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Investor Losses From FTX’s Implosion Are Growing

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Investor Losses From FTX’s Implosion Are Growing

The breadth of the worldwide fallout from FTX’s collapse has continued to emerge. Temasek, Singapore’s state-backed fund, mentioned on Thursday that it had absolutely written down its $275 million funding within the crypto trade, becoming a member of the Silicon Valley agency Sequoia Capital and SoftBank, the Japanese tech conglomerate, in declaring their stakes nugatory.

The event comes as Sam Bankman-Fried, FTX’s founder, delivered a sequence of bombshell admissions in a candid direct-message trade with Vox’s Kelsey Piper. Amongst them: S.B.F., as Mr. Bankman-Fried is understood, blamed “messy accounting” for the corporate’s losses, which may run into the billions.

Contagion fears are rising — and hitting notable buyers. Mr. Bankman-Fried satisfied Anthony Scaramucci, the founding father of the funding agency SkyBridge Capital, to purchase $10 million price of FTT, the digital token of FTX, as a situation for Bankman-Fried to inject $45 million into SkyBridge in September, based on The Monetary Occasions. FTT’s worth has plunged by greater than 90 p.c over the previous two weeks.

Is Genesis International Capital, an enormous lender to crypto hedge funds, in danger? The agency faces $175 million in publicity to FTX and has employed the restructuring agency Alvarez & Marsel and the legislation agency Cleary Gottlieb as advisers because it faces a liquidity crunch. Genesis halted buyer withdrawals and any new lending on Wednesday.

Why it issues: Genesis is owned by Digital Forex Group, one of many greatest gamers within the crypto trade. Based by Barry Silbert in 2015, D.C.G. is a crypto conglomerate that owns dozens of firms, together with the information website CoinDesk and the asset supervisor Grayscale Investments, which runs the world’s largest crypto fund. It’s additionally backed by big-name mainstream buyers, together with SoftBank’s Imaginative and prescient Fund 2 and Alphabet, the dad or mum firm of Google.

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Shares of the Grayscale Bitcoin Belief have fallen 20 p.c prior to now two weeks, and are down 75 p.c for the 12 months.

Losses at Grayscale may run deep. Grayscale is the place Bitcoin touches retail buyers and Wall Avenue. Anybody may purchase into Grayscale. Cathie Wooden’s Ark Funding Administration and dozens of different mutual funds are, or have been, holders of Grayscale funding merchandise to get publicity to crypto belongings.

Different corporations are beneath stress, too. The crypto trade Gemini, which is owned by the Fb-famous Winklevoss twins, briefly halted a few of its withdrawals on Wednesday.

FTX faces large authorized challenges as buyers search justice. S.B.F. mentioned on Twitter on Wednesday that he was wrong to assume FTX held sufficient reserves to cowl buyer withdrawals, a presumably tantalizing admission.

David Boies, the distinguished lawyer concerned in among the greatest circumstances lately, has signed on to signify FTX buyers in a class-action lawsuit. They’re looking for billions from not simply Bankman-Fried, but additionally superstar FTX promoters, together with the comic Larry David and the soccer participant Tom Brady.

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Lawmakers are additionally gearing up. Treasury Secretary Janet Yellen mentioned on Wednesday that the crypto market wants extra oversight, including that the sector’s hyperlinks to the broader monetary system may trigger wider stability points. And the Home Monetary Providers Committee will maintain a listening to on the current travails of the crypto market subsequent month.

Republicans declare management of the Home. The G.O.P. crossed the 218-seat threshold to win a majority within the chamber, however its maintain stays far slimmer than it had hoped. A handful of races have but to be referred to as. In the meantime, one other distinguished Republican donor, Ron Lauder, grew to become the newest to say he wouldn’t again Donald Trump’s presidential run.

The U.Ok. authorities outlines its price range finally. The chancellor of the Exchequer, Jeremy Hunt, mentioned thousands and thousands extra Britons would pay greater taxes, public spending could be lower sharply and already enormous windfall taxes on vitality firms would rise. The strikes, he mentioned, had been geared toward shoring up Britain’s funds amid rising inflation and market turmoil exacerbated by the earlier authorities’s plans for unfunded tax cuts.

