Guest hyperbole by David Middleton
Since, someone will very likely comment that the article doesn’t say that activist shareholders were trying to force oil companies to stop being oil companies, I will answer preemptively:
- You don’t know what an oil company is or does.
- The thread title was intentionally hyperbolical.
One of the two answers above may be hyperbolical.
However, my thread title is not nearly as misleading as the title of this Axios article:
Amy Harder Apr 2
Investors stunned over oil producer’s climate-change exemption
A new twist is unfolding in the fight between activist investors and the oil industry: an unprecedented move by federal regulators allowing a major producer to preemptively kill a shareholder resolution on climate change without a vote.
Why it matters: The Securities and Exchange Commission’s support of oil producer EOG Resources is emerging as a flashpoint in what has become America’s central battleground over climate change: what investors do about it. It’s an arcane fight, but a consequential one too, because President Trump is reversing course on climate policy.
“What the SEC has done here really feels like interfering with the marketplace, substituting their judgment for what shareholders and investors already think and do.”— Jonas Kron, director of shareholder advocacy at Trillium Asset Management, the investment firm that filed the now-blocked resolution
For the record, spokespeople at the SEC and EOG both declined to comment.
The details: Trillium proposed a resolution calling on EOG to set a target to reduce its greenhouse gas emissions. EOG complained to the SEC in late December that the proposal would micromanage the company, calling it a “rigid, time-bound” target, and asked to omit it from consideration.
Responding in late February, the SEC agreed and took a veiled shot at shareholders, implying they don’t know enough to set company policy. The SEC sent another letter last month to Kron’s firm rejecting an appeal request.
[…]
This is what the activist shareholders demanded:
Resolved: Shareholders request EOG Resources, Inc. (EOG) adopt company-wide, quantitative, time-bound targets for reducing greenhouse gas (GHG) emissions and issue a report, at reasonable cost and omitting proprietary information, discussing its plans and progress towards achieving these targets.
I’ve only worked in the oil industry for 37 years… So forgive my ignorance… How in the hell could an oil company, particularly the largest oil producer in Texas, reduce its greenhouse gas emissions and remain a viable oil company? Drill less wells? Produce less oil & natural gas? Solar-powered oil fields?
EOG very politely asked the SEC to schist-can this activist shareholder demand for the following reasons:
Under Rule 14a-8(i)(7), a proposal is excludable if it “deals with a matter relating to the company’s ordinary business operations.” In 1998, when the Commission adopted amendments to Rule 14a-8, the Commission explained that two central considerations determine whether a proposal is excludable under Rule 14a-8(i)(7). The first consideration relates to when a proposal concerns tasks “so fundamental to management’s ability to run a company on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight.” The second consideration relates to “the degree to which the proposal seeks to ‘micro-manage’ the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.” See SEC Release No. 34-40018 (May 21, 1998).
The SEC did not grant EOG a “climate-change exemption.” The SEC agreed with EOG that shareholders are not empowered to micro-manage corporations or interfere with their day-to-day operations. They do not have the right to vote for EOG to be something other than an oil company.
The Proposal requests that the Company adopt company-wide, quantitative, timebound targets for reducing greenhouse gas emissions and issue a report discussing its plans and progress towards achieving these targets.
There appears to be some basis for your view that the Company may exclude the Proposal under rule 14a-8(i)(7), as relating to the Company’s ordinary business operations. In our view, the Proposal seeks to micromanage the Company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment. Accordingly, we will not recommend enforcement action to the Commission if the Company omits the Proposal from its proxy materials in reliance on rule 14a-8(i)(7). In reaching this position, we have not found it necessary to address the alternative bases for omission upon which the Company relies.
And sanity prevailed.
AXIOS is yet another agglomeration of disgruntled “journalists” unhappy and incomprehensible that the world hasn’t anointed them as King/Emperor/Dictator.
At bottom, journalism is essentially professional gossipers and busybodies.
They weren’t athletic enough to be jocks, or studious enough to be nerds, or popular enough to be groupies, or weird enough to be arties. They eventually found their way to the school newspaper, where they wrote and took pictures of all the students who were more interesting than them.
Now that they’ve grown up and got journalism degrees, you can almost feel the resentment in the tone of their articles sometimes.
On the plus side for destructive activist shareholders, the stock may have been given a bump up making their holdings more valuable.
In an argument years ago with an individual who drank too much Koolaid and was complaining about the terrible exploitation of the poor by greedy corporations (?), I said their shares were available to purchase by anyone -go buy some shares and complain at the AGM. If they happen to be making all this money, you could also set up a foundation and support the poor with your investment profits.
I assumed this would give cause to actually cheer the corporations on. However, I see that it’s more likely for this kind of investor to cut his nose off to spite his face.
This decision by the SEC should be a precedent for court cases that are demanding a company cease to do what they do as an enterprise. Indeed, are the governments of Oakland and San Francisco not interfering in the rights of oil company shareholders to profit from their decision to invest in Exxon, Mobil, BP…Why haven’t shareholders launched a class action suit against these cites and the state governments whose AGs are interfering in the rights of shareholders. Are all lawyers now just activist ones? Any legal types here on this thread?
Simply question: Why are such activists investors in this sort of company, to begin with? Am I missing something? What? — they decided to invest in a profitable venture one day TO MAKE MONEY, and then, all of a sudden, one day they grew an activist conscience about CO2 and still think that they can MAKE MONEY in the original venture in which they invested?
Hey, I want to invest in stock of a major pizza chain to make money on a venture that makes money, but, oh, I have this thing about cheese and all those calories and stuff.
It’s an OIL company !
You are assuming the reason they bought stock in the company was to make money. They’re activists, the reason they bought stock was as an avenue to push their agenda.
It’s a contradictory, contrived path, then, which would be intentionally malicious towards the fundamental legal objective or legal mission of the business, which they would have to know, if this were their strategy, … thus, making them hostile, seemingly, in the eyes of the law.
If this were the case, then they would just be naive ignoramuses. If they knew the basis of the business, and if they intended to harass, systematically attempt to undermine, or otherwise interfere with the legal right of the company to act in accordance with this fundamental basis, then I could see a criminal case.
Imagine if the SEC had permitted this activism.
What a way to take out ones competition.
And what a cheap way to do it.
Is there really even such a thing as an “activist shareholder” ?? You are either an activist or a shareholder. They are mutually exclusive, if you have any sense. You have the freedom to invest in companies that you think will give you a “return on your investment”. Does it make sense to invest in a company that you don’t like the way it is run? Out of all the possible things to invest in, you can only find companies that you want to change? This is really an investment in a company in order to generate a news story about how they tried to silence YOUR CRITICISM OF THE CORE PRODUCT THEY PRODUCE!!!
It makes about as much sense as “climate justice”. And probable invented by the same marketeers that create slogans with no meaning behind them to sell to those with no capacity to understand what words mean. The people that fall for this word mangling just assign value to words depending on how they “make me feel”.
If they want to own shares in companies that are run by the shareholders, buy into a co-op. That’s what co-ops are for. Shareholders of a public company normally have a voice in the selection of who operates the company on their behalf.
The difference is that of a representative or a delegate. The proposal was made as if the board members are representatives of the daily opinion of the shareholders. They in fact have already delegated the power to manage the affairs of the companies on behalf of the shareholders, a completely different management and operations model.
In the US the difference is clearly shown by the House of Representatives operating at the whim of their electorate and financiers, and the Delegates that select the President. After the last presidential election there were calls to have the Delegates behave as Representatives, a violation of the Constitution, as amended.