduced a measure dubbed the “Rejecting Extremist Shareholder Proposals that Inhibit and Thwart Enterprise for Businesses Act, or “RESPITE.” The act would overturn an SEC rule stating that resolutions dealing with “significant social policy issues” can’t be excluded from the annual proxy under the traditional “ordinary business” limitation.
Don’t expect them to be shy about demanding more latitude from a reelected President Trump. The Washington Post reported last week that Trump pledged to roll back Biden administration environmental policies if the oil executives meeting with him at Mar-a-Lago would raise $1 billion for his campaign. An Exxon Mobil executive was present, the Post reported.
For the trendiest tenants in Hollywood office buildings, it’s the latest fad that goes way beyond designer furniture and art: mini studios
To capitalize on the never-ending flow of stars and influencers who come through Los Angeles, a growing number of companies are building bright little corners for content creators to try products and shoot short videos. Athletic apparel maker Puma, Kim Kardashian’s Skims and cheeky cosmetics retailer e.l.f. have spaces specifically designed to give people a place to experience and broadcast about their brands.
Hollywood, which hasn’t historically been home to apparel companies, is now attracting the offices of fashion retailers, says CIM Group, one of the neighborhood’s largest commercial property landlords.
“When we’re touring a space, one of the first items they bring up is, ‘Where can I build a studio?’” said Blake Eckert, who leases CIM offices in L.A.
Their studio offices also serve as marketing centers, with showrooms and meeting spaces where brands can host proprietary events not open to the public.
“For companies where brand visibility is really important, there is a trend of creating spaces that don’t just function as offices,” said real estate broker Nicole Mihalka of CBRE, who puts together entertainment property leases and sales.
Puma’s global entertainment marketing team is based in its new Hollywood offices, which works with such musical celebrity partners as Rihanna, ASAP Rocky, Dua Lipa, Skepta and Rosé, said Allyssa Rapp, head of Puma Studio L.A.
Allyssa Rapp, director of entertainment marketing at Puma, is shown in the Puma Studio L.A. The company keeps a closet full of Puma products on hand to give VIP guests. Visits to the studio sanctum are by invitation only, though.
(Kayla Bartkowski / Los Angeles Times)
Hollywood is a central location, she said, for meeting with celebrities, stylists and outside designers, most of whom are based in Los Angeles.
The office is a “creation hub,” she said, where influencers can record Puma’s design prototyping lab supported by libraries of materials and equipment used to create Puma apparel. The company, founded in 1948, is known for its emblematic sneakers such as the Speedcat and its lunging feline logo, and makes athletic wear, accessories and equipment.
Puma’s entertainment marketing team also occupies the office and sometimes uses it for exclusive events.
“We use the space as a showroom, as a social space that transforms from a traditional workplace into more of an experiential space,” Rapp said.
Nontraditional uses include content creation, sit-down dinners, product launches, album listening parties and workshops.
“Inviting people into our space and being able to give them high-touch brand experiences is something tangible and important for them,” she said. “The cultural layer is really important for us.”
The company keeps a closet full of Puma products on hand to give VIP guests. Visits to the studio sanctum are by invitation only, though. There’s no retail portal to the exclusive Hollywood offices.
Puma shoes are on display in the Puma Studio L.A.
(Kayla Bartkowski / Los Angeles Times)
Puma is also positioning its L.A studio as a connection point for major upcoming sporting events coming to Los Angeles, including the World Cup this summer, the 2027 Super Bowl and 2028 Olympics.
In-office studios don’t need to be big to be impactful, Mihalka said. “These are smaller stages, closer to green screen than a massive soundstage.”
Social media is the key driver of content created by most businesses, which may set up small booth-like stages where influencers can hawk hot products while offering discounts to people watching them perform.
Bigger, elevated stages can accommodate multiple performers for extended discussions in front of small audiences, with towering screens behind them to set the mood or illustrate products.
Among the tricked-out offices, she said, is Skims. The company, which is valued at $5 billion, is based in a glass-and-steel office building near the fabled intersection of Hollywood Boulevard and Vine Street.
The fashion retailer declined to comment on the studio uses in its headquarters, but according to architecture firm Odaa, it has open and private offices, meeting rooms, collaboration zones, photo studios, sample libraries, prototype showrooms, an executive lounge and a commissary for 400 people.
Pieces of a shoe sit on a workbench in the Puma Studio L.A.