Retailers are providing a cautiously optimistic financial image. Retail gross sales rose 1.3 p.c final month, the Commerce Division introduced, surpassing expectations. However whereas that’s additionally been borne out by outcomes at Walmart, Goal cautioned that it was seeing spending slowdowns in discretionary classes like attire heading into the vacation season.

Former SpaceX employees say they had been fired for criticizing Elon Musk. 9 engineers mentioned their dismissals had been tied to the writing of a letter calling on the rocket firm to sentence its C.E.O.’s “dangerous Twitter conduct.” Eight of them filed costs of unfair labor practices with federal regulators over the matter. (Extra on Musk’s travails at one other of his firms under.)

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Dell agrees to a file $1 billion payout to settle a shareholder lawsuit. The tech large’s proposed fee will finish investor claims that Dell’s 2018 deal to go public was based mostly on “coercive, strong-arm ways.” If accredited, the settlement could be one of many greatest ever in Delaware’s Court docket of Chancery.

Sam Bankman-Fried, the embattled founding father of FTX, has already bewildered many by persevering with to tweet about his crypto empire whilst he faces potential investigations into its implosion. However in an eye-opening interview with Vox over Twitter direct messages, he spoke candidly about FTX’s destiny, regulation, ethics and extra. (S.B.F. later tweeted that he believed he was talking with a friend and didn’t intend for these to change into public.)

Listed below are among the highlights.

  • S.B.F. derided regulators with an expletive, including, “They make all the pieces worse. They don’t defend clients in any respect.” (He later tried to stroll these feedback again.)

  • He regretted having FTX file for chapter safety: “If I hadn’t accomplished that, withdrawals could be opening up in a month with clients absolutely entire.” Submitting for Chapter 11 meant placing folks in cost who “are attempting to burn all of it to the bottom out of disgrace,” he wrote.

  • S.B.F. performed down earlier feedback about the necessity to keep away from unethical conduct even when it serves a higher good, lamenting “this dumb sport we woke westerners play.” He additionally commented on the approval that Changpeng Zhao, an FTX investor-turned-rival who deserted a deal to save lots of S.B.F.’s agency, has gained in current days: “Is it as a result of he’s virtuous? Or as a result of he had the larger stability sheet.”

In a chapter courtroom submitting on Thursday, legal professionals for FTX criticized S.B.F.’s “incessant and disruptive tweeting.”


On Wednesday on the trial over Elon Musk’s monumental pay bundle at Tesla, the electrical carmaker’s C.E.O. took the stand to defend one of the crucial profitable compensation plans in trendy historical past, price practically $50 billion in inventory choice grants. And his hourslong look yielded new revelations about the way forward for each Tesla and Twitter.

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Mr. Musk mentioned he had no say over the pay bundle. The billionaire mentioned he was centered on operating the corporate and didn’t push the board — a few of whom had been additionally his social acquaintances — to do his bidding.

Tesla’s board has mentioned discovering a successor to Mr. Musk. One in all its administrators, the media scion James Murdoch, testified on Wednesday that Musk had lately instructed somebody who may take over within the prime function. However Antonio Gracias, who was a Tesla director till final 12 months, mentioned that whereas the board had mentioned potential successors, it hadn’t discovered an acceptable candidate.

Mr. Musk added that he had thought of stepping down as C.E.O., whereas Gracias mentioned the board felt it wanted Musk to stay within the prime spot.

Mr. Musk confirmed that his management of Twitter is short-term. “I anticipate to scale back my time at Twitter and discover any person else to run Twitter over time,” he testified. Musk admitted earlier this week that he had “an excessive amount of work” on his plate. That’s worrying Tesla shareholders, who assume his consideration is simply too divided amongst his many firms.

He performed down Tesla engineers’ work at Twitter. “I believe it lasted for a number of days and it was over,” Musk mentioned, describing the drafting of a number of Tesla software program engineers to assist at Twitter as “an after-hours” association. Murdoch mentioned the board’s audit committee was conscious that Mr. Musk had requested Tesla engineers to work on a volunteer foundation at Twitter.

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Mr. Murdoch general supplied a sturdy protection of the Tesla chief: “Shareholders have been rewarded, frankly, in a historic vogue.”


