Lessons from ExxonMobil

After 144 years of legal domicile in New Jersey, ExxonMobil Corporation, which has been physically headquartered in Texas since 1989, is consolidating its legal and physical homes to Texas. With approximately 71 percent of votes cast in favor at its 2026 annual meeting, Exxon’s reincorporation to Texas reflects the Lone Star State’s growing competitiveness as a corporate law jurisdiction and demonstrates that reincorporation into Texas may be an achievable result for widely-held public companies. Exxon Chairman and Chief Executive Officer Darren Woods explained that Texas has cultivated a policy and regulatory environment that enables companies to focus on creating shareholder value rather than navigating unnecessary red tape and political interference.[1]

Boards considering reincorporation into Texas should carefully consider the corporate governance and shareholder outreach strategies employed by Exxon and other successfully redomiciled public companies. Because proxy advisors have generally opposed reincorporation to Texas, favorable votes for reincorporation are not guaranteed for corporations that lack a controlling shareholder or a large, friendly voting block. Successful reincorporations will require companies to work well in advance of shareholder meetings to solicit investor feedback, determine an acceptable Texas corporate governance structure, and educate voters on the benefits of reincorporation.

Texas Attempts To Court Companies

Exxon’s move highlights the concerted efforts made by Texas in recent years to become a more attractive option for reincorporation. Texas’s latest legislative changes came on the heels of several 2024 Delaware court rulings that prompted some companies—particularly controlled companies—to reassess whether Delaware was the best domicile. For example, in January 2024, the Delaware Chancery Court in Tornetta v. Musk invalidated the approximately $56 billion equity compensation package for Elon Musk, the Chief Executive of Tesla Inc. (“Tesla”), even though it had been approved by shareholders. Three weeks later, the Court of Chancery held that certain provisions of a shareholder agreement with a controlling shareholder (which were considered established market practice) were invalid in West Palm Beach Firefighters’ Pension Fund v. Moelis & Company. Finally, in Palkon v. Maffei, the Delaware Chancery Court ruled that the entire fairness standard of judicial review, the strictest standard Delaware courts impose to evaluate board decisions, should apply to Tripadvisor Inc.’s decision to redomesticate from Delaware to Nevada. Although the Delaware Supreme Court reversed each of these decisions (and the Delaware legislature reacted with statutory amendments to the Delaware General Corporation Law in 2025), the rulings prompted some companies to express concerns about the willingness of Delaware courts to scrutinize corporate decision-making.

In 2023, the Texas legislature approved the creation of the Texas Business Court, a specialized court designed to have concurrent jurisdiction with the Texas District Courts over certain commercial cases. The Texas Business Courts became operational in September 2024, and Texas Business Court judges are required to have at least 10 years of business law experience.

In 2025, Texas significantly reformed the Texas Business Organizations Code (the “TBOC”) in an attempt to create a legal environment that promotes predictability for corporate decisionmakers. For instance, Texas codified the business judgment rule in Section 21.419 of the TBOC, which provides a statutory rebuttable presumption that directors and officers of covered corporations acted in good faith, on an informed basis, in furtherance of the corporation’s interests, and in obedience of the law and the corporation’s governing documents. To successfully bring a cause of action under this new statute, a plaintiff must (i) rebut one or more of the foregoing presumptions and (ii) prove a breach of fiduciary duty and that such breach involved fraud, intentional misconduct, an ultra vires act, or a knowing violation of law.

The amended TBOC also introduced provisions allowing certain corporations to impose ownership thresholds in their governing documents—either their charters (which typically require shareholder approval to amend) or their bylaws (which commonly can be amended by the board without shareholder approval)—as a prerequisite to shareholders’ taking certain actions. For instance, Section 21.552 of the TBOC allows Texas corporations to require shareholders to own a minimum percentage of the corporation’s outstanding shares before initiating a derivative proceeding, provided that the threshold does not exceed three percent. Separately, Texas corporations that either have their principal office in Texas or are listed on a Texas stock exchange[2] may opt into Section 21.373 of the TBOC and require a proxy proposal ownership threshold that is stricter than the Securities and Exchange Commission’s Rule 14a-8. Under this provision, only shareholders who meet all three of the following criteria may submit proposals: (1) beneficial ownership of at least $1 million in market value or three percent of the company’s shares entitled to vote on the proposal; (2) continuous ownership of those shares for at least six months prior to the shareholder meeting; and (3) solicitation of holders representing at least 67 percent of the voting power of shares entitled to vote on the proposal. In late 2025, Chairman Paul Atkins stated that companies opting into this Texas framework should be permitted to exclude non-compliant proposals under Rule 14a-8(i)(1).[3]

Texas corporations may also amend their governing documents pursuant to Sections 2.116 and 2.115 of the TBOC, respectively, to (i) waive jury trials for any internal entity claim—which includes derivative and other claims relating to the internal affairs of the corporation—and (ii) designate Texas courts, including the Texas Business Court, as the exclusive forum for resolving such claims.

