On September 15, 2025, the SEC's Division of Corporation Finance issued a no action letter response to Exxon Mobil Corporation (Exxon) confirming that it would not recommend enforcement action under Exchange Act Rule 14a-4(d)(2) or Rule 14a-4(d)(3) if Exxon implements its proposed "Retail Voting Program." Its no-action position was based on several features of the program, including: its limitation to retail investors; its opt-in and opt-out design; annual reminders to participants; and the ability of participants to override standing instructions with respect to an upcoming meeting, all as described in more detail below.1 Where permitted by applicable state law, such programs may be attractive to companies with a significant and stable shareholder base to increase retail shareholder participation in shareholder votes (potentially dampening the influence of institutional and activist shareholders and/or aiding in the achievement of a quorum). However, such programs will also increase a company's expenses and administrative burdens, with no guarantee of ultimate success. In addition to costs incurred in connection with the documentation and disclosure of the program itself, companies would need to invest time and resources to track their retail shareholder base and historical voting patterns to determine whether such a program would be desirable, and would incur expenses from brokers/bankers in connection with communications to accountholders regarding the program, as well as platform set-up and ongoing maintenance fees of its chosen vote-processing agent.
Background
For many companies with a significant number of retail shareholders, a large percentage of such shareholders do not vote at shareholder meetings. As an example, Exxon noted that "at its most recent annual meeting, nearly 40% of our outstanding shares were held by retail investors, yet only a quarter of these retail shares were voted." In response, Exxon proposed 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 its Board of Directors at each duly called annual general or special shareholder meeting.
Exchange Act Rules 14a-4(d)(2) and 14a-4(d)(3)
Under Exchange Act Rule 14a-4(d)(2), "no proxy shall confer authority ... [t]o vote at any annual meeting other than the next annual meeting (or any adjournment thereof) to be held after the date on which the proxy statement and form of proxy are first sent or given to security holders." Similarly, under Exchange Act Rule 14a-4(d)(3), "no proxy shall confer authority ... [t]o vote with respect to more than one meeting (and any adjournment thereof) ...." Exxon argued that due to the easy opt-out and override abilities built into the program, it did not conflict with these rules. Exxon's no-action request also noted that New Jersey and Delaware state corporate law each permit the giving of a standing voting instruction that does not expire so long as the instruction provides for such extended duration.2
Retail Voting Program Design
- Availability: The Retail Voting Program would be available to all retail investors (including registered owners and beneficial owners through banks, brokers, or plan administrators) at no cost; the program would not be available to registered investment advisors.
- Opt-In Process: Participants can have their standing voting instruction apply either: (1) to all matters; or (2) to all matters except contested director elections or any acquisition, merger, or divestiture transaction that, under applicable state law or stock exchange rules, requires shareholder approval.
- Opt-Out Process: Participants can opt out of the program to cancel their standing voting instruction at any time and at no cost (applicable to meetings for which Exxon has not yet filed a definitive proxy statement).
- Reminders: Participants will receive annual reminders of their enrollment in the program and their standing voting instruction, as well as their ability to opt out and cancel their standing voting instruction with respect to future meetings. 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.
- Overrides: While participants can only opt out of the standing voting instruction for future meetings, they can always override the votes cast through the standing voting instruction by voting using the proxy materials they received for an upcoming meeting.
- Voting Mechanics: Exxon's vote-processing agent will manage the voting process and related administrative tasks for the program, including communications between and among the company, banks and brokers, shareholders, and the backend portal through which shareholders may choose to opt in or out of the program. Participants would have their voting positions submitted after Exxon files the definitive proxy statement with the SEC, but prior to the distribution of the definitive proxy statement to shareholders. The standing voting instruction is designed to facilitate the shareholder's choice to establish a streamlined and automated process, but such shareholder can easily override that process by instead voting at an upcoming meeting using the proxy materials they receive that year (identical to any other shareholder voting at that meeting).
- Disclosure: (i) Exxon will disclose the Retail Voting Program in its proxy statement for each upcoming shareholder meeting, including the ability of participating shareholders to opt out for future meetings or to override their standing voting instructions prior to the vote at the upcoming meeting; (ii) Exxon filed with the SEC the relevant materials describing the Retail Voting Program under cover of Schedule 14A pursuant to Exchange Act Rule 14a-12 and will subsequently file any material changes to these materials in the same manner; and (iii) Exxon will make full disclosure on its website and in its proxy statement of the Retail Voting Program.
The SEC Staff noted that different facts may lead to a different conclusion, and that their response "does not express any legal conclusion on the questions presented or any views on any other questions that your request may raise, including compliance with other provisions of the federal proxy rules or the federal securities laws."
Footnotes
1 Exxon did not seek no-action relief regarding whether this program involves the "solicitation" of proxies, as defined in Rule 14a-1(l). However, Exxon noted that, to the extent communications related to the Retail Voting Program are considered "solicitations," the provision of such communications to beneficial owners of the company's securities by banks, brokers, and other nominees would be subject to Rule 14a-2(a)(1) [specifying solicitations where the proxy rules do not apply].
2 Exxon cited NJ Rev Stat § 14A:5-19 ("No proxy shall be valid for more than 11 months, unless a longer time is expressly provided therein"); 8 Del. C. § 212(b) (proxies valid for up to three years, "unless the proxy provides for a longer period").
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