It was one factor when Columbia introduced over the summer time that it wouldn’t take part in U.S. Information and World Report’s rankings of prime nationwide universities, over doubts about information it had submitted for the influential listings.

However the one-two punch on Wednesday of Yale and Harvard withdrawing their legislation colleges’ cooperation with the rankings was one other factor altogether. Although in the end restricted in scope, the Ivy League establishments’ selections may have additional repercussions for the much-criticized — however broadly adopted — rankings.

Yale and Harvard argued that the U.S. Information system was unreliable, based mostly on self-reported information in addition to publicly obtainable figures. They added that the rankings devalued efforts to recruit less-well-off college students, present extra need-based monetary help and encourage graduates to pursue public-service jobs. Critics additionally say the rankings overemphasize college students’ grades and admission take a look at scores.

It’s a small step, not a knockout blow. Yale and Harvard solely withdrew their legislation colleges’ cooperation, not that of their universities as an entire. U.S. Information can nonetheless draw on publicly obtainable information to rank colleges.

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However ​​the transfer might persuade U.S. Information to change its methodology, notably by discounting the significance of admissions take a look at scores. “We agree that take a look at scores don’t inform the total story of an applicant,” U.S. Information mentioned after the Yale and Harvard bulletins.

Offers

  • Tencent of China plans to distribute its $20 billion stake in Meituan, the meal-delivery large, to its shareholders as a particular dividend. (Bloomberg)

  • Paris’s inventory market is near overtaking London’s because the highest-valued fairness hub in Europe. (FT)

  • Over 150 retired EY companions mentioned the agency’s plans to spin off its consulting arm from its accounting operations may harm each companies. (FT)

  • Hollywood’s prime two horror-movie producers, James Wan and Jason Blum, are in talks to merge their studios. (NYT)

Coverage

  • One of many main conservative dark-money teams in Washington acquired two nameless presents of $425 million every, among the many greatest ever to political organizations. (Politico)

  • Karen Bass, a veteran Democratic congresswoman, defeated the billionaire businessman Rick Caruso to change into the primary girl elected as mayor of Los Angeles. (NYT)

  • A invoice to supply federal protections for same-sex marriage superior within the Senate with bipartisan assist. (NYT)

Better of the remaining

  • As Silicon Valley firms like Meta and Twitter lay off workers, TikTok is shifting to scoop them up. (The Data)

  • Nick Jones, the founding father of the Soho Home members’ membership, is stepping down as C.E.O. after being identified with prostate most cancers. (FT)

  • First, Taylor Swift followers hoping for tickets for her newest tour crashed Ticketmaster’s web site. Now tickets are hitting $28,000 on the secondary market. (Reuters)

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Pro-Palestinian activists protest at Google developer conference amid Israel-Hamas war

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Pro-Palestinian activists protest at Google developer conference amid Israel-Hamas war

Dozens of protesters blocked the entrance of Google’s developer conference in Mountain View, Calif., for roughly 90 minutes on Tuesday, demanding that the tech giant drop its work with the Israeli government amid the country’s war with Hamas in the Gaza Strip.

The protest group, which accuses Israel of committing genocide against Palestinians in Gaza, held two events on Tuesday that it said involved hundreds of participants.

A group chanted “Shame on Google” and “Google Cloud rains blood” in the front of the entrance to the conference at Shoreline Amphitheatre, where the tech giant was expected to announce updates to business including its Android and Gemini AI systems. Separately, the protesters held a rally at a nearby park.

The protesters, who call themselves No Tech for Genocide, have been demanding that Google end its cloud computing contract with the Israeli government, known as Project Nimbus.

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The latest Israel-Hamas war began when Hamas militants attacked southern Israel on Oct. 7, killing about 1,200 people and taking an additional 250 hostage, according to the Israeli government. Palestinian militants still hold about 100 captives, and Israel’s military has killed more than 35,000 people in Gaza, according to Gaza’s Health Ministry, which doesn’t distinguish between civilians and combatants.

Protesters at the Google event said they believe the company’s technology is being used by the Israeli military for surveillance of people in Gaza through facial recognition, leading to the arrest and detention of Palestinians.

Google did not immediately respond to a request for comment.

