Dear ExxonMobil: No Thank You (Again)

Every spring, public companies go through a carefully choreographed ritual of finalizing proxy statements, sending them out to shareholders, and waiting for individual and institutional owners to vote on each proposal. While institutional investors have long been able to set up “standing voting instructions” for their proxy votes, that option hasn’t been available for mom-and-pop investors.

That changed back in September 2025, when the US Securities and Exchange Commission issued a no-action letter in response to a request from ExxonMobil XOM for a proposed retail voting program that would allow individual investors to elect standing instructions for future proxy votes.

A week later, the company started reaching out to shareholders (including yours truly), inviting them to opt in to the new program. With the company’s May 27 annual meeting approaching, I’m once again getting emails encouraging me to sign up.

Shareholders have the option of selecting standing voting for all matters, which means each proposal in the proxy will be voted in line with the board’s recommendations, or a more limited option that excludes any contested director election, plus votes on a merger, acquisition, or divestiture that requires shareholder approval. In both cases, the voting instructions remain in place until the shareholder takes action to cancel them. Shareholders can override their standing instructions on specific proposals but must go through some additional steps to do so.

Arguments in Favor of Standing Voting Instructions

Low voting rates among individual shareholders can be a big problem, particularly for Exxon. The company has been a frequent target for climate activists, who could pose a threat to its core business. Indeed, the company spent about $35 million in its 2021 proxy battle with Engine No. 1, which ultimately won two board seats. The company reports that 40% of its shares are held by retail investors, and 75% of those shareholders don’t cast votes on their proxies.

In addition, programs such as Exxon’s could ease the administrative burden on shareholders. Retail equity shareholders need to remember to: 1) open and read their proxy statements, 2) decide how to vote on each proposal, and 3) actually cast their votes. With the advent of aggregated proxy voting platforms such as ProxyVote.com (used by many public companies), the latter step is faster and easier than ever. Even so, a large percentage of retail shareholders don’t participate in proxy voting. Adopting standing instructions for proxy ballots could increase that percentage.

The Problem With Outsourced Voting

On balance, though, I’m not thrilled about this program and what it means for shareholder democracy. In principle, I believe all shareholders (including retail shareholders) should evaluate each proxy proposal on its own merits. Outsourcing the decision-making process to the company itself goes against that principle. The company claims this program is another way “to ensure your voice is heard.” But in effect, I’d argue it’s another way to ensure the voice of the board is heard.

The biggest danger of this, in my opinion, is that it makes it easier for shareholders to go along with whatever the board wants. There’s a real risk that shareholders who opt in will end up simply voting the party line—after all, they’ve already chosen that as the default option. Yes, they can choose to opt out of a given proposal, but the assumption that shareholders will generally agree with board recommendations is not a step in the right direction. There’s simply too much at stake to make the default choice a rubber stamp. Even if I had complete confidence in a company’s board of directors, I don’t think I’d ever be comfortable opting into a similar program.

In addition, the company’s marketing materials for the retail voting program wildly overstate the actual administrative burden most shareholders face, as evidenced by the statement below:

The average retail investor would have had to dedicate a year of full-time work to briefly study and vote on each of the roughly 28,000 items in the proxies of the companies in the Russell 3000 in 2024—and that’s assuming that they spent only five minutes on each item.

This all sounds pretty overwhelming. But in reality, the average retail shareholder does not own thousands of stocks, or even hundreds of stocks. Estimates on ownership vary, but the actual number is probably more in the neighborhood of three (based on Brad Barber and Terrance Odean’s famous paper Trading Is Hazardous to Your Wealth) to eight (based on a 2024 study from Broadridge, which mentions eight as the average number of equity investments but doesn’t specify if that figure refers to stocks or funds). In other words, Exxon’s estimate of the time needed to study and vote on proxy proposals is misleading at best.

Finally, I’d argue that proxy battles come with the territory for public companies, especially if they operate in controversial areas. While allowing shareholders to opt in to standing voting instructions is one way to deal with this problem, it could also result in unintended consequences—an even less engaged, less informed, and more passive shareholder base.

Final Thoughts

When I vote in state, local, or national elections, I proudly wear my “I Voted” sticker for the rest of the day. Similarly, the process of voting proxies is a key reminder that shareholders (no matter how small) have an important role as partial owners of the company. The annual spring ritual of opening proxy notices for all my stock holdings and deciding how to vote on each proposal is something I cherish as an investor, and a right I’ll continue to exercise.

A version of this article was previously published Sept. 30, 2025.