Shareholder Primacy Podcast: "XOM Domicile; Pending Proxy Contests"

Date: March 18, 2026
Hosts: Mike Levin (activist investor), Ann Lipton (Colorado Law Professor)
Podcast by: Free Float Media Inc.

Episode Overview

This episode focuses on two intertwined, highly-relevant developments in U.S. corporate governance:

• ExxonMobil’s proposal to move its legal domicile from New Jersey to Texas, a move with major implications for shareholder rights, corporate law, and the ongoing tension between shareholders and management.
• A survey of the current landscape of proxy contests scheduled for the 2026 proxy season, highlighting trends, notable campaigns, and shifts in shareholder activism.

Throughout, hosts Ann Lipton (expert in securities/business law) and Mike Levin (activist investor) discuss the real implications of these trends, using practical experience, legal nuance, and a dose of sharp, wry commentary.

Key Discussion Points & Insights

1. ExxonMobil’s Proposed Redomestication: History and Motives

• The Proposal: ExxonMobil seeks shareholder approval to shift its legal home from New Jersey (where it’s stayed since its Standard Oil origin days) to Texas, aligning its corporate structure with its operational headquarters.
  (04:14–06:26)

• Historical Context:

  • New Jersey was the original "race to the bottom" state aiming to attract incorporations in the late 1800s—earning the nickname "betrayer state." Its liberal laws inspired Delaware's later dominance.
    Ann:

    "New Jersey in the late 1800s was the first state to say we are going to make an effort to attract incorporations." (05:09)
    "Delaware kind of like took the crown. It basically literally copied New Jersey’s law." (05:49)

• Texas as Domicile:

  • Texas recently revamped corporate statutes to drastically curtail shareholder rights and enhance managerial/insider protections.
    Ann:

    "Texas, as we’ve said before, recently revamped its corporate code to give a lot more power to managers and... to be a lot less friendly to shareholders. And I just have to say Texas, Exxon, they call this pro business. That’s not accurate. They're pro manager." (08:09)

2. Legal Analysis: New Jersey, Delaware, and Texas Compared

• New Jersey vs. Delaware:

  • At this point, laws are largely similar, though changes like Delaware’s SB21 have diverged in recent years.

• Texas’s Distinctiveness:

  • Limits on Lawsuits & Proposals: Texas allows companies to require 3% stock ownership ($20 billion for Exxon) or $1M stake for shareholder proposals and derivative suits—but only if companies explicitly "opt in."
    Ann:

    "Texas allows companies... to limit derivative lawsuits... or shareholder proposals... In Exxon’s case 3% is about $20 billion... never mind. You’re never going to get a shareholder proposal there." (08:27, 09:10)

  • Mandatory Board Protection: Texas shields directors/officers from virtually all liability except fraud or knowing law violations—including from the board itself.
  • Restricted Shareholder Rights: No inspection of books/records for litigation; no access to emails/texts, etc.
    Ann:

    "Texas flatly bars shareholders from getting books and records if they're doing it to explore litigation." (09:43)

• Exxon’s Stance:

  • It claims (in its proxy statement) that it won’t (yet) opt in to these anti-shareholder provisions, but hasn't bound itself or made enforceable commitments.
    Ann:

    "But it has made no commitment to that. Both of those things—limits on lawsuits and on proposals—they can be adopted unilaterally by the board at any time." (12:04)

• Other Precedents:

  • Some companies (e.g., ArcBest, Fidelity National Financial) contractually limited their liability shield or holding requirements to appease shareholders, Exxon has not.
    Ann:

    "...Fidelity National Financial... put in their charter that they would have the same standards as Delaware... Exxon is not waiving anything." (13:28)

3. Shareholder Impact and Governance Dynamics

• Summary of Effects: Exxon could, post-move, severely limit litigation, shareholder proposals, and accountability for its board/officers—all without making binding promises not to do so.
  Mike:

