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Introduction
On September 15, 2025, the Securities and Exchange Commission (the "SEC") issued a no-action letter confirming that it would not recommend enforcement action against Exxon Mobil Corporation ("Exxon") with respect to the implementation of their retail voting program (the "Voting Program"). The Voting Program is a voluntary, no-cost program whereby retail investors could authorize a standing voting instruction requiring Exxon to vote their shares based on the recommendations of Exxon's board of directors (the "Board") at each duly called annual general or special shareholder meeting. One of the stated objectives behind the Voting Program is to address and combat low shareholder participation turnout.
The Retail Voting Program
Exxon has a large retail investor base who do not vote at the same rate as Exxon's other investors. As a result, Exxon created the Voting Program to attempt to close the gap between its voting and non-voting shareholders. Through the Voting Program, participating shareholders will give the Board standing power to cast votes in favour of the Board recommendations. The Voting Program is limited to retail investors and has an opt-in and opt-out design.
As Exxon stated in its no-action request letter to the SEC, the Voting Program will be available to all retail investors of Exxon, including any registered and beneficial owners, on a completely voluntary and no-cost basis. Each participating shareholder will 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 or any acquisition, merger or divestiture transaction that, under applicable state law or stock exchange rules, requires approval of ExxonMobil's shareholders.
Key Conditions and Requirements
The SEC did not object to the implementation of the Voting Program based on the following key conditions and requirements:
- Opt-in Process: the Voting Program is completely voluntary and participating shareholders will have their vote casted in accordance with their standing voting instructions.
- Opt-out Process: at any given time, participating shareholders may opt-out of the program at no cost. However, this is only applicable to meetings where Exxon has not yet filed a definitive proxy statement.
- Eligible Shareholders: in order to comply with SEC rules and the Securities Exchange Act, the Voting Program will not be available to investment advisers registered under the Investment Advisers Act of 1940.
- Annual Reminders: participating shareholders will receive annual reminders about their opt-in and their standing voting instructions. The annual reminder will also provide them with opt-out instructions. Participants who selected to have their shares voted on "all matters" will receive an additional reminder prior to any meeting involving a contested director election or an acquisition, merger, or divestiture transaction that, under applicable state law or stock exchange rules, requires shareholder approval.
- Overriders: participating shareholders will have the ability to use the proxy materials they receive for each meeting to override their standing voting instruction with respect to any proposals.
- Public Disclosure: Exxon will make full disclosure on its website and in its proxy statements of the Voting Program.
Implications of the Retail Voting Program In Canada
Many Canadian publicly listed issuers with a large retail investor base face the same concerns as Exxon with respect to low voter turn out by retail shareholders, and may well believe that implementing a retail voting program would be helpful notwithstanding the implementation costs. Such a program could also serve to lessen the influence of institutional and activist shareholders. However, like Exxon, Canadian issuers will likely need to seek regulatory relief in order to implement a similar auto-voting program. In Canada, proxy solicitation and proxy requirements are generally governed under federal and provincial corporate legislations and Canadian securities law, which have some similarity to US federal securities laws which were considered by the SEC.
We note, however, that New Jersey corporate legislation (which governs Exxon) and Delaware corporate law allow for standing voting instructions that do not expire, and we expect that this fact was considered in the SEC's decision. This is not the case in Canada. Under the Canada Business Corporations Act (the "CBCA"), proxies are only valid for the meeting it was given in respect of. In Ontario and Nova Scotia, proxies are valid for one year. In New Brunswick, proxies are valid for the meeting it was given in respect of or at any meeting held during the period specified in the proxy, up to a maximum of 14 months, but can only be valid for one annual meeting during that period. Other provincial corporate legislations adopt the CBCA approach or are silent on the issue.
We have no doubt that issuers and regulators in Canada are following this development carefully, particularly issuers who are subject to regulations in both Canada and the United States, and have a large retail investor base who tend to vote with management. We would expect that the implementation of such a program in Canada would require regulatory approval or relief and be subject to significant scrutiny.
A Cautionary Note
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
