Sorry, Ben, I’m jumping on this one.

Exxon is proposing to move its domicile to Texas.

It’s an obvious move for Exxon; their headquarters are there so they’re not exposing themselves to lawsuits in a different venue, and they also perhaps expect, shall we say, a friendlier judicial reception in Texas.

But Exxon isn’t a Delaware company. It’s a New Jersey one, old school from when it was Standard Oil and New Jersey dominated the market for corporate charters. Right now, they’re the subject of a couple of lawsuits in New Jersey over their retail shareholding program, and they’re fighting to transfer those to Texas.

But Exxon doesn’t have a controlling shareholder; its shareholders are normie institutions like BlackRock and State Street.

Perhaps to placate them over the move, it’s explicitly not going to opt in to the Texas provisions that would allow ownership thresholds on shareholder proposals and derivative lawsuits – provisions that did not exist when, say, Tesla asked them to vote on a move.

But, it’s also not committing in the charter not to adopt those provisions in a unilateral director-passed bylaw in the future (compare, for example, ArcBest, which promised in the charter not to adopt ownership thresholds). (Exxon does, however, argue that even under New Jersey law, it would be free to adopt a bylaw limiting shareholder proposals – an untested proposition, but one Mohsen Manesh has advocated)

But there is a provision of Texas law Exxon (and ArcBest) would be bound by: Texas prohibitions on imposing any liability on corporate directors or officers for anything short of fraud, intentional misconduct, an ultra vires act or a knowing violation of law. Notably, these protections of Texas law extend even to director initiated lawsuits – i.e., not just shareholder derivative lawsuits, but ones that the board voluntarily chooses to bring.

All of this, I think, puts the BlackRocks of the world in a political bind. They generally express a preference against diminishing shareholder rights in meaningful ways, but they’re also under heavy pressure to demonstrate that they support the fossil fuel industry.

I’d ask what they plan to do but I …. assume … Exxon wouldn’t have offered this proposal in the first place if it hadn’t put out a few feelers first (in full compliance with the rules on proxy solicitation of course).