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Summary
- Exxon is latest high-profile company moving to Texas for business-friendly environment
- New Jersey sued Exxon and others over climate change; suit dismissed
- Incorporation in Texas may aid Exxon in policy matters, says law professor
(Reuters) – Exxon Mobil is seeking to abandon its corporate registration in New Jersey and redomicile in Texas where its headquarters is located, the U.S. oil major said on Tuesday, in a move that could help bolster its defenses against activist shareholders and climate advocates.
Exxon announced the proposal in a proxy filing. If the move is approved by shareholders, Exxon would become the latest of several high-profile companies including SpaceX, Tesla and Coinbase to register in the business-friendly Lone Star State.
Last year, a new Texas law enhanced legal protections for businesses through several mechanisms, including reducing the threat of shareholder litigation by allowing companies to set stock ownership thresholds for lawsuits.
“The Board believes Texas legislators, judges, and juries who might make decisions that impact Exxon Mobil are generally more familiar with our business and operations,” the company said in the filing.
The top U.S. oil producer, physically headquartered in Spring, Texas, has long been the target of environment-related lawsuits.
New Jersey officials sued Exxon, Chevron and other fossil-fuel companies in 2022, alleging that they contributed to climate change, forcing the state to spend billions of dollars to clean up after major natural disasters such as Superstorm Sandy and Hurricane Ida. The suit was dismissed last year.
Incorporating in the same state as a company’s headquarters can help executives get the attention of state politicians whose help they might need on taxes or other policy questions, said Jill Fisch, a law professor at the University of Pennsylvania.
“One way you might show your loyalty and get the legislators to pay attention to you is to incorporate in your home state,” she said.
Exxon’s roots in New Jersey trace back to its formation after the breakup of Standard Oil in the early 1900s, though its headquarters has been in Texas since 1989.
In September, Exxon took a novel step to help fend off activist shareholder resolutions during annual meetings, introducing a program to allow retail investors to automatically cast their ballots in step with the board’s recommendations.
Nearly 40% of the company’s shares are held by individuals but just a quarter of them vote during proxy season, though they mostly support the board, the company said at the time.
Texas has sought to reinforce its reputation as a safe haven for business and has been a major beneficiary as some companies have departed states such as Delaware, a top destination for incorporation.
(This story has been corrected to say that Exxon Mobil plans to redomicile in Texas, not reincorporate, in paragraph 1)
Reporting by Sheila Dang in Houston and Ross Kerber in Boston; Editing by Nathan Crooks and Muralikumar Anantharaman
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