Key Takeaways:
Exxon Mobil shareholders voted 71.3% to approve reincorporation in Texas, moving the oil giant's legal home to a more corporate-friendly jurisdiction.
"The board believes Texas legislators, judges and juries who might make decisions that impact Exxon Mobil are generally more familiar with our business and operations," the company said in its proxy filing ahead of the vote.
The vote, which required only a simple majority, passed at Exxon's annual meeting on Wednesday. Proxy advisory firms Glass Lewis and Institutional Shareholder Services had recommended investors oppose the move, citing concerns that shareholder rights could be diluted. Texas passed a law in 2023 enhancing legal protections for businesses, including allowing companies to set stock ownership thresholds for lawsuits. Exxon said it does not plan to raise those thresholds.
The reincorporation caps a years-long shift by Exxon to align its corporate structure with its physical operations. The company has been headquartered in Houston since 1989 but remained incorporated in New Jersey, a vestige of its origins as part of Standard Oil in the 19th century. The move places Exxon alongside other companies including SpaceX, Tesla and Coinbase that have shifted operations to Texas.
Exxon also said goodbye to board member Jeffrey Ubben, arguably its most environmentally-minded director, who decided not to stand for reelection. Ubben had joined the board in 2021 amid an activist campaign by Engine No. 1, which won three board seats that year.
The company has taken several steps that make a repeat of that proxy loss less likely. Exxon created a program last year allowing retail shareholders to opt in to always vote in line with management recommendations. More than 100,000 retail shareholders have signed up, representing over 150 million shares, Exxon said. Retail investors represent about 40% of the company's shareholder base.
A shareholder proposal to modify the program by adding an option to automatically vote against management received just 23.5% support. Exxon also faced no shareholder proposals this year for the first time in decades, after filing a lawsuit against activists in 2024 over a carbon emissions proposal. A judge dismissed the suit after the activists withdrew the proposal.
The reincorporation gives Exxon a legal environment that CEO Darren Woods said would lead to "more reasonable, productive decisions from Texas officials and citizens." Texas established new business courts in 2023 with judges appointed by the governor, a structure widely viewed as more corporate-friendly than New Jersey's courts.
For shareholders, the move reduces legal risk and aligns the company's corporate domicile with its operational base. Investors will watch whether other large companies follow Exxon's lead in shifting incorporation to Texas, a trend that could reshape corporate governance norms across the energy sector.
This article is for informational purposes only and does not constitute investment advice.
