When shareholders start getting opposed to board directors, there can be a lot of drama to come out of such friction. That’s what happened recently as Calpers, the California pension board, took a stand against oil company Exxon Mobil (NYSE:XOM) during its board of directors vote. The move was enough to prompt concern among shareholders, who sent shares down fractionally in Monday afternoon’s trading.
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Calpers, or the California Public Employees’ Retirement System, is the largest state public pension fund in the United States. That means it carries a lot of weight when it functions as a shareholder in any regard. And it’s swinging that weight toward Exxon Mobil, which Calpers believes is “undermining shareholder rights.” The whole thing stemmed from an earlier incident in which Exxon sued a pair of investors who had a focus on climate-related issues.
The investors’ proposals were later withdrawn, but Exxon wanted more clarity from the Securities and Exchange Commission (SEC) about their own rules. That, in turn, prompted Calpers to oppose the current board, believing that the search for clarity would mean “…a chilling effect on future shareowner proposals in the United States.”
Not Exxon’s Only Problem
As bad as that is, it comes on the heels of another issue for Exxon. Courts ordered Exxon to pay a mechanic $725.5 million after said mechanic alleged that exposure to benzene in Exxon Mobil products between 1975 and 1980 gave him cancer. Exxon was found negligent in a state court in Philadelphia for failing to warn users about the risks of benzene. But the mechanic likely won’t see any money for some time to come, as Exxon declared the verdict “irrational” and promised to appeal until it couldn’t anymore.
Is ExxonMobil a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on XOM stock based on 11 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 17.42% rally in its share price over the past year, the average XOM price target of $137.07 per share implies 15.3% upside potential.
