Company Name: Exxon Mobil Corp.
Public Availability Date: April 12, 2006
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
March 9, 2006
VIA FACSIMILE AND NETWORK COURIER
Fax #: 202-772-9215
U. S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, DC 20549
RE: Section 14(a); Rule 14a-8Omission of shareholder proposal to establish a
director qualification policy
Gentlemen and Ladies:
By letter dated January 11, 2006 (the "Original Letter"), ExxonMobil requested
the staff's concurrence that the captioned proposal could be excluded from the
proxy material for ExxonMobil's upcoming annual meeting in reliance on Rule
14a-8(i)(10).
We understand the staff recently issued a letter to Allegheny Energy, Inc.
(available February 25, 2006), in which the staff was unable to concur with that
company's view that substantially the same proposal could be excluded under Rule
14a-8(i)(10) or on the other grounds asserted by the company.
The purpose of this letter is to highlight key factual differences between
ExxonMobil's policies and the company policies described in Allegheny which we
believe render the Allegheny precedent inapplicable to ExxonMobil's no-action
request.
The underlying proposal requests that the board adopt a policy that the audit,
nomination, and compensation committees be chaired by highly-qualified and
highly-performing independent directors who are not over-committed. As more
fully described in our Original Letter and attachments, we believe ExxonMobil
already has such policies in place.
While the company in Allegheny appeared to have written policies addressing the
issues of independence and over-commitment, unlike ExxonMobil the company in
Allegheny was not able to cite written policies establishing clear and specific
standards for director qualification. On this aspect of the proposal, the
company in Allegheny cited only general language in its governance documents to
the effect that, in selecting candidates, the nominating committee would take
into consideration factors which "may include integrity, compatibility,
judgment, independence, experience and background in a relevant field..."
In contrast, ExxonMobil has clear and specific written policies establishing
criteria of high-qualification and high-performance for all non-employee
directors. As explained in more detail in our Original Letter, our Guidelines
for Selection of Non-Employee Directors (Exhibit 2 to the Original Letter)
require ExxonMobil's non-employee directors to be individuals "who have achieved
prominence in their fields, with experience and demonstrated expertise in
managing large, relatively complex organizations, and/or, in a professional or
scientific capacity, be accustomed to dealing with complex situations,
preferably those with worldwide scope." In addition, as explained in our
Original Letter, the charters of the relevant committees require that, among
other qualifications, all members of our audit committee be or become
"financially literate"; all members of our corporate governance committee be
"suitably knowledgeable in matters pertaining to corporate governance"; and all
members of our compensation committee be "suitably knowledgeable in matters
pertaining to executive compensation."
We believe the language highlighted above demonstrates that ExxonMobil already
maintains clear and specific policies designed to ensure that our non-employee
directors, including the chairs of key committees, are "highly-qualified and
highly-performing individuals," and that ExxonMobil's policies are
distinguishable in this regard from the policies at issue in Allegheny.
As ExxonMobil's Original Letter demonstrates, we also already have clear
policies requiring that all members of the relevant committees be independent
and ensuring that our directors are not over-committed. For example, the service
of all non-employee directors on the boards of other public companies is
reviewed at least annually to ensure that such service does not impair the
director's ability to discharge effectively his or her responsibilities to
ExxonMobil and its shareholders; no non-employee director may accept a seat on
an additional public company board without prior review by the Board Affairs
Committee; and a director who experiences a substantial change in outside status
must tender his or her resignation for consideration by ExxonMobil's Board.
For the reasons noted above and in our Original Letter, we therefore continue to
believe the proposal may be omitted from the proxy material for ExxonMobil's
upcoming annual meeting under Rule 14a-8(i)(10).
The supporting statement for the proposal, as well as letters to the staff from
the proponent's representative John Chevedden, make much of the fact that
certain third-party observers have been critical of some ExxonMobil directors.
We could just as easily provide extensive citations and materials attesting to
ExxonMobil's corporate governance excellence and superior performance for
shareholders. However, we do not believe that a "battle of quotes" is relevant
to the question of whether or not ExxonMobil has policies in place meeting each
of the criteria set forth in the proposal.
Mr. Chevedden also finds fault with the fact that ExxonMobil's policies
regarding director qualifications and experience apply to all non-employee
directors and committee members, not just committee chairs. We believe the fact
that ExxonMobil's policies are more rigorous than the policies requested by the
proposal enhances rather than rebuts our argument under Rule 14a-8(i)(10).
