On Sept. 15, 2025, the staff of the Office of Mergers & Acquisitions, Division of Corporation Finance of the U.S. Securities and Exchange Commission (SEC) issued a no-action letter to Exxon Mobil Corporation (Exxon) regarding its retail voting program, which is designed to encourage greater participation by individual investors in corporate governance matters. Exxon’s decision to implement this program reflects a growing recognition among public companies of the limited role retail shareholders play in influencing the outcome of shareholder votes, including for companies with a significant retail shareholder base.
Exxon’s approach may serve as a compelling model for other public companies with significant retail ownership. By streamlining the voting process, retail voting programs could help unlock a previously untapped voting bloc. In doing so, companies can consolidate support for management’s position on key proposals — particularly in the face of increasingly active institutional and activist investors — by effectively mobilizing the “silent majority” of individual shareholders. For companies facing contentious votes or shareholder proposals, retail voting programs could provide a powerful mechanism to build a supportive base and counterbalance more organized opposition. Importantly, the SEC staff’s issuance of a no-action letter in connection with Exxon’s implementation of its retail voting program provides a level of regulatory clarity and appears to open the door for other public companies to pursue similar strategies with greater confidence.
Overview
Opt-In Process
Under the retail voting program, all of Exxon’s retail investors, including registered owners or beneficial owners (via their bank, broker or plan administrator), may authorize a standing voting instruction that requires Exxon to vote their shares based on the recommendation of Exxon’s board of directors at each meeting of shareholders. Shareholders who opt-in to the retail voting program (participating shareholders) have two choices for the kinds of matters to which their standing voting instruction would apply: (1) all matters; or (2) all matters except contested director elections (elections in which the number of director nominees in that election exceeds the number of directors to be elected) or any acquisition, merger or divestiture transaction that, under applicable state law or stock exchange rules, requires approval of Exxon’s shareholders.
Opt-Out Process and Reminders
Participating shareholders can subsequently opt out of the retail voting program to cancel their standing voting instruction at any time and at no cost. However, cancellation of a standing voting instruction will only apply for meetings for which Exxon has not yet filed a definitive proxy statement. Instead, participating shareholders can override their standing voting instruction for an upcoming meeting by casting their own votes using any method described in the proxy materials they received for that meeting.
Exxon will send annual reminders to participating shareholders regarding their enrollment in the program and their standing voting instruction that includes explicit language regarding the participating shareholders’ ability to opt out and cancel their standing voting instruction.
Additionally, participating shareholders who have chosen to have their standing voting instruction apply to “all matters” will receive an additional reminder of their ability to opt out of their standing voting instruction for future meetings or override their standing voting instruction and cast their own votes at an upcoming meeting prior to any meeting that involves a contested director election or an acquisition, merger or divestiture transaction that requires approval of Exxon’s shareholders.
On Sept. 17, 2025, Exxon filed its solicitation materials describing its retail voting program with the SEC on Schedule 14A and indicated that it will file disclosure of any material changes to its solicitation materials on subsequent Schedules 14A.
State Law Considerations
Exxon reviewed the legality of an indefinite standing voting instruction under New Jersey (the state in which Exxon is incorporated) and Delaware corporate law and determined that the corporate code of each state permits giving a standing voting instruction that does not expire so long as the instruction provides for an extended duration. Section 14A:5-19 of the New Jersey Business Corporation Act provides that “no proxy shall be valid for more than 11 months, unless a longer time is expressly provided therein.” Section 212 of the Delaware General Corporation Law states that “no such proxy shall be voted or acted upon 3 years from its date, unless the proxy provides for a longer period.” In order to comply with these requirements to include an express term for proxy appointments, the solicitation materials for Exxon’s retail voting program provided to retail investors state that the standing voting instruction “will remain effective and in place for every shareholder meeting until [the investor] cancel[s] the instruction.”
Shareholder Pushback
On Sept. 30, 2025, shareholder advocacy groups As You Sow and the Interfaith Center on Corporate Responsibility filed a reconsideration request with the SEC staff asking that it rescind its no-action relief allowing Exxon to implement its retail voting program. The groups argued that the program may reduce active decision-making by shareholders by causing many retail votes to be automatically cast in favor of management. The groups claimed that the retail voting program violates several Exchange Act rules, including Exchange Act Rule 14a-4(d)(2), which prohibits a proxy from conferring authority “to vote at any annual meeting other than the next annual meeting,” and Exchange Act Rule 14a-4(d)(3), which provides that a proxy cannot give authority “to vote with respect to more than one meeting.” The SEC staff has not yet provided a response to the reconsideration request.
On Oct. 14, 2025, the City of Hollywood Police Officers’ Retirement System, a public pension fund located in Florida, filed a class action suit on behalf of Exxon’s shareholders against Exxon and its board of directors in the U.S. District Court for the District of New Jersey. The suit alleged that the retail voting program violates federal law, unlawfully impairs the voting rights of Exxon’s public shareholders and constitutes an “unlawful entrenchment device” that perpetuates the directors’ control of Exxon. Additionally, the complaint alleged that Exxon’s directors breached their fiduciary duties in connection with the retail voting program by establishing the retail voting program to “entrench and perpetuate their control over director elections as well as corporate policies and practices.” The plaintiffs in this case seek declaratory and injunctive relief and to enjoin the continued operation of Exxon’s retail voting program. The allegations made against Exxon and its board of directors have not been proven; the case has not yet been certified as a class action; and the defendants in the case have not yet filed a defense.
Next Steps/Other Considerations
The SEC staff granted no-action relief for Exxon’s retail voting program through a no-action letter that specifically addressed Exxon’s facts and circumstances and request for no action. The Exxon no-action letter provides a level of regulatory clarity and appears to invite other public companies to pursue similar strategies. Companies seeking to implement a retail voting program that follows the model proposed by Exxon should be able to do so without seeking their own no-action relief from the SEC staff before proceeding. However, companies proposing to implement a retail voting program that differs from Exxon’s model should consider seeking their own no-action relief from the SEC staff (or at least contact the SEC staff) before proceeding.
Companies must also carefully consider the legality of implementing indefinite standing voting instructions in a manner similar to those included in Exxon’s retail voting program under their respective state corporate statutes and governing documents. For companies incorporated in Virginia and North Carolina, the Virginia Stock Corporation Act (VSCA) and the North Carolina Business Corporation Act (NCBCA) contain provisions similar to the New Jersey and Delaware provisions. Section 13.1-663(C) of the VSCA provides that the appointment of a proxy is “valid for the term provided in the appointment form and, if no term is provided, is valid for 11 months unless the appointment is irrevocable under subsection D.” Section 55-7-22(c) of the NCBCA states that a proxy appointment is “valid for 11 months unless a different period is expressly provided in the appointment form.” Therefore, similar to Exxon’s approach, companies incorporated in Virginia or North Carolina should ensure that their retail voting program solicitation materials state that the term of an investor’s proxy appointment shall be “until revoked” or “until the participant opts out” in order to comply with their state statutory requirements.
For questions about the Exxon retail voting program, how to implement a similar program or other related questions, contact the authors, your McGuireWoods contact or a member of the firm’s Public Company Advisory Practice Group.