  "By making this move... it’s going to basically allow Exxon to limit shareholder lawsuits or derivative lawsuits in significant ways if it wants to, and also limit shareholder proposals..." (14:05)

• Why the Fuss About Proposals?: Unclear why Exxon is so disturbed by shareholder proposals, but it clearly is, underscored by lawsuits over minor ESG submissions.
  Mike:

  "...for whatever reason ... these shareholder proposals, which I would think to most explicitly a mammoth company like Exxon would be just kind of a nuisance, is really something." (15:08)

4. Voting Mechanics and the Role of Major Shareholders

• The AGM Vote:

  • This redomicile requires shareholder approval.
  • Most likely, a simple majority of votes cast or shares outstanding is needed (16:34).
  • Without a controlling shareholder, outcome depends on the big asset managers (BlackRock, Vanguard, State Street).

• The Big Three’s Dilemma:

  • They've historically supported similar moves (e.g., Tesla), but Texas law has since become much tougher on shareholder rights.

  • Their internal proxy guidelines profess commitment to shareholder rights, but they face political pressure (Texas AG Ken Paxton and others suing them over ESG). Ann:

    "BlackRock and State Street are right now fighting a lawsuit in Texas... alleging that their climate change resolutions were essentially a conspiracy." (18:11) "I'm concerned they may feel a lot of political pressure to support this move..." (19:08)

  • While Exxon almost certainly checked in with its biggest shareholders before proposing, much will depend on proxy advisors’ recommendations and the extent of political/PR pressure.

5. Broader Implications: Texas as a Corporate Law Power?

• Does this Signal a Shift Away from Delaware?

  • Some (mostly Texas-based) commentators claim Exxon’s move marks Texas’s arrival as a Delaware alternative for blue-chip companies. The hosts are skeptical. Ann:

    "Texas is really very explicitly creating a kind of politicized corporate governance. It’s treating corporate governance as a Culture War issue. It’s targeting shareholder proposals which usually have a liberal bent." (23:59)

• Risk of Political Hijack:

  • Incorporating in Texas may make companies vulnerable to politicized lawsuits, regulatory unpredictability (e.g., potential bans on considering ESG).
  • Examples: Texas anti-ESG lawsuits, anti-woke litigation, AG Paxton’s actions against nonprofits and corporations. Ann:

    "So incorporating in Texas just seems to invite that kind of risk." (25:36) "If BlackRock were actually incorporated in Texas, forget it. There is no chance that they would have this lawsuit transferred." (26:11)

• Limited Broader Movement Predicted:

  • Companies seeking insulation from liability might prefer Nevada’s apolitical regime. For most, Texas’s "political branding" is a deterrent, not a draw.

Proxy Contests: 2026 Season Preview

1. Macro Takeaways

• About 15 pending proxy contests expected to go to a vote in the next several months—slightly up from last year, but not radically. Mike:

  "There were 16 pending proxy contests... One kind of dropped off... there’s now 15. That’s a couple, two, three more than I recall we had around this time last year..." (31:40)

• Universal Proxy Effects:

  • The rule requiring all director nominees to appear on the same ballot has made activists more ambitious, seeking more board seats per contest. Mike:

    "In six of these 14 or 15, the activists are seeking at least a majority... Universal Proxy has allowed activists or dissidents... to be somewhat more aggressive in what they start to look for..." (38:29)

• Sample Size Still Small: Trends are hard to generalize due to modest contest numbers.

2. Notable Contests and Trends

• Prominent Players:

  • Starboard Value (Jeff Smith): Active at CarMax (seeking 2 of 10 seats) and TripAdvisor (possibly majority control; 33:12)

  • Impactive Capital (Lauren Taylor Wolfe): Going after 4 of 11 seats at WEX; interesting escalation after last year’s withhold campaign. (34:46)

  • Real Estate:

    • Two REITs (Whitestone, First Industrial) in play—Maryland law (famed for being management-friendly).