The company has said that its technology is used to support numerous governments around the world, including Israel’s, and that the Nimbus contract is for work running on its commercial cloud network, with the Israeli government ministries agreeing to comply with Google’s terms of service and acceptable use policy.

“This work is not directed at highly sensitive, classified, or military workloads relevant to weapons or intelligence services,” Google said in an April statement.

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One of the protesters at the Tuesday conference was Ariel Koren, a former Google employee who alleges the company retaliated against her in 2021 after she raised concerns about the contract. Google said at the time that it had investigated the case and found no evidence of retaliation.

“We want to make sure that every single person who comes here and who might think that today’s a day about celebrating technological advancements — every single one of those people needs to understand that the reality is much darker than what Google has painted,” Koren said.

Organizers estimated that 50 people participated in the demonstration in front of the conference. The rally at the park drew a bigger crowd.

One of the participants objected to Google holding its conference the day before Palestinians commemorate 76 years since their mass expulsion from what is now Israel. Palestinians refer to their displacement during the 1948 Israeli-Arab war as the Nakba, which is Arabic for catastrophe.

The protest in front of the Google I/O conference began at around 9:30 a.m., with protesters moving toward a bag checkpoint. Conference attendees had been asked to take out their laptops and have their bags searched.

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The event’s security closed the entrance as protesters moved to stand in front, leaving a large line of attendees who were later directed to another area to proceed to the conference. A line of protesters held a red sign that proclaimed “Google Stop Fueling Genocide.” The demonstration ended at about 11 a.m.

Google’s developer conference draws thousands of people each year, many of whom are developers eager to learn about the company’s latest technology.

After witnessing the protest, several attendees said they planned to do more research on Project Nimbus.

“I feel that it is worth a shot to listen to others when they have a point of view,” said Andres Haro, a 30-year-old software security engineer from Utah, as he waited in a long redirected line into Google I/O’s entrance.

The protest comes after more than 50 Google employees were fired following sit-ins and protests that took place at Google office locations last month protesting Project Nimbus. Google said it terminated those workers after an investigation determined they were involved in disruptive activity that violated its policies governing employee conduct.

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A spokesperson for the group behind the sit-ins, called No Tech for Apartheid, said they were not involved with Tuesday’s protest.

“We’re asking more questions about what role we and our employers are playing in the world,” said Roni Zeiger, a product developer who participated in the rally on Tuesday at Charleston Park, near the Google event. “World events have continued to evolve and … people, including employees, are asking harder questions and wanting to work at places that are consistent with their values.”

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Red Lobster offered customers all-you-can-eat shrimp. That was a mistake

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Red Lobster offered customers all-you-can-eat shrimp.  That was a mistake

Red Lobster promised customers an endless supply of shrimp for $20 — a gamble the struggling restaurant chain hoped would help pull it out of its pandemic doldrums.

But Americans, and their appetites, had other plans.

The beloved yet beleaguered pillar of casual dining abruptly shuttered dozens of locations this week, heightening speculation that the chain is careening toward bankruptcy.

Although its dire financial situation isn’t the result of a single misstep, executives at the company that owns a large stake in the chain, as well as industry experts, said that miscalculations over the popularity of the all-you-can-eat shrimp special accelerated the company’s downward spiral.

The closures, including at least five locations in California, were announced in a LinkedIn post Monday by Neal Sherman, the chief executive of a liquidation firm called TAGeX Brands, which is auctioning off surplus restaurant equipment from the shuttered locations.

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Representatives for Red Lobster did not respond to a request for comment about the closures, which were listed on its website as temporary, or whether it planned to file for bankruptcy.

But company executives have been vocal about the misguided gamble with shrimp and how they misjudged just how hungry Americans would be for a deal on the crustaceans.

In an effort to boost foot traffic and ease the sales slump that swept through the restaurant industry during the pandemic, Red Lobster executives last year decided to relaunch a popular marketing ploy from years past to lure customers: For $20 they could eat as much shrimp as they wanted.

Eager for a deal during an era of stubbornly high inflation, many consumers eagerly embraced the offer as a challenge. People took to TikTok to brag about how many of the pink morsels they could put down in a single sitting — one woman boasted she’d consumed 108 shrimp over the course of a 4-hour meal.