Please file-stamp the enclosed copy of this letter and return it to me in the
enclosed self-addressed postage-paid envelope. In accordance with SEC rules, I
enclose five additional copies of this letter and enclosures. A copy of this
letter and enclosures is also being sent to the proponent and the proponent's
representative.
Please feel free to call me directly at 972-444-1478 if you have any questions
or require additional information. In my absence, please call Lisa K. Bork at
972-444-1473.
Sincerely,
/s/
James E. Parsons
JEP:clh
Enclosures
Distribution List
Proponent:
Mr. Kenneth Steiner
14 Stoner Avenue, 2M
Great Neck, NY 11021
Proponent Representative:
Mr. John Chevedden
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
[INQUIRY LETTER]
March 10, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Exxon Mobil Corporation (XOM)
#3 Shareholder Position on Company No-Action Request Rule 14a-8 Proposal:
Director Qualifications
Shareholder: Kenneth Steiner
Ladies and Gentlemen:
This is to forward the previous letters in the no action process as the company
did not have the courtesy to do so in its request for reconsideration.
The latest company argument seems to emphasize that if company directors can win
a "battle of quotes" on general "excellence" topics they need not meet the
specific requirements of a rule 14a-8 proposal.
It is respectfully requested that concurrence not be granted to the company.
It is also respectfully requested that that the shareholder have the last
opportunity to submit material since the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Kenneth Steiner
James Parsons<james.e.parsons@exxonmobil.com>
T: 972-444-1478
[INQUIRY LETTER]
February 27, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Exxon Mobil Corporation (XOM)
#2 Shareholder Position on Company No-Action Request Rule 14a-8 Proposal:
Director Qualifications
Shareholder: Kenneth Steiner
Ladies and Gentlemen:
This adds to the January 19, 2006 initial response to the Exxon January 11, 2006
no action request.
In regard to a proposal on this very same topic, Allegheny Energy did not
receive Staff concurrence in Allegheny Energy, Inc. (February 25, 2006).
Allegheny did not receive Staff concurrence in citing the same issue as Exxon
Mobil rule 14a-8(i)(10).
The text of the rule 14a-8 proposal states:
3 Director Qualifications
RESOLVED: Shareholders request that our board of directors adopt a policy (in
our bylaws if practicable) that our key board committees of audit, nomination
and compensation be chaired by highly-qualified and highly-performing
independent directors who are not over-committed. The definition of
highly-performing director includes the individual director's performance on
other boards he or she may serve on.
This proposal gives our company an opportunity to cure director disqualification
should it exist or occur once this proposal is adopted.
This proposal is not intended to unnecessarily limit our Board's judgment in
crafting the requested change in accordance with applicable laws, our charter
and bylaws and existing contracts.
For example it would be consistent with this proposal that a chairman of a key
board committee would not serve on more than 3 boards (to avoid
over-commitment), not have more than 15-years tenure (long-tenure impacts
independence), not have non-director links to our company and not have a record
of serving on boards with poor governance ratings unless it was clearly a
turnaround situation.
For example under this proposal the following directors in 2005 may not have
been qualified to chair a key committee:
Our directors who had 19 to 23 years tenure Independence concern:
1) Mr. Howell with 23-years tenure
2) Mr. Lippincott with 19-years tenure.
Any director with more than 3 directorships:
1) Mr. Howell had 5 directorships.
Our directors who were designated "problem directors" by The Corporate Library
(TCL) http://www.thecorporatelibrary.com/ a pro-investor research firm:
1) William Howell a "problem director" because he chaired the committee that set
executive pay at Exxon which received a CEO Compensation grade of "F" by TCL.
2) Walter Shipley a "problem director" because he chaired the committee that set
executive pay at Verizon (VZ), which received a CEO Compensation rating of "F"
by TCL.
Although the company seems to claim that it has exhaustive director standards,
these standard still allow a director who performs poorly or is linked to poor
performance at other companies to chair one of our key committees.
Director performance at other companies is a key measurement of director
competence because there is little disclosure of the interaction of directors or
the contributions of individual directors within the boardroom of the company.
The company also does not claim that a chairman of a key committee currently
must meet a higher standard than a non-chairman of a key committee. The company
even boasts that it has no special requirements for key committee chairmen in:
"ExxonMobil's existing policies in fact apply to all non-employee directors."
The company does not make any distinction in its argument that to decide the
"best" implementation of this proposal whether its meaning of "best"
implementation would be according to the provisions of this rule 14a-8 proposal
as opposed to the convenience of the directors.