  • Quasi-Hostile Takeover-Style Campaigns:

    • Diana Shipping seeking 6 of 7 board seats at Genco.
    • Beretta (firearm manufacturer) moving for seats at Sturm, Ruger.
    • Lululemon: Former founder challenging current board with 3 of 4 seats sought.

    Ann:

    "The third is... very high profile because there’s a lot of ego is at Lululemon. Lululemon Athletica, where the former founder... is running three out of four directors..." (36:44)

• Activists Seeking Majorities: Several contests see activists targeting a full or controlling slate—a shift likely enabled by the universal proxy framework.
  Mike:

  "There's some ambition being demonstrated here that's really kind of interesting." (38:29)

3. Current Success Rate for Activists

• Of five universal proxy contests since September, activists won some or all their slate in two, lost decisively in three—a typical ~40% win ratio for activists.
  Mike:

  "With a really tiny sample. That's about right... Batting less than .500 is about right for how activists tend to do when they actually go to a vote these days." (40:35)

Notable Quotes & Moments

• On Texas’s new law:
  "They're pro manager... Whether they're pro business in the sense of actually making companies more valuable or more profitable, that really depends on a contested view of what rights shareholders should actually have." (Ann, 08:09)

• Exxon’s history with New Jersey:
  "Delaware literally copied New Jersey law... And then they kind of took off with it and ran with it. And New Jersey fell behind historically. But Exxon, which is formerly Standard Oil, remained there from 1899..." (Ann, 05:55)

• On the "revealed preference" of Exxon’s leadership:
  "For whatever reason that I still do not completely understand, these shareholder proposals... really annoys Exxon." (Mike, 14:51)

• On the dilemma facing asset managers:
  "I think it's likely to pass, but I think it's going to be interesting to see the messaging around it. And I'm going to have my questions about whether BlackRock, Vanguard and State Street, if they vote in favor, are doing it because they genuinely think it's better for shareholders or... because they feel like they can't really oppose Exxon." (Ann, 19:11)

• On the Texas "culture war" edge:
  "Texas is really very explicitly creating a kind of politicized corporate governance... It’s targeting shareholder proposals, which usually have a liberal bent. They've got their anti-ESG proxy advisor law and they're using the court system for this kind of thing as well." (Ann, 23:59)

Important Timestamps

• 00:47 – 15:44: ExxonMobil’s domicile history and why the Texas move matters.
• 07:49 – 13:24: Specific legal differences between New Jersey, Delaware, and Texas; how Texas can erode shareholder rights.
• 14:05 – 16:12: Recap of practical effects on shareholder lawsuits, proposals, books-and-records access, board liability.
• 16:28 – 23:26: Voting requirements, the role of asset managers, and the "politics" of shareholder stewardship.
• 23:59 – 28:45: The broader battle between Delaware and Texas, and why Texas is unlikely to replace Delaware for most companies.
• 29:33 – 41:00: 2026 proxy contest landscape, trends in activist behavior, and notable fights upcoming this proxy season.

Conclusion & Takeaways

• ExxonMobil’s planned move from New Jersey to Texas is as much about reducing exposure to shareholder rights as it is about "fitting" its Texas operational identity.
• Texas law offers unique (and in some eyes: worrisome) protection for management/insiders at shareholders’ expense—but only if companies adopt those rules; Exxon reserves the right to do so later if not now.
• Large asset managers and proxy advisors are under cross-current political and fiduciary pressures; their decisions on Exxon’s move will set governance and activism precedents.
• Proxy season 2026 will see slightly more contests, with activists emboldened by universal proxy rules, but big wins remain elusive.
• Texas’s attempt to rival Delaware will likely attract companies seeking not just insulation from shareholder rights, but also a political statement—making it a niche rather than mainstream trend.

Further Information

• Contacts:
  • Mike Levin – mike@theactivistinvestor.com
  • Ann Lipton – Colorado Law Faculty
• Produced by: Free Float Media

For updates, listener questions, and future episode topics, email: shareholderPrimeCrimeFloat LLC.