(Kayla Bartkowski / Los Angeles Times)
The brands building studios typically want to find the darkest spot on the premises to put their content creation or podcast spaces, Eckert said, where they can limit outside light and sound. That’s commonly near the center of the office floor, far from windows and close to permanent shear walls that limit sound intrusion.
They also need space for green rooms and restrooms dedicated to the talent.
Spotify recently built a fancy podcast studio in a CIM office building on trendy Sycamore Avenue that is open by invitation-only to video creators in Spotify’s partner program.
“Ambitious shows need spaces that support big ideas,” Bill Simmons, head of talk strategy at Spotify, said in a statement. “These studios give teams room to experiment and keep pushing what’s possible.”
The rolling robots that deliver groceries and hot meals across Los Angeles are getting an upgrade.
Coco Robotics, a UCLA-born startup that’s deployed more than 1,000 bots across the country, unveiled its next-generation machines on Thursday.
The new robots are bigger, tougher and better equipped for autonomy than their predecessors. The company will use them to expand into new markets and increase its presence in Los Angeles, where it makes deliveries through a partnership with DoorDash.
Dubbed Coco 2, the next-gen bots have upgraded cameras and front-facing lidar, a laser-based sensor used in self-driving cars. They will use hardware built by Nvidia, the Santa Clara-based artificial intelligence chip giant.
Coco co-founder and chief executive Zach Rash said Coco 2 will be able to make deliveries even in conditions unsafe for human drivers. The robot is fully submersible in case of flooding and is compatible with special snow tires.
Zach Rash, co-founder and CEO of Coco, opens the top of the new Coco 2 (Next-Gen) at the Coco Robotics headquarters in Venice.
(Kayla Bartkowski/Los Angeles Times)
Early this month, a cute Coco was recorded struggling through flooded roads in L.A.
“She’s doing her best!” said the person recording the video. “She is doing her best, you guys.”
Instagram followers cheered the bot on, with one posting, “Go coco, go,” and others calling for someone to help the robot.
“We want it to have a lot more reliability in the most extreme conditions where it’s either unsafe or uncomfortable for human drivers to be on the road,” Rash said. “Those are the exact times where everyone wants to order.”
The company will ramp up mass production of Coco 2 this summer, Rash said, aiming to produce 1,000 bots each month.
The design is sleek and simple, with a pink-and-white ombré paint job, the company’s name printed in lowercase, and a keypad for loading and unloading the cargo area. The robots have four wheels and a bigger internal compartment for carrying food and goods .
Many of the bots will be used for expansion into new markets across Europe and Asia, but they will also hit the streets in Los Angeles and operate alongside the older Coco bots.
Coco has about 300 bots in Los Angeles already, serving customers from Santa Monica and Venice to Westwood, Mid-City, West Hollywood, Hollywood, Echo Park, Silver Lake, downtown, Koreatown and the USC area.
The new Coco 2 (Next-Gen) drives along the sidewalk at the Coco Robotics headquarters in Venice.
(Kayla Bartkowski/Los Angeles Times)
The company is in discussion with officials in Culver City, Long Beach and Pasadena about bringing autonomous delivery to those communities.
There’s also been demand for the bots in Studio City, Burbank and the San Fernando Valley, according to Rash.
“A lot of the markets that we go into have been telling us they can’t hire enough people to do the deliveries and to continue to grow at the pace that customers want,” Rash said. “There’s quite a lot of area in Los Angeles that we can still cover.”
The bots already operate in Chicago, Miami and Helsinki, Finland. Last month, they arrived in Jersey City, N.J.
Late last year, Coco announced a partnership with DashMart, DoorDash’s delivery-only online store. The partnership allows Coco bots to deliver fresh groceries, electronics and household essentials as well as hot prepared meals.
With the release of Coco 2, the company is eyeing faster deliveries using bike lanes and road shoulders as opposed to just sidewalks, in cities where it’s safe to do so. Coco 2 can adapt more quickly to new environments and physical obstacles, the company said.
Zach Rash, co-founder and CEO of Coco.
(Kayla Bartkowski/Los Angeles Times)
Coco 2 is designed to operate autonomously, but there will still be human oversight in case the robot runs into trouble, Rash said. Damaged sidewalks or unexpected construction can stop a bot in its tracks.
The need for human supervision has created a new field of jobs for Angelenos.
Though there have been reports of pedestrians bullying the robots by knocking them over or blocking their path, Rash said the community response has been overall positive. The bots are meant to inspire affection.
“One of the design principles on the color and the name and a lot of the branding was to feel warm and friendly to people,” Rash said.
