SEC Provides No-Action Relief for Retail Voting Program

The U.S. Securities and Exchange Commission’s (SEC) Office of Mergers & Acquisitions recently issued a no-action letter to ExxonMobil on September 15, 2025, allowing them to implement a retail voting program aimed at boosting retail shareholder involvement. This ground-breaking program would enable ExxonMobil to solicit standing voting instructions from retail investors, aligning their votes with the recommendations made by the board. This approach, also known as “client directed voting” or “advance voting instructions,” has been under consideration for some time and was previously discussed in the SEC’s 2010 concept release on the U.S. proxy voting system.

Key Features of the Program

The retail voting program put forth by ExxonMobil encompasses various vital components:

Eligibility: The program will be open free of charge to all retail investors, including both registered owners and beneficial owners. Regardless of status, all eligible investors will have an equal opportunity to enroll. While registered owners will be directly contacted by ExxonMobil, communications with non-objecting beneficial owners (NOBOs) and objecting beneficial owners (OBOs) will be conducted through their respective banks, brokers, and agents.

Opt-in process: Shareholders opting to participate in the program can choose between applying their standing voting instructions to all matters or excluding contested director elections and specific transactions requiring shareholder approval under state law or stock exchange regulations.

Opt-out process: Enrolled shareholders maintain the freedom to withdraw their standing voting instructions without incurring any costs, albeit affecting only future voting instances where ExxonMobil hasn’t yet issued a definitive proxy statement. ExxonMobil has committed to sending annual reminders to participants about their enrollment status and opt-out privileges. Those who opt to apply their votes to all matters will receive additional notifications regarding contested board elections or significant corporate undertakings, offering the option to amend or revoke their voting preferences. Shareholders can also override standing instructions at any time by submitting their individual votes using the provided proxy materials.

Voting mechanics: To facilitate the voting process for the retail voting program, ExxonMobil’s vote-processing agent will oversee voting operations and related administrative functions, maintaining secure communication links with the company, shareholders, brokers, and banks. Confidential data will remain within the vote-processing agent’s systems without disclosure to ExxonMobil. Votes from standing instructions will be cast post the finalization of ExxonMobil’s proxy statement but before it reaches shareholders. Enrolled shareholders can also opt to cast their votes using the proxy materials available if they wish to override standing instructions. ExxonMobil has pledged to include program details in their proxy statements, ensuring shareholders are aware of opt-out and override options, with assistance from banks and brokers in liaising with beneficial owners.

Key Takeaways

Companies looking to enhance retail shareholder engagement should evaluate their shareholder composition, past retail voting trends, and the potential implications of adopting a retail voting program similar to ExxonMobil’s initiative. Further dialogue with SEC Staff on the procedural aspects and any need for individual no-action responses should be considered by companies seeking to implement a comparable program. While the SEC Staff has shown receptivity towards other companies exploring retail voting programs aligning with the ExxonMobil model, prudent engagement and consultation with SEC Staff are advisable before proceeding. Companies deviating in program structure, technology, or execution parameters should conduct a thorough analysis to ensure alignment within the established parameters or seek personalized no-action relief from the SEC.

For further elucidation, refer to the no-action request submitted by ExxonMobil to the SEC. Seeking legal counsel for clarifications on no-action relief and program specifics is recommended for companies contemplating a retail voting program.