ExxonMobil is Headed Home

ExxonMobil's shareholders have overwhelmingly approved the company's proposal to reincorporate from New Jersey to Texas. More than 70% of shareholders supported the proposal, signaling broad investor buy-in for the move to Texas.

The high level of support is notable for a few reasons. First, unlike many of the other companies that have recently reincorporated to Texas, ExxonMobil does not have a single controlling or dominant shareholder capable of driving the vote. Second, the victory was achieved despite negative recommendations from both ISS and Glass Lewis. Together, the high level of support suggests broad investor acceptance of Texas corporate law.

It is also notable that, just days before ExxonMobil's vote, ISS endorsed a proposed Texas reincorporation by Natural Gas Services Group, a small natural gas infrastructure company.  That was ISS’s first recommendation in favor of a Texas reincorporation since it backed Tesla's move in 2024, which was prior to the state's 2025 legislative changes that permit companies to require ownership thresholds for shareholder proposals and derivative lawsuits.  ISS’s rationale for supporting Natural Gas Services Group was based on the company’s stated intention to use the reincorporation to declassify its board.

It is hard to find a consistent throughline for ISS’s endorsement of Natural Gas Services Group’s reincorporation to Texas, on one hand, and its opposition to ExxonMobil’s, on the other hand.  If Natural Gas Services Group is successful, both it and ExxonMobil will have declassified boards, and neither will impose the aforementioned ownership thresholds.  Consider further that ISS opposed ArcBest’s proposal to reincorporate to Texas earlier this year.  Similar to ExxonMobil and Natural Gas Services Group (if successful), ArcBest has a declassified board and did not seek to impose the aforementioned ownership thresholds, even going so far as to require explicit shareholder approval should it choose to opt into the ownership thresholds in the future.

We expect the inconsistency of these recommendations, when combined with ExxonMobil's victory, to have ripple effects into the next proxy season as companies and shareholders alike increasingly gain comfort with Texas corporate law.