When reflecting upon the intent of these sweeping changes to the Texas judiciary and legislation, Texas Governor Greg Abbott remarked that they “provide[ ] business decision makers the certainty that sound business judgments made in the best interest of shareholders will not be second-guessed by courts. Business decisions are to be made by the elected officers and shareholders, not by unelected judges.”[4] Texas lawmakers hope that these changes have positioned Texas as an increasingly compelling destination for businesses considering reincorporation.

Assessing the State of Texas Reincorporation

Exxon is one of the largest public companies to redomesticate to Texas, but it is not the first. At least a dozen public companies, including Tesla, ArcBest Corporation, and Dillard’s, Inc., have moved their legal domicile to Texas in the last two years. Additionally, as of the date of publication, at least nine public companies, including Dell Technologies Inc. and Weatherford International plc, are currently seeking stockholder approval to reincorporate in Texas.

Many of the first Texas redomestications, occurring in mid-to-late 2025, involved controlled or founder-led companies that could leverage their concentrated voting power to act by shareholder consent or at an off-cycle special meeting. These companies frequently adopted the full suite of TBOC provisions available, including the derivative ownership threshold and shareholder proposal ownership threshold.

Non-controlled, widely-held public companies seeking reincorporation, such as Exxon, ArcBest, and Texas Capital Bancshares, Inc., began submitting proposals to shareholders in the regular annual meeting season in early 2026. Proxy advisory firms Institutional Shareholder Services Inc. and Glass, Lewis & Co. LLC have generally recommended against reincorporation into Texas, citing concerns about diminution in shareholder rights but providing no economic analysis demonstrating how the reincorporation proposal would harm shareholder value. Nevertheless, widely-held public companies face a more challenging road to reincorporation than controlled companies because ISS and Glass Lewis recommendations can be dispositive for a company with a diffuse shareholder base that primarily uses the services of the proxy advisory firms.

Case Studies in Shareholder Solicitation

Boards looking to reincorporate should study the contrasting approaches of Exxon, ArcBest, and Texas Capital Bancshares to shareholder solicitation, proxy advisor engagement, and corporate governance structuring. While all three companies extolled their nexus to Texas (including operational and financial links) and lack of connection to Delaware (characterized as a “historical footnote” by Exxon) in their proxy statements, only Exxon’s and ArcBest’s reincorporation proposals prevailed. These divergent outcomes underscore that the path to Texas must be carefully tailored to each company’s shareholder base.

Exxon: Anticipating concerns that a reincorporation would be perceived to weaken shareholder rights, Exxon emphasized in its proxy materials that it declined to adopt certain TBOC provisions—specifically the derivative litigation ownership threshold, the shareholder proposal ownership threshold, and the jury trial waiver. However, Exxon stopped short of committing not to adopt such provisions in the future, which could be accomplished by board-only bylaw amendments without a shareholder vote under Texas law. Exxon also filed multiple proxy supplements to directly refute ISS and Glass Lewis claims that the move would harm shareholders’ rights and to further explain differences in Texas’s legal structure. In supplemental proxies, Exxon also responded to concerns raised in a filing by New York City Comptroller Mark Levine that a Texas move “sets the stage for the potential erosion of shareholder rights under Texas state law.”

ArcBest: While ArcBest similarly did not adopt ownership thresholds for initiating derivative litigation or bringing shareholder proposals, it went a step further than Exxon by explicitly opting out of those provisions in its Texas charter. Accordingly, future adoption of either provision would require shareholder approval (rather than board-only action). ISS has called this approach a “best practice.”

Texas Capital Bancshares: Texas Capital Bancshares implemented a different approach altogether, proposing Texas governing documents that included a one-percent derivative litigation ownership threshold (significantly below the three-percent limit) and seeking a shareholder advisory vote prior to adopting the shareholder proposal ownership threshold. Both measures, along with the reincorporation proposal itself, failed to win shareholder approval.

	Exxon	ArcBest	Texas Capital Bancshares
Ownership Threshold for Derivative Proceedings	Did not opt in	Expressly opted out in Texas charter	Opted in at 1% in Texas charter
Ownership Threshold for Shareholder Proposals	Did not opt in	Expressly opted out in Texas charter	Sought shareholder advisory vote prior to opting in
Jury Trial Waiver	Did not opt in	Opted in	Opted in

Regardless of whether a corporation opts into the derivative ownership threshold, shareholder proposal ownership threshold, or jury trial waiver, a Texas corporation has access to the Texas Business Court and the decisions of its board and management are subject to the business judgment rule codified in Section 21.419 of the TBOC. Additionally, pursuant to Section 21.553 of the TBOC, Texas law requires plaintiffs in derivative proceedings to make a written demand on the corporation’s board, and there is no showing of demand futility that excuses this requirement. By comparison, in Delaware, a shareholder can bring a derivative proceeding without first making a litigation demand on the corporation’s board if the shareholder can adequately allege demand futility. Additionally, under Section 21.558 of the TBOC, a board committee of one or more independent and disinterested directors may then determine whether commencing the derivative action will be in the best interests of the corporation or whether the action should be dismissed. A Texas plaintiff has limited discovery rights and can only challenge the lack of independence or disinterest, good faith of the inquiry and review, or reasonableness of the procedures of the disinterested and independent persons conducting the review. Absent a problem in one of these areas, the decision of the independent and disinterested directors is binding on the court. Taken together, these TBOC provisions can limit a Texas corporation’s exposure to derivative litigation and related costs, even if the corporation does not opt into the derivative ownership threshold.

