Proxy season represents a crucial reckoning for public oil and gas companies, perhaps now more than ever before as key headwinds – most specifically, the energy transition and all things ESG – dominate shareholder sentiment.

Proxy statements – filed in early spring with the U.S. Securities and Exchange Commission (SEC) as a form DEF14 – provide a treasure trove of information to investors. Material statements on corporate performance, top investor holdings, executive compensation, board membership and general reporting can be found – that is, if you can muster the time and inclination to pore through the jargon written in fine print on 100+ page documents.

It’s worth the bandwidth.

You see, these documents also list the shareholder resolutions that individual investors may approve or silence as well as the boards’ recommendations.

These proposals may take aim at individual board members, corporate spending, the chief executive’s duties, emissions reductions and diversity.

On the heels of the “great shareholder rebellion” against the E&P sector’s growth-for-growth’s sake spending and a perceived industry resistance to climate change, shareholder resolutions vetted during these annual gatherings have grown both in numbers and vitriol.

Some of these votes are non-binding, meaning that no action is required regardless of the outcome. Still, the outcome of a shareholder majority’s vote on any given proposal amounts to a referendum on corporate behavior made by the folks who invest in the company.

And that’s why individual executives – as well as the industry at large – should take note of a non-binding slap on the wrist.

Shareholder sentiment can disrupt even the mightiest of corporate boards.

Exxon Mobil is among the companies that has learned to take a shareholder challenge seriously. In 2021, an upstart activist investor group, Engine No. 1, began the year in dialogue with Exxon management to discuss the supermajor’s market capitalization, which at the time was in collapse, and its role in the energy transition.

The meetings reportedly didn’t go well, and Engine No. 1 took its push for additional board members at Exxon to the annual meeting. Holding a stake in the company of less than 0.02%, Engine No. 1 mustered support from major institutional investment firms. BlackRock, Vanguard and State Street voted with Engine No. 1. The influential proxy advisor Institutional Shareholder Services was in favor of the change.

Engine No. 1 won. 

Exxon added three new independent members to its board – each at the behest of a tiny upstart hedge fund.

It’s a modern-day David and Goliath story that likely emboldens others to hold even the largest of corporate behemoths to account for their actions, whether it’s on climate concerns or shareholder returns.

The following are among the shareholder proposals scheduled at U.S. producers’ meetings this month:

  • Greenhouse gas emissions reduction targets: BP, Chevron, Enbridge, Exxon, Kinder Morgan, Royal Dutch Shell and Suncor
  • Lobbying/net-zero commitments: Coterra Energy, CNX Resources, Devon Energy, Enbridge, EOG Resources and Kinder Morgan 
  • Opposition to board member re-election: ConocoPhillips, Chevron, Devon Energy, Exxon, Kinder Morgan and Occidental Petroleum
  • Climate-related/just transition planning: Chevron, Exxon and Kinder Morgan
  • Methane measurement: EOG Resources, Exxon and Marathon Oil
  • Risk: Exxon
  • Energy transition reporting: Exxon 

Proxy watchers say that as the season has heated up, climate concerns remain at the top of the 2023 trends. This extends to a surge of “anti-ESG” filings designed to counter several years’ of “pro-ESG” proposals.

Proxy season begins in earnest in May and generally lasts through June. Watch closely.