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There Will Be Rockefellers

Exxon Mobil's founding family takes to the media barricades to press changes on the company.
Moguls
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Shareholder activism can be a lonely struggle.

Waged for the most part by corporate outsiders—Roman Catholic nuns, state and union pension funds, or maverick lawyers—campaigns about executive pay or labor conditions abroad are often met with indifference from the public and derision or condescension from corporate executives.

The Rockefellers are rich, of course, and the rich are different. So their shareholder campaign attracted a lot of attention when they launched it today in the bright penthouse of Le Parker Meridien hotel in New York.

There, before a bevy of reporters and cameras and a table laden with fruits, coffee, pastries, and croissants, two descendants of John D. Rockefeller laid out in patrician accents their case for changes at Exxon Mobil in its current incarnation.

A majority of Rockefeller family members support four resolutions on global climate change and corporate governance that will go before Exxon Mobil shareholders at their annual meeting in Dallas next month.

It is not just the Rockefeller name that is attracting interest but the back-to-the-future aspect of the campaign. Exxon Mobil is a descendant of John D. Rockefeller's Standard Oil, the first modern multinational, founded in 1870.

"We almost define the term long-term investor," said Neva Rockefeller Goodwin, a great-granddaughter of the company's founder and daughter of David Rockefeller, the former chairman of Chase Manhattan Bank.

The name of John D. is being invoked to press Exxon Mobil to devote more resources to finding energy alternatives to oil and natural gas, for the long-term benefit of the company and shareholders, as well as for the environment.

Goodwin, who is co-director of the Global Development and Environment Institute at Tufts University, noted that John D. Rockefeller's genius was in recognizing kerosene as the "alternative energy" of the 19th century, replacing whale oil.

Exxon, she said, needs to "get back to its strong historical roots." (Although presumably that does not include fixing prices with railroads or shooting at striking workers.)

"Exxon Mobil is profiting in the short term from investments and decisions made many years ago and by focusing on a narrow path that ignores the rapidly shifting energy landscape around the world, including developing nations," she said.

Three of the four shareholder resolutions backed by the Rockefellers concern global climate change. The fourth seeks to have the chairman's role be independent from that of the chief executive. Rex Tillerson became C.E.O. and chairman of Exxon Mobil in January 2006. (Exxon Mobil recommends that shareholders reject all four proposals.)

Rockefeller family members had quietly brought up these issues with company executives in years past, said Goodwin's cousin Peter O'Neill, a great-great-grandson of John D. "It was not an easy decision for the majority of the Rockefeller family to go public with our concerns," he said.

Goodwin hailed Exxon Mobil's "strong corporate culture," noting that its top executives have spent their entire careers at the company. But, she added, that culture "includes not listening to outside voices."

Goodwin recalled an informal lunch that she had with Lee Raymond, then chairman and chief executive of Exxon Mobil, and Tillerson who was about to succeed him. "I was told I had to behave myself and not say much," she said.

There are 152 descendants of John D., who died in 1937. Seventy-eight of them are over the age of 21, and 66 are supporting the four shareholder resolutions, O'Neill said.

The Rockefeller cousins, he said, do both business and philanthropy together and "spend a lot of time" communicating with one another about common interests.

The Rockefellers could not say how much of Exxon Mobil is owned by family members. It has been estimated that the combined family stake is not very large, but Goodwin said that it "is a significant holding for us."

When the U.S. Supreme Court ordered the breakup of Standard Oil as an "unreasonable monopoly" in 1911, it was split into 34 companies. One, Standard Oil of New Jersey, became Exxon; another, Standard Oil of New York, became Mobil. The Rockefeller family had shares in all 34 companies as a result. Exxon and Mobil merged in an $80 billion deal in 1998.

The news conference came a day before Exxon Mobil is expected to report a blowout first quarter on higher oil prices. Indeed, the Rockefellers were careful to emphasize that they were pleased with Tillerson and the recent performance of the company and the stock price.

"When Exxon Mobil does well, so do I and other members of my family," Goodwin says. But she and O'Neill said that family members are concerned that the company is not doing enough to prepare for the long term, as some of its rivals have.

The resolution to separate the positions of chairman and C.E.O. is similar to one put forward last year, which received 40 percent of the vote. The Rockefellers said they expected the resolution would do better this year and expressed hope that the board would make changes if the nonbinding resolution received more than 50 percent of the vote.

The Connecticut state pension fund and the two big California public pension funds, Calpers and Calstrs, support the four resolutions. Denise Nappier, the treasurer of the State of Connecticut, said Exxon Mobil is the state pension fund's largest single holding, at $300 million.

As the world's biggest publicly traded company—and biggest nonstate energy producer—Exxon Mobil has long been a lightning rod for critics of many stripes. At its annual meeting, shareholders will be asked to vote on 19 resolutions, most of them concerning the environment and corporate government.

Another reason why Exxon Mobil has been a target was Raymond, its longtime leader and an irascible bull of a C.E.O. who cared little about the niceties of corporate P.R.

That comes across in one of the arguments for the resolution on an independent chairman, brought by Robert Monks, the longtime shareholder activist, in Exxon's own proxy.

It cites part of an exchange between Raymond and the then-state treasurer of Maine, Dale McCormick, at the 2004 annual shareholders meeting.

McCormick: Then may I pose that question to Mr. Houghton, who is the chair of the audit committee?'

Raymond: You may not, you may not.

McCormick: Why, sir?

Raymond: Because that's not—the audit committee looks at the recommendations of management. That's properly the responsibility of the controller of the corporation.

McCormick: May I pose it to you?

Raymond: Oh, sure. You can pose anything to me. (Laughter)

McCormick: Will you answer me then?

Raymond: Oh, that's a different question. (More laughter)

McCormick: Sir, I do not think it is a matter of laughter when an institutional investor representing over 3 million shares cannot get answers to an important question like this.

Raymond: The question is precisely what?

McCormick: What provisions have you made on the financial statements for the damage caused by climate change and the potential liability [resulting therefrom]?

Raymond: It's neither likely nor could it be estimated.

 
 

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