ISS and Glass Lewis: Opposition and a Potential Path to Endorsement

As with most other recent Texas reincorporation proposals, ISS and Glass Lewis recommended against all three companies’ redomestication proposals, citing harm to shareholder rights. ISS, in particular, warned that a Texas reincorporation would make it more difficult for shareholders to hold directors and officers accountable.

During the course of its proxy season, Exxon pushed back aggressively, filing proxy supplements contending that ISS’s and Glass Lewis’s respective recommendations were based on “flawed analysis,” “speculation” and “immaterial factors,” and that the proxy advisors failed to disclose their “obvious” conflicts of interest resulting from their ongoing legal battle with the Texas Attorney General.[5] Exxon also ran a widespread media campaign, which included running ads in major newspapers, like the Wall Street Journal, to support the reincorporation. By contrast, ArcBest and Texas Capital Bancshares did not publicly refute the proxy advisor recommendations prior to their shareholder meetings. Following its failed vote, Texas Capital Bancshares cited ISS’s and Glass Lewis’s “ill-informed influence and recommendation against the firm re-domiciling in its home state” as a significant factor contributing to the proposal’s rejection by shareholders.

ISS and Glass Lewis have recommended against the vast majority of Texas reincorporation proposals, despite the case-by-case analysis described in their voting policies.

Proxy Advisor Voting Policies on Reincorporation

ISS

Management or shareholder proposals to change a company’s state of incorporation should be evaluated case-by-case, giving consideration to both financial and corporate governance concerns including the following:

Reasons for reincorporation;
Comparison of company’s governance practices and provisions prior to and following the reincorporation; and
Comparison of corporation laws of original state and destination state.

Vote for reincorporation when the economic factors outweigh any neutral or negative governance changes.

Glass Lewis

The Benchmark Policy is generally of the view that the board is in the best position to determine the appropriate jurisdiction of incorporation for the company. However, all proposals to reincorporate to a different state or country are reviewed on a case-by-case basis. This review includes the changes in corporate governance provisions, especially those relating to shareholder rights, material differences in corporate statutes and legal precedents, and relevant financial benefits, among other factors, resulting from the change in domicile.

Reincorporation proposals are closely examined for their impact on shareholder rights arising from a change in domicile and governing law, including the following:

Will shareholders gain/retain certain rights (i.e. the right to call special meetings, the right to act by written consent, the ability to remove directors)?

Does the proposed new jurisdiction allow for director and officer exculpation and/or exclusive forum provisions?
What are the fiduciary duties (if any) of directors, officers, and majority shareholders under the new jurisdiction’s statutes?
What are the material differences in corporate statutes, case law, and judicial systems?
Is the company proposing to reincorporate to a jurisdiction considered to be a “tax haven”?

In addition, when examining a proposal to reincorporate, the overall governance of the company will also be considered.[6] Where there is a decline in shareholder rights, the financial benefits are de minimis, and the proposed jurisdiction has significantly worse shareholder protections, the Benchmark Policy will generally recommend voting against the transaction.

There may be a narrow path to an endorsement from ISS and Glass Lewis: Natural Gas Services Group, Inc., a non-controlled company, received affirmative recommendations for its proposal to reincorporate from Colorado to Texas from both proxy advisors. In supporting the proposal, both ISS and Glass Lewis noted that the additional “significant” governance improvements, including simultaneous declassification of the board and removal of certain supermajority provisions, proposed to be made in connection with the reincorporation, made a “compelling case” outweighing other concerns. It appears that ISS and Glass Lewis may be willing to support reincorporation proposals from companies that hold back on opting into certain TBOC provisions while sweetening the deal with favored governance features.

What the Exxon Reincorporation Vote Actually Tells Us

Despite receiving negative recommendations from the proxy advisors, Exxon’s redomestication proposal garnered approval from approximately 71 percent of votes cast, demonstrating that widely-held companies can successfully move to Texas by using a tailored strategy attuned to the company’s shareholder base. Given that large institutional investors hold a significant portion of Exxon’s stock, some institutional investors must have supported the proposal.

The voting guidelines of BlackRock, State Street and Vanguard, the three largest passive index fund managers, indicate that each will evaluate reincorporation proposals on a case-by-case basis, weighing relative shareholder