Jeremy Garvey and Seth Popick discuss the no-action relief granted to ExxonMobil by the Securities and Exchange Commission’s (SEC) Division of Corporate Finance in Law360. This will enable the company to implement a groundbreaking retail shareholder voting program, which aims to increase participation among retail investors, who own nearly a third of public company shares but vote on less than 10%, by simplifying the voting process and allowing for standing voting instructions. The program is designed to help companies reach quorum and meet voting thresholds, especially for supermajority requirements, while also potentially reducing the influence of activist shareholders. Retail investors can opt in or out at any time, receive annual and supplemental reminders, and override their standing votes if desired. The program applies to annual and special meetings, excludes investment advisers, and must be disclosed in proxy statements and on company websites.

Despite its potential benefits, the program has faced criticism and legal challenges. Advocacy groups argue that it violates SEC proxy rules and undermines shareholder rights by reducing engagement and informed decision-making. A lawsuit filed by the City of Hollywood Police Officers’ Retirement System alleges that the program breaches fiduciary duties and dilutes the votes of non-participating shareholders. While major proxy advisory firms have yet to weigh in, the SEC’s decision marks a pivotal moment in proxy voting reform. If adopted more broadly, such programs could modernize shareholder participation and empower retail investors, though companies must carefully navigate legal, logistical, and regulatory compliance.

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