Exxon Mobil criticized for worker rights and safety issues at annual shareholder meeting

Key Points
  • Exxon Mobil investors voted down four shareholder proposals, including one that would require the oil giant to report on its political lobbying.
  • The measure was fueled by concern among union members that Exxon is aligning its safety procedures with a group that drafts industry-friendly legislation.
  • In a separate complaint, a shareholder said Exxon's policy for reducing workplace accidents "penalizes and punishes and disciplines" workers who report incidents and injuries.
A sign is seen at the entrance of the ExxonMobil Port Allen Lubricants Plant in Port Allen, Louisiana, November 6, 2015.
Lee Celano | Reuters

Exxon Mobil faced heat over worker rights and safety at its annual meeting on Wednesday but it prevailed against several shareholder demands.

Shareholders voted against four resolutions, including a call for greater clarity around the oil giant's political lobbying activities. Union members had raised the concern, arguing that Exxon was implementing "complex and confusing" safety procedures aligned with a conservative group known for producing industry-friendly legislation.

At the same meeting, shareholders approved executives' pay package, with nearly 73 percent of voters supporting the measure. More than 90 percent also voted to re-elect the members of the board.

Shareholders should be concerned that core health and safety procedures seem to be weakened by our company.
Ricky Brooks
United Steel Workers Local 13-2001 president

The failure of any single shareholder resolution to attract adequate support this year was a relief to Exxon, which last year failed to quell investors' demands that the company report regularly on how global climate change initiatives will affect its business. A shareholder resolution calling for the report passed last May after large institutional investors threw their support behind the measure.

The vote came amid reports that Exxon downplayed the danger of global warming despite internal research that showed it was a major concern.

However, a resolution proposed at this year's meeting by the United Steelworkers union and 25 co-filers asking Exxon to report annually on its lobbying expenses garnered the support of just over a quarter of voting shareholders.

Employees speak out about safety shortfalls

Ricky Brooks, president of USW Local 13-2001 in Baytown, Texas, said Exxon's membership in the conservative American Legislative Exchange Council, or ALEC, raises safety concerns for its members. He claimed that ALEC, which drafts legislation that states and municipalities can adopt, seeks to water down workers rights and health and safety rules, as well as to roll back contracts and arbitration awards.

"We see their impact in how our company is unilaterally implementing complex and confusing safety changes in Baytown," where Exxon operates a refinery, said Brooks, who works at the facility. "For decades, these safety practices have been mutually agreed upon to ensure workers' health and safety."

"Shareholders should be concerned that core health and safety procedures seem to be weakened by our company," he said.

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Brooks said the lobbying report is necessary because publicly available government data is difficult to find and Exxon had failed to hold promised tutorials on the subject.

In response, Exxon CEO Darren Woods, said the Baytown refinery is one of the safest in the company's circuit and around the world.

However, another shareholder from Baton Rouge, Louisiana, complained that the company's system for reporting safety issues "penalizes and punishes and disciplines" employees who report incidents or injuries. He said the company's safety performance record likely does not accurately reflect the true number of workplace accidents because the current policy discourages workers from speaking up.

"Your experience is very different than the philosophy of that system and how we've implemented it around the world," Woods said.

In a statement to CNBC on Thursday, Exxon spokesman William Holbrook said, "Nothing is more important to our company than the safety of our employees, our contractors and the people who live and work around our operations. Safety is a core value for our company and we're committed to continuous improvement."

He said Exxon's safety system "deliberately encourages workers to report [incidents and near-incidents] for the express purpose of learning and preventing reoccurrence."

Resolutions on independent chair, diversity and shareholder rights also fail

A resolution aimed at preventing Exxon's CEO from holding the role of chairman of the board once again failed this year after several previous attempts. However, with 38.7 percent of voters in favor of the measure, it garnered the highest support of the four shareholder proposals.

The measure was put forward by the Kestrel Foundation and co-filed by Vermont's pension fund.

Kenneth Steiner, a prolific filer of shareholder proposals, also put forward a measure that would allow shareholders with a 10-percent stake in the company to call for a special meeting without having to petition a judge. The proposal appeared geared toward giving shareholders greater say over board members.

Just 36 percent of shareholders backed the proposal, down from 40 percent at last year's meeting.

A representative for New York City Comptroller Scott Stringer and the New York City pension funds presented the final proposal, which asked Exxon to create a "diversity matrix" outlining each director's race, gender and ethnicity. Exxon, whose board is composed mostly of men and white people, argued that it already provided adequate information.

Shareholders appeared to agree with Exxon. More than 83 percent voted down the measure.

During the Q&A period, Julian Martinez, director of program development at the Hispanic training and education nonprofit SER National, noted that Exxon has no Latinos on its board and urged the company to address the lack of representation.

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Correction: This story has been updated to correct the attribution for Exxon Mobil's response to safety concerns at the Baytown refinery. It was from CEO Darren Woods.