ConocoPhillips (COP) Earnings Call Transcript

Thank you, Mr. Wang. The Board's response to this proposal begins on Page 143 of the proxy statement. The Board recommends you vote against this proposal. Item 9 on the agenda is a stockholder proposal for the company to prepare and publish a tax transparency report prepared in accordance with the requirements and recommendations set forth in the Global Reporting Initiative Tax Standard. I think Daniel Mulé is here to introduce this proposal and make any supporting statement. Mr. Daniel Mulé.

Thank you. Yes, I'm back, I'm Daniel Mulé, a policy lead with Oxfam America, and I'm presenting our resolution this time. And I urge you to support our proposal item 9, which calls on ConocoPhillips to publish a tax transparency report in accordance with the GRI standard on tax, including disclosure of payments to governments around the world. Oxfam is a shareholder in Conoco and a global organization that fights inequality. And we understand the importance of transparent business practices. We share this view with investors. Tax transparency is now supported by investors with combined assets under management of over $10 trillion. And this includes our co-filers, Nordea and KLP. For too long, businesses thought that tax was outside the remit of transparency and social responsibility. And this view came with a cost to society as aggressive tax avoidance has undermined government's ability to fund the shared infrastructure and services on which we all rely to address global inequality or to adapt to climate change. But aggressive tax avoidance also comes with another cost. Shareholders are left in the dark to guess, is the company operating with a successful commercial strategy and generating profits where it operates? Or are its profits artificially inflated because it has shifted them to avoid taxes? If the latter, those short-term profits may be unsustainable. They carry material risks of being wiped out due to regulatory changes, reputational damage or conflict over country or community benefits. An aggressive tax avoidance has already led to tax controversies at Conoco. The company has paid out over $510 million in settlements with tax authorities in 2022 alone as ConocoPhillips has also faced reputational damage from tax controversies in Canada, Timor-Leste, the U.S., Vietnam and Norway, where, in particular, the court specifically revised down Conoco's inflated intragroup interest rate, increasing the taxes due and partially offsetting last year's quarter 2 gains. The GRI Tax Standard requires public country-by-country reporting, which allows investors to understand any such material risks in a company's tax practices. And there is nothing stopping ConocoPhillips from publishing country-by-country reports. The company already collects this information privately. And peers, including Hess, Newmont, Shell, BP and others disclose this information. But instead of embracing transparency, ConocoPhillips is retreating. In 2022, Conoco withdrew its support for the -- in the Extractive Industries Transparency Initiative as a supporting company. And this will limit investor and public access to its payments to governments data, which is a GRI-recommended tax transparency disclosure for the oil and gas sector. Meanwhile, 69 other peer companies, including Exxon and Chevron, remain committed supporters of this initiative. So my question to shareholders is this, why does ConocoPhillips want to keep information from you that its peer companies make readily available? I urge you to vote in favor of item 9. Thank you.

Thank you, Mr. Mulé. The Board's response to this proposal begins on Page 145 of the proxy statement. The Board recommends that you vote against this proposal. Item 10 on the agenda is a stockholder proposal for the company to prepare and publish an annual report disclosing our direct and indirect lobbying activities. A representative of the National Legal and Policy Center prerecorded a statement presenting this stockholder proposal. And we'll play it now.