For the above reasons it is respectfully requested that concurrence not be
granted to the company. It is also respectfully requested that that the
shareholder have the last opportunity to submit material since the company had
the first opportunity.
Sincerely,
John Chevedden
cc:
Kenneth Steiner
James Parsons<james.e.parsons@exxonmobil.com>
T: 972-444-1478
[INQUIRY LETTER]
January 19, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Exxon Mobil Corporation (XOM)
Shareholder Position on Company No-Action Request Rule 14a-8 Proposal: Director
Qualifications
Shareholder: Kenneth Steiner
Ladies and Gentlemen:
This is an initial response to the Exxon January 11, 2006 no action request.
The text of the rule 14a-9 proposal states:
3 Director Qualifications
RESOLVED: Shareholders request that our board of directors adopt a policy (in
our bylaws if practicable) that our key board committees of audit, nomination
and compensation be chaired by highly-qualified and highly-performing
independent directors who are not over-committed. The definition of
highly-performing director includes the individual director's performance on
other boards he or she may serve on.
This proposal gives our company an opportunity to cure director disqualification
should it exist or occur once this proposal is adopted.
This proposal is not intended to unnecessarily limit our Board's judgment in
crafting the requested change in accordance with applicable laws, our charter
and bylaws and existing contracts.
For example it would be consistent with this proposal that a chairman of a key
board committee would not serve on more than 3 boards (to avoid
over-commitment), not have more than 15-years tenure (long-tenure impacts
independence), not have non-director links to our company and not have a record
of serving on boards with poor governance ratings unless it was clearly a
turnaround situation.
For example under this proposal the following directors in 2005 may not have
been qualified to chair a key committee:
Our directors who had 19 to 23 years tenure Independence concern:
1) Mr. Howell with 23-years tenure
2) Mr. Lippincott with 19-years tenure.
Any director with more than 3 directorships:
1) Mr. Howell had 5 directorships.
Our directors who were designated "problem directors" by The Corporate Library
(TCL) http://www.thecorporatelibrary.com/ a pro-investor research firm:
1) William Howell a "problem director" because he chaired the committee that set
executive pay at Exxon which received a CEO Compensation grade of "F" by TCL.
2) Walter Shipley a "problem director" because he chaired the committee that set
executive pay at Verizon (VZ), which received a CEO Compensation rating of "F"
by TCL.
Adopting this policy is a good way to assure shareholders that our key board
committees are chaired by highly qualified and highly performing independent
directors who are not over-committed.
Although the company seems to claim that it has exhaustive director standards,
these standard still allow a director who performs poorly or is linked to poor
performance at other companies to chair one of our key committees.
Director performance at other companies is a key measurement of director
competence because there is little disclosure of the interaction of directors or
the contributions of individual directors within the boardroom of the company.
The company also does not claim that a chairman of a key committee currently
must meet a higher standard than a non-chairman of a key committee. The company
even boasts that it has no special requirements for key committee chairmen in:
"ExxonMobil's existing policies in fact apply to all non-employee directors."
The company does not make any distinction in its argument that to decide the
"best" implementation of this proposal whether its meaning of "best"
implementation would be according to the provisions of this rule 14a-8 proposal
as opposed to the convenience of the directors.
For the above reasons it is respectfully requested that concurrence not be
granted to the company. It is also respectfully requested that there be an
opportunity to submit additional material in support of the inclusion of the
rule 14a-8 proposal. Also that the shareholder have the last opportunity to
submit material since the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Kenneth Steiner
James Parsons<james.e.parsons@exxonmobil.com>
T: 972-444-1478
[STAFF REPLY LETTER]
April 12, 2006
James E. Parsons
Counsel
Exxon Mobil Corporation
5959 Las Colinas Boulevard
Irving, TX 75039-2298
Re: Exxon Mobil Corporation Incoming letter dated March 9, 2006
Dear Mr. Parsons:
This is in response to your letter dated March 9, 2006 concerning the
shareholder proposal submitted to ExxonMobil by Kenneth Steiner. We also have
received a letter on the proponent's behalf dated March 10, 2006. On March 8,
2006, we issued our response expressing our informal view that ExxonMobil could
not exclude the proposal from its proxy materials for its upcoming annual
meeting.
We received your letter after we issued our response. After reviewing the
information contained in your letter, we find no basis to reconsider our
position.
Sincerely,
/s/
Eric Finseth
Attorney-Adviser
Enclosures
cc: John Chevedden
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
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