American Culture

ExxonMobil's ironic ally: Steve Milloy

Tomorrow is ExxonMobil‘s annual meeting. At that meeting, shareholders are going to vote on a number of Rockefeller family-supported shareholder resolutions, one of which will if passed, force Exxon to invest more money in alternative energy. The Rockefeller family’s logic is that their investment in Exxon (which goes back to the founding of Standard Oil by John D. Rockefeller) will lose value over time as Exxon’s competitors gain footholds in the alternative energy markets to the detriment of Exxon.

But the very first resolution to be voted on is not one that’s supported by the Rockefeller family. In fact, the very first resolution to be voted on is one that would specifically ban resolutions that qualify as “shareholder activism,” supposedly like the resolutions supported by the Rockefellers. And the first resolution was introduced by the Free Enterprise Action Fund (FEAFund), a mutual fund founded and managed by none other than S&R’s own favorite purveyor of global heating propaganda, Steven J. Milloy.

The UK’s Guardian online’s article quotes Milloy as saying “They’re not bona fide shareholders. They’re not shareholders who are invested in Exxon because they think it’s a good investment – they’re shareholders who want to use Exxon to advance their social and political agenda.” If you read the FEAFund Prospectus, it says the following:

[T]he Fund may take an activist position with respect to one or more corporate managements if
the Adviser believes advocacy may:

  • Promote the American system of free enterprise;
  • Ensure that corporate management makes sound business decisions based on long-term investor interests; and
  • Protect businesses and their investors from what the Adviser believes is harmful social activism.

(Source: page 2)

In other words, the FEAFund’s Advisor, Steven J. Milloy, has introduced a resolution that equates to shareholder activism with the stated goal of banning activist shareholder resolutions. And, as a libertarian who likely supports the elimination of the estate tax, Milloy is also claiming that the Rockefeller family, who control Exxon shares via the Rockefeller estate, aren’t bona fide shareholders. And Milloy, who’s funds’ Prospectus claims a Milton Friedman quote as it’s guiding principle (“The Social Responsibility Of Business Is To Increase Its Profits.”), is opposing a resolution based on concerns that the long-term profitability of ExxonMobil is threatened by it’s unwillingness to develop alternative energy technologies and sources.


And this from a mutual fund that, according to the Prospectus, invests a minimum of 65% of its money in Fortune 500 and S&P500 companies, yet has generally underperformed the S&P500 since its inception. Compared to the S&P500 and the DJIA, the FEAFund is marginally better than the S&P and significantly worse than the DJIA over the last year. This certainly implies that the the social responsibility of the FEAFund is to minimize fund shareholder profit by underperforming the market.

For more detailed information about the individuals who were bankrolling the FEAFund as of December, 2007, please see We Berate, You Deride – A look at Steven J. Milloy’s current affiliates and backers.

Categories: American Culture

10 replies »

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  2. According to Exxon, the Rockefellers only own 0.006% of the shares outstanding. However, as a firm believer of share holder rights, they have every right to pursue their agenda. That being said, only one of their initiatives(related to splitting the Chairman/CEO position) will be passed and that’s because CALPERS and Fidelity are in agreement with them. CALPERS and Fidelity own a lot of Exxon.


  3. I’m not sure I’d go quite that far, Denny. Milloy’s got the refs in his pocket and his pick of the players, so he started the game with a score of 400. I’ve got a long way to go to catch up. Still, Milloy’s such a piece of work that it’s absolutely worth attempting. 🙂

  4. Jeff – from what I’ve read, you’re almost certainly right that the only resolution the Rockefeller family will get passed is to split the CEO and COB positions. What effect that will have on the ultimate direction of ExxonMobil over the short and long term is a question I lack the expertise (or, to be blunt, the interest) to divine.

  5. It always warms my heart to see someone using the banner of “free markets” to control the market. As i understand it, the shareholders are part of the market and its mechanisms; their activism will either be supported or corrected by the market. Yet the Free Enterprise Action Fund wishes to constrain the inherent wisdom of its revered market. Too much gold…not enough calf. Oh were Dickens alive today to write the modern equivalent of Hard Times or Little Dorritt.

  6. Great work, Brian. I’ve been following this a little bit myself but didn’t know anything about the FEAFund’s influence. Thanks

  7. This just in: NYTimes is reporting that the move to split the two positions has been defeated.