Good morning. I'm Paul Chesser, Director of the Corporate Integrity Project for National Legal and Policy Center. ConocoPhillips argues against our proposal for a lobbying disclosure report because they say they already report much of the information in their public disclosures. In other words, they expect you, the shareholder, to search on the Internet through dozens, if not hundreds, of governmental websites for ConocoPhillips disclosures. The company says it would be, "An undue administrative burden to have to do a report that puts the information all in one place for shareholders." The bottom line is they want you to bear the undue administrative burden of spending countless days and hours searching for the company's lobbying disclosure information. Now we also continue to be puzzled by ConocoPhillips' continued advocacy for carbon tax, which is only a means to raise prices on the kinds of energy that they produce and that actually work in the real world. This makes it even more urgent for the company to be more transparent about its lobbying activities and expenditures. We're also curious why environmental leftists are viciously attacking Exxon and Chevron with shareholder proposals while they are leaving ConocoPhillips alone. These anti-fossil fuel radicals want to destroy our way of life by waging an all-out attack against the corporate entities that don't sufficiently comply with their destructive agenda. They have gone after many of the largest financial institutions in the country, demanding that they meet their so-called net-zero targets, which are a fantasy, and to stop funding fossil fuel projects. Large banks, including Bank of America, Goldman Sachs, JPMorgan Chase and Wells Fargo, were confronted with three shareholder proposals each this year to attack their financing of the oil and gas industries. Meanwhile, Conoco's top 2 industry competitors, Exxon and Chevron, also are fighting off a multi-front war from climate zealot shareholders. So all the big banks and the two biggest oil companies are under total assault from these Soros-funded environmental pressure groups. But ConocoPhillips remains unscathed. Why is that? Four of the eight shareholder proposals at Chevron, the country's second-largest oil and gas company, challenged them on greenhouse gas emissions, net-zero, climate or a related topic. And the top dog, Exxon Mobil, 8 of the 13 shareholder proposals this year come from anti-fossil fuel interest. And as we all know, 2 years ago, Exxon's Board endured a full-on insurgency from a fossil fuel-hating hedge fund, which succeeded in inserting three directors on their Board. Did that historic event scare the directors and executives at ConocoPhillips into silence in compliance with the climate alarmist agenda? Because what other explanation can there be for 0 anti-fossil fuel shareholder proposals this year for ConocoPhillips, other than the company somehow bought off the climate propaganda silence? After all, payoffs are really what this is all about. It's one big rift. We can't help but think that more extensive disclosure of Conoco's lobbying activities might shed some more light on this. At least Exxon this year seems fed up, and they have started to push back. For example, Exxon explains to shareholders in this year's proxy statement that, "There are some anti-oil and natural gas activists who used the SEC shareholder proposal process to further their own interest in conflict with the interest of many of the company's other shareholders." Exxon adds that, "These activist firms acquire a minimal ownership stake in the company to support resolutions ultimately designed to eliminate oil and gas investments." This is the kind of pushback we'd like to see more of from the oil majors. And ConocoPhillips could use a little courage like that. But instead, Conoco's directors and executives seem to hide in fear, begging for carbon tax. As I said at last year's Annual Meeting, the predictions of the climate alarmist always fail to materialize, yet no one calls them on it. They've cried chicken little for decades with zero evidence to back them up. It's time for ConocoPhillips directors and executives to exercise real leadership and to show they have a backbone to stand up to the climate bullies. It's to that end that we seek greater transparency from ConocoPhillips about its lobbying expenditures to provide assurance that the company truly is acting in the best interest of shareholders, customers and of our country. So please vote for proposal #10. Thank you.

The Board's response to this proposal begins on Page 148 of the proxy statement. The Board recommends that you vote against this proposal. Now any shareholder who has not yet voted and wishes to change their vote, may do so now by completing their ballot and passing it to the aisle for collection. If you need a ballot, please raise your hand and a meeting host will provide you with one. Shareholders who have sent their proxies in or voted prior to the meeting and do not wish to change their vote do not need to take any further action. The next item on the agenda is the preliminary report of the inspector of elections. Any ballots collected before the polls close but not reflected in the preliminary report will be reflected in the final report of the inspector of election. So I now declare the polls closed. The inspector of election has filed a certification of the preliminary results of the voting. And Shannon, will you please read those results?

Yes. The inspector of election has reported the following results. Each of the 13 nominees for election have been elected as directors to serve a 1-year term, expiring at next year's Annual Meeting. The ratification of Ernst & Young as ConocoPhillips' independent auditors for fiscal year 2023 has been approved. The advisory approval of our executive compensation has passed. The alternative that received the most stockholder votes for frequency of say-on-pay vote was 1 year. The adoption of the amended and restated certificate of incorporation has not passed. The adoption of the 2023 Omnibus Stock and Performance Incentive Plan of ConocoPhillips has passed. The stockholder proposal for an independent Board Chairman has not passed with only approximately 25% of the votes present at today's meeting cast in favor of the proposal. The stockholder proposal for the Human Resources and Compensation Committee to set a policy requiring named executive officers to retain equity until retirement has not passed with only approximately 22% of the votes present at today's meeting cast in favor of the proposal. The stockholder proposal for the company to prepare and publish a tax transparency report has not passed with only approximately 17% of the votes present at today's meeting cast in favor of the proposal. The stockholder proposal for the company to prepare and publish an annual report disclosing our direct and indirect lobbying activities has not passed with only approximately 9% of the votes present at today's meeting cast in favor of the proposal. Mr. Chairman, that concludes the report of the preliminary voting. Details of the final results will be available for all stockholders in our filings with the SEC within 4 business days. Stockholders may also obtain voting results by calling or writing the office of the Corporate Secretary.

Thank you, Shannon. And that completes the business scheduled for today. Now we're going to adjourn the formal meeting and conduct a Q&A session with attendees here in the room. We will post responses to the questions that were submitted online in advance of the meeting on our website within the next 72 hours. So I declare the formal meeting is adjourned.