From Scorched Earth to Mars: Corporate Governance Goes Rogue in 2026

Something fundamental shifted during the 2026 proxy season. Reacting to the SEC’s “hands-off” approach, boards deployed increasingly aggressive procedural strategies to evade accountability. That several of the New York City Pension Funds had to sue AT&T simply to secure a vote on a shareholder proposal illustrates how far the process has shifted.

The SEC’s retreat from the traditional no-action process stands at the heart of this storm—inequitably favoring management and impairing shareholders’ ability to advance shareholder proposals. Indeed, while shareholders have thus far been forced to litigate just to have their proposals voted on, the SEC staff granted Exxon Mobil Corporation (“Exxon”) no-action relief on its unprecedented (and potentially industry-defining) retail voting program with seemingly minimal scrutiny. As the public record shows, Exxon’s retail voting program, which is now facing legal challenges in federal court, received no-action relief from the SEC on the very day it was requested.[1]

The asymmetry at play here is stark. During engagement calls regarding the New York City Police Pension Fund’s shareholder proposal, which requested that Exxon’s new retail voting program provide shareholders with multiple voting options as opposed to simply robovoting with management, Exxon asked whether the Comptroller’s Office had spoken with the SEC about how the proposal aligned with the agency’s aforementioned no-action determination. It was a particularly revealing question from a company that has the privilege of spending years in informal dialogue with the SEC behind closed doors to secure same-day approval for its retail voting program. Shareholder proponents simply do not have that kind of access.

The SEC’s abdication has altered the culture of corporate engagement itself. Engagement is becoming increasingly adversarial, litigious, and punitive. Meaningful accountability is becoming increasingly elusive.

The trend extends beyond the annual meetings that define proxy season. SpaceX’s pending IPO, for example, appears designed to make shareholder accountability all but impossible from liftoff.

But no company has crystallized these dynamics more sharply than Exxon, whose annual meeting is today. Its controversial governance choices have drawn the attention of investors, legal scholars, and other companies contemplating similar moves. When the Comptroller raised specific concerns about the implications of Exxon’s new retail voting program and the company’s proposed reincorporation to Texas, Exxon did not engage on the merits. Instead, it attacked the Comptroller directly, dismissing legitimate criticisms as mere “scaremongering” and “bullying.”

This is not normal corporate behavior. It reflects a broader trend in American political and cultural discourse, increasingly normalized at the highest levels of public life: attacking institutions, impugning motives, and treating scrutiny itself as a form of aggression. That reflexive hostility toward scrutiny is now migrating into corporate boardrooms.

Exxon’s Scorched Earth March to Texas

Across multiple proxy-related filings, Exxon also accused the New York City Comptroller of political motivation and systemic misrepresentation. Exxon further alleged that the Comptroller violated solicitation process and privacy norms when it cited Exxon’s own engagement arguments as part of a longstanding Council of Institutional Investors (CII) conference session whose very purpose is to allow shareholders to discuss their proposals.[2] Professor Christina Sautter, Southern Methodist University law professor, whose credentialed academic analysis Exxon chose to rebut not on the merits but by pointing out that a colleague at her own institution had reached different conclusions, fared no better.

Exxon also made a separate filing accusing proxy advisory firm Glass Lewis of basing its recommendation against the proposed Texas reincorporation on “misunderstandings” and “speculation,” even going as far as suggesting that Glass Lewis had concealed a conflict of interest arising from its litigation with the Texas Attorney General.

This approach, repeated across filing after filing, is ad hominem ad nauseam. The vigor of the attack is in inverse proportion to the quality of the rebuttal.

If the combative rhetoric of a market bellwether like Exxon and the insulated architecture of history’s largest upcoming IPO at SpaceX set the tone for the market, investors are in for a very rough ride.

When Governance Mechanisms Compound

Exxon’s scorched-earth responses deflect from two entrenching governance moves that it prefers not be examined in tandem.

The first is its Voluntary Retail Voting Program, which allows retail shareholders to provide standing instruction for their shares to be automatically voted in alignment with board recommendations at every future meeting without the need to review the specific proposals on the ballot. Notably, nearly 40% of Exxon’s shares are held by individual investors. Once enrolled, a portion of those shares would vote with management indefinitely, sight unseen, via silent and perpetual automatic renewal.

The second is reincorporation from New Jersey to Texas. Exxon argues that Texas law provides comparable shareholder protections to New Jersey, and maintains that no provisions weakening shareholder rights have been adopted in connection with the move. Shareholders are asked to take that commitment only on faith because, however sincerely made today, it is NOT legally binding on future boards. Reincorporating peers have reassured shareholders by codifying similar commitments in binding governing documents. Exxon has not. Future Exxon boards will operate within the more permissive framework of Texas law, not within the assurances offered in this year’s proxy statement.

For these reasons, New York City Comptroller Mark Levine has recommended voting against reincorporation. This sentiment has been echoed by independent proxy firms Glass Lewis, and Institutional Shareholder Services, making the outcome at Exxon’s May 27 annual meeting contested. If automatically cast retail votes ultimately override informed investor opposition, Exxon’s march to Texas could become entangled in a legal minefield. A New Jersey federal court ruling that the program, as implemented, breaches fiduciary duty in City of Hollywood Police Officers Retirement System v. Woods could potentially call into question the validity of those ballots and undermine Exxon’s reincorporation effort itself.