“In the current environment, consumers are looking to find value and stretch budgets where they can,” said Jim Salera, a research analyst at Stephens, who tracks the restaurant industry. “At $20, it’s very possible for a consumer to eat well past the very thin profit margin.”

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During a presentation about sales from the third quarter of last year, Ludovic Garnier, the chief financial officer of Thai Union Group, a seafood conglomerate that has been Red Lobster’s largest shareholder since 2020, cited the endless shrimp deal as a key reason the chain had an operating loss of about $11 million during that time frame.

“The price point was $20,” Garnier said.

He paused.

“Twenty dollars,” he repeated with a tinge of regret in his voice. “And you can eat as much as you want.”

Although the promotion boosted traffic by a few percentage points, Garnier said, the number of people taking advantage of the all-you-can-eat offer far exceeded the company’s projections. In response, they adjusted the price to $22 and then $25.

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All-you-can-eat offers can be effective marketing strategies to get people in the door in the competitive world of casual dining — Applebee’s offers $1 margaritas dubbed the Dollarita, buffet chains such as Golden Corral and Sizzler promise abundance at a flat rate, and Olive Garden, one of Red Lobster’s main competitors, has long lured customers with unlimited salad and bread sticks.

But Red Lobster made a few crucial missteps with the shrimp deal, said Eric Chiang, an economics professor at University of Nevada, Las Vegas, and a self-proclaimed buffet aficionado.

The company not only started with a low price point, but offered a prized and pricey menu item that can serve as an entire meal — not many customers at Olive Garden, he noted, are going to stock up on bread sticks and salad alone.

“Most people will also order the Taste of Italy,” he said, “or something that gives you meat and pasta.”

Chiang said the most effective loss leaders, a term for products that aren’t profitable but bring in enough new customers or lead to the sale of enough other items to make the offer worthwhile, use cheap ingredients. A good example is 7-Eleven’s Free Slurpee Day, he said, as the company gives away about 15 cents of ice and syrup to customers who then pay to fill up their gas tanks.

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Consumers are especially drawn to all-you-can-eat deals and buffets during tighter economic times, Chiang said.

“This is a story of inflation,” he said. “All you can eat for $15? That gives customers a sense of control. Like we’re not being gouged, not being nickel and dimed for every dessert.”

Red Lobster, it turns out, has been in trouble for a while.

In 2003, the chain, which at the time was owned by Darden Restaurants, the company that owns Olive Garden, offered a similarly disastrous all-you-eat crab special for around $23.

So many people came back for seconds, thirds and even fourths, executives said at the time, that it cut into profit margins. Before long, the company’s then-president stepped down.

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In 2014, after a period of disappointing sales and less foot traffic, Darden sold Red Lobster to San Francisco private equity firm Golden Gate Capital for more than $2 billion, a stake that was eventually taken over by Thai Union.

Despite the turmoil, the company, which until this week touted about 700 locations, remained a brand so beloved that it earned a reference in Beyonce’s song “Formation,” in which she describes post-coital trips to Red Lobster.

After the song’s release, the company said it saw a 33% jump in sales, but that glow was short lived and had faded long before the ill-fated shrimp deal was brought back last year.

“You have to be pretty close to the edge for one promotion to tip you over the edge,” said Sara Senatore, a senior analyst at Bank of America, who follows the restaurant industry.

In January, Thai Union Group — citing a combination of financial struggles it pinned to the pandemic, high labor and material costs and the oft-cited buzzword of industry “headwinds” — announced plans to dump its stake in the company, which was founded in 1968 in Lakeland, Fla. The closures this week hit at least five California locations — Redding, Rohnert Park, Sacramento, San Diego and Torrance — according to the website of the liquidation company, which posted images of available items, including a lobster tank, seating booths, refrigerators and a coffee maker.

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During a presentation to investors in February, Thiraphong Chansiri, the chief executive of Thai Union, expressed frustration with the situation surrounding Red Lobster, saying it had left a “big scar” on him.

“Other people stop eating beef,” he said. “I’m going to stop eating lobster.”

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Column: Exxon Mobil is suing its shareholders to silence them about global warming

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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

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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.

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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.

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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.

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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.”

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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.

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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.

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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.

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