The proposed matrix would enable shareowners to assess the quality and diversity of Exxon’s board and make fully informed voting decisions on director nominees.  As our proposal notes, a responsive board matrix will give shareowners a “big-picture” view of directors’ attributes and how they fit together, thereby enabling shareowners to (a) assess how well-suited individual director nominees are for Exxon in light of (i) the company’s evolving business strategy and risks and (ii) the overall mix of directors’ skills and experiences; (b) identify any gaps in skills, experience or other characteristics; and (c) make better informed proxy voting decisions.

Many companies, including Exxon peers, disclose board matrices.  Such disclosure has seen a significant up-tick by S&P 500 and Russell 3000 companies over the past few years with a ramp-up of disclosures in the 2018 proxy season, including significant Exxon peers such as Chevron, Occidental Petroleum, and IBM.  Other companies providing first-time disclosure this year include W.W. Grainger, Leucadia National, Unum, Skyworks Solutions, PepsiCo, Ameren, Exelon, Wells Fargo, Colgate Palmolive, Honeywell International, and Duke Energy.  Each of these companies engaged in productive dialogue with the NYC Funds.

Independent proxy advisors Glass Lewis and Egan Jones support Item 6 for the reasons noted above.  Glass Lewis concluded that “given the significant increase in the number of companies producing information similar to that requested by the proposal, we believe that the Company may be an outlier…as evidenced by the fact that both Chevron and Occidental Petroleum provide disclosure of their skills matrices.”  The Glass Lewis report emphasized that companies should be providing to their investors “thorough disclosure concerning how directors are evaluated… to ensure a high-functioning and appropriately diverse board.”

Exxon’s current disclosure is inadequate and confusing, as was its engagement with the NYC Funds.  Exxon maintains that its current disclosure of its overall board competencies and diversity should be sufficient for shareowners.  The bar chart showing aggregate director attributes on page 7 of its 2018 proxy statement tells investors nothing about the abilities of individual directors.  In its director biographies on pages 15-20, qualifications are listed that are different from those listed in its bar chart.  What are investors to make of these confusing and, in some cases, contradictory qualifications of directors?

We attempted repeatedly to engage Exxon management and directors, starting with a letter we sent in early September 2017, in order to avoid ever sending Exxon this proposal.  Notably, we submitted similar proposals to several other companies, all of which we subsequently withdrew following meaningful and productive engagements with their management teams and independent directors.  We finally had one substantive discussion with Exxon management in early January 2018, followed by a brief call after which we immediately received a copy of a “no-action request” that Exxon submitted to the Securities and Exchange Commission in an ultimately unsuccessful attempt to deny shareowners the right to even vote on Item 6.  All five of our requests to engage directly with an independent Exxon director went unanswered.

Diverse boards are generally well-functioning boards.  As our Supporting Statement (which includes links to relevant research) notes, the research generally and the views of surveyed directors support our belief that a diverse board – in terms of relevant skills and experience AND gender and race/ethnicity – is a good indicator of a well-functioning board.