Coco plans to add thousands of bots to its fleet this year. The delivery service got its start as a dorm room project in 2020, when Rash was a student at UCLA. He co-founded the company with fellow student Brad Squicciarini.
The Santa Monica-based company has completed more than 500,000 zero-emission deliveries and its bots have collectively traveled around 1 million miles.
Coco chooses neighborhoods to deploy its bots based on density, prioritizing areas with restaurants clustered together and short delivery distances as well as places where parking is difficult.
The robots can relieve congestion by taking cars and motorbikes off the roads. Rash said there is so much demand for delivery services that the company’s bots are not taking jobs from human drivers.
Instead, Coco can fill gaps in the delivery market while saving merchants money and improving the safety of city streets.
“This vehicle is inherently a lot safer for communities than a car,” Rash said. “We believe our vehicles can operate the highest quality of service and we can do it at the lowest price point.”
President Trump on Friday directed federal agencies to stop using technology from San Francisco artificial intelligence company Anthropic, escalating a high-profile clash between the AI startup and the Pentagon over safety.
In a Friday post on the social media site Truth Social, Trump described the company as “radical left” and “woke.”
“We don’t need it, we don’t want it, and will not do business with them again!” Trump said.
The president’s harsh words mark a major escalation in the ongoing battle between some in the Trump administration and several technology companies over the use of artificial intelligence in defense tech.
Anthropic has been sparring with the Pentagon, which had threatened to end its $200-million contract with the company on Friday if it didn’t loosen restrictions on its AI model so it could be used for more military purposes. Anthropic had been asking for more guarantees that its tech wouldn’t be used for surveillance of Americans or autonomous weapons.
The tussle could hobble Anthropic’s business with the government. The Trump administration said the company was added to a sweeping national security blacklist, ordering federal agencies to immediately discontinue use of its products and barring any government contractors from maintaining ties with it.
Defense Secretary Pete Hegseth, who met with Anthropic’s Chief Executive Dario Amodei this week, criticized the tech company after Trump’s Truth Social post.
“Anthropic delivered a master class in arrogance and betrayal as well as a textbook case of how not to do business with the United States Government or the Pentagon,” he wrote Friday on social media site X.
Anthropic didn’t immediately respond to a request for comment.
Anthropic announced a two-year agreement with the Department of Defense in July to “prototype frontier AI capabilities that advance U.S. national security.”
The company has an AI chatbot called Claude, but it also built a custom AI system for U.S. national security customers.
On Thursday, Amodei signaled the company wouldn’t cave to the Department of Defense’s demands to loosen safety restrictions on its AI models.
The government has emphasized in negotiations that it wants to use Anthropic’s technology only for legal purposes, and the safeguards Anthropic wants are already covered by the law.
Still, Amodei was worried about Washington’s commitment.
“We have never raised objections to particular military operations nor attempted to limit use of our technology in an ad hoc manner,” he said in a blog post. “However, in a narrow set of cases, we believe AI can undermine, rather than defend, democratic values.”
Tech workers have backed Anthropic’s stance.
Unions and worker groups representing 700,000 employees at Amazon, Google and Microsoft said this week in a joint statement that they’re urging their employers to reject these demands as well if they have additional contracts with the Pentagon.
“Our employers are already complicit in providing their technologies to power mass atrocities and war crimes; capitulating to the Pentagon’s intimidation will only further implicate our labor in violence and repression,” the statement said.
Anthropic’s standoff with the U.S. government could benefit its competitors, such as Elon Musk’s xAI or OpenAI.
Sam Altman, chief executive of OpenAI, the company behind ChatGPT and one of Anthropic’s biggest competitors, told CNBC in an interview that he trusts Anthropic.
“I think they really do care about safety, and I’ve been happy that they’ve been supporting our war fighters,” he said. “I’m not sure where this is going to go.”
Anthropic has distinguished itself from its rivals by touting its concern about AI safety.
The company, valued at roughly $380 billion, is legally required to balance making money with advancing the company’s public benefit of “responsible development and maintenance of advanced AI for the long-term benefit of humanity.”
Developers, businesses, government agencies and other organizations use Anthropic’s tools. Its chatbot can generate code, write text and perform other tasks. Anthropic also offers an AI assistant for consumers and makes money from paid subscriptions as well as contracts. Unlike OpenAI, which is testing ads in ChatGPT, Anthropic has pledged not to show ads in its chatbot Claude.
The company has roughly 2,000 employees and has revenue equivalent to about $14 billion a year.
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