When you buy a share on the stock exchange, you own a piece of the company and that entitles to a number of features such as using capital gains if you sell at a profit or capital loss if you sell at a loss. For taxes, capital losses can be carried forward to lower capital gains in the future. You have a right to vote at the annual meeting for the Board of Directors, executive compensation, the auditor and ask questions at the meeting. Sometimes people who want change to policies will submit questions in advance and the company will offer advice on whether to vote for or against a proposal. If you never voted, there is often an option to vote for management’s recommendations. Some stocks are widely held or there are no controlling shareholders, but if the company makes money on a consistent matter, the odds are the institutional shareholders will vote with management, individuals will tend to vote with management.

In an article by J Edward Moreno of the New York Times, Exxon Mobil is suing 2 activist investors to prevent their proposals from coming to a vote of shareholders.

All companies have rules and regulations to submitting questions before shareholders, and generally it is time sensitive, meaning at some point the materials must be printed and mailed to shareholders so the questions need to be done before that point. The shareholders filed their questions before the deadline, but Exxon does not want to submit the questions.

Exxon has filed a suit in the US District Court for the Northern District of Texas (ExxonMobil is headquartered in Houston), accusing the shareholders of abusing the process for proposing shareholder votes because the proposal would mean the company’s existing businesses would be diminished. The shareholders want Exxon to speed up the process to become carbon neutral.

Under the securities law, Exxon says they have the ability to toss petitions that deal with matters relating to the company’s ordinary business operations. Exxon says the proposal does not seek to improve ExxonMobil’s economic performance or create shareholder value.

The company asked the SEC to offer an opinion but it was informal and subject to interpretation and for that reason it has gone to the courts.

Linking to dividend paying stocks, if a company makes money and can increase its dividend on a consistent basis most shareholders will vote for management. When the company does not make money, then all the complaints and issues with the company will surface and shareholder fights will result, likely new management will be the outcome. When a company makes profits, often shareholders will overlook the negative aspects to the company and hope overtime technology will improve outcomes.

There are more questions than answers, till the next time – to raising questions.