US oil majors petition SEC to write off environmental shareholder resolutions from AGM votes

Companies seek SEC OK for omitting investor filings from the proxy.

US oil majors including Chevron, Exxon Mobil and Occidental are seeking SEC approval to write off shareholder resolutions lodged by institutional investors on environmental issues from votes at their forthcoming annual general meetings (AGMs). Their lawyers have written to the US regulator seeking assurance that it will not act against them if the proposals are omitted from the shareholder proxy voting form ahead of the AGMs, according to SEC filings. The process is entirely legitimate. However, the number of SEC requests from oil majors sheds light on the behind-the-scenes wrangling that occurs before shareholder resolutions are actually voted on. US companies have 13 reasons for which they can request SEC proxy omission for shareholder resolutions, including duplication or the common defence that the company is already dealing with the matter. In a letter dated December 29 2010, Occidental Petroleum wrote to the SEC requesting to omit a proposal from the $140.6bn New York State Common Retirement Fund. The fund, which owns 3.1m shares in Occidental, is calling for the nomination at least one board member with expertise on the environmental impacts of hydrocarbon exploration and production. Occidental says its board director John Feick, who has a doctorate in chemical engineering, “meets these requirements”. Occidental will mail its proxy material to shareholders on or around March 22 ahead of its AGM, which is likely to happen in May. However, ConocoPhillips failed in an attempt to wipe a shareholder proposal from the American Federation of Labor and Congress of Industrial Organizations (AFLCIO) for a report on safety. The SEC told the oil company: “Based on the information you have presented, it does not appear that ConocoPhillips’ public disclosures compare favourably with the guidelines of the proposal.” In another example, letters dated January 21 from ExxonMobil to the Office of Chief Counsel, Division of Corporation Finance at the SEC, show the company isseeking to omit environmental-related resolutions from shareholder activists, As You Sow, and fund managers, Green Century Asset Management and NorthStar Asset Management. As You Sow is calling on Exxon Mobil to report on the environmental impacts of its natural gas fracturing operations. Green Century is requesting a report on the long term ESG risks of the group’s Canadian oil sands operations, and NorthStar, the $300m manager, is requesting that the group implement a policy on the human right to water. In each case, Exxon Mobil’s SEC submission says it has already “substantially implemented” the proposals ahead of its AGM, scheduled for May. The SEC filings also show that New York City Comptroller John Liu, who oversees the city pension funds, withdrew a resolution requesting that controversial mining firm Massey Energy produce a report on pollution reduction, according to a February 4 letter. The move follows Massey’s $8.5bn merger with Alpha Natural Resources in January. Some of the SEC’s published decisions on shareholder resolution omissions are revealing, albeit for what appear to be administrative oversights. An attempt by Calvert, the socially responsible asset manager, to force Energen, the oil and gas exploration and production company, to publish a sustainability report by October 2011 was successfully blocked by the company on a technicality over Calvert’s shareholding. The SEC said Calvert had “provided a statement of its own intentions and not of the shareholders’ intentions”. The SEC said it would also not recommend an enforcement action against Anadarko Petroleum for omitting a resolution relating to natural gas fracturing tabled by The Sustainability Group, the Boston-based wealth manager, after it had failed to supply documentation showing minimum ownership requirements. Under the SEC’s Rule 14a-8 shareholders submitting AGM proposals must have continuously held at least $2,000 worth, or 1%, of a company shares for at least a year. SEC home page.