The Exxon Playbook

Accountability insulation may offer a short-term shield for a single board. But it risks undermining the systemic trust and transparency that long-term institutional investors require to manage risk across diversified portfolios. If scorched-earth tactics become a viable response to shareholders raising concerns and proposals seeking remedies and accountability, the implications could extend far beyond any single annual meeting.

It was not always this way. Just eighteen months ago, JPMorgan Chase described the New York City Pension Funds’ Energy Supply Financing Ratio shareholder proposal, submitted and negotiated by the Comptroller’s Office, as “an excellent example of what ongoing engagements and pragmatic and reasonable requests can accomplish.”[3]

JPMorgan recognized the Comptroller not as an adversary, but as a legitimate participant in the governance process, and the resulting disclosure has since become an emerging standard in the banking sector.

The contrast between JP Morgan’s response and Exxon’s reflects two fundamentally different theories of shareholder engagement. One treats engagement as a feature of well-functioning capital markets. The other treats it as a threat to be neutralized.

Texas as the Nexus of Neutralization

It is no coincidence that the three companies at the center of this season’s accountability crisis — AT&T, Exxon, and SpaceX — are all headquartered in Texas. The Lone Star State is no longer merely a legal refuge. It is becoming the institutional home of a new model of corporate governance, defined less by engagement than by the systematic neutralization of investor oversight.
The logical endpoint of this model may already be coming into view. SpaceX is preparing to go public in a structure one institutional investor described as “closing the voting door, the courthouse door and the proposal door simultaneously.”[4] Supervoting shares, mandatory arbitration, the effective elimination of class actions, and stricter shareholder proposal rules, all under Texas law, combine to make accountability optional at liftoff.

Many asset owners and other passive investors will have no choice in the matter. At SpaceX’s scale, Nasdaq’s new Fast Entry framework could force index inclusion in as little as fifteen days, long before market pricing fully reflects the risk.

Passive investors could therefore become involuntary shareholders in companies designed to operate outside the bounds of accountability. That is why New York City Comptroller Levine, New York State Comptroller Tom DiNapoli, and CalPERS, collectively representing more than $1 trillion in assets and millions of beneficiaries, have written directly to SpaceX urging reconsideration of its governance structure before it files its S-1. That filing has since occurred, confirming that investors’ governance concerns were well-founded.

Even as major investors push back, the referee is stepping back. For decades, the SEC served as the central referee of U.S. capital markets, helping establish a baseline for investor rights and procedural fairness. Increasingly, however, those protections are being reshaped by state-level experimentation, private ordering, and regulatory retreat. The result is a gradual transfer of authority toward governance regimes explicitly designed to minimize accountability to investors.

The defining question raised by the 2026 proxy season is whether U.S. capital markets will continue to operate on the premise that public ownership carries meaningful rights of oversight and accountability, or whether those rights will slowly become vestigial features of a rogue market increasingly designed to insulate management and directors from the investors who ultimately provide the capital.

1In its filing, Exxon denied the Comptroller’s claim of same-day approval as “clearly false,” noting that it underwent “long and significant effort with the SEC, across two administrations” to secure no-action relief for its retail voting program. Exxon then proceeded to accuse the Comptroller of knowingly making a misleading allegation through a third-party citation in an attempt to circumvent the relevant securities laws regarding false statements. Exxon’s accusation is without merit. The public record is clear on the truth of the statement made: Exxon’s formal no-action request and the SEC staff response providing no-action relief were issued on the exact same date: September 15, 2025. Moreover, the fact that Exxon’s immediate response did not limit itself to addressing the issue at hand but instead went on to include a thinly-veiled accusation of illegality, is a chilling example of the company’s scorched-earth tactics directed at its own shareholders.(go back)

2Full disclosure: The presentation at the Council of Institutional Investors Conference was delivered by the author. In its May 12, 2026 supplemental proxy filing, Exxon expressed shock at the public exposure of its private engagement arguments by including a comical footnote declaring: “Yes, he really said the things we address below. First, to institutional investors though [sic] the Council of Institutional Investors on May 4, 2026, and then a day later filed publicly with the SEC.” Exxon’s rushed attempt to attack its critics left its official SEC filing riddled with errors. Beyond the obvious typo (“though” instead of “through”), the company committed a glaring factual blunder regarding the timeline: the CII conference took place in mid-March, not May. The May 4 date Exxon cited was the day the Comptroller’s Office filed its exempt solicitation. These errors appear in a document Exxon filed to question the Comptroller’s rigor and accuracy(go back)

3https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/investor-relations/documents/events/2024/energy-supply-financing-ratio-supplement/esfr-presentation.pdf(go back)

4https://www.reuters.com/sustainability/boards-policy-regulation/spacex-ipo-gives-musk-sweeping-power-curbs-shareholder-rights-2026-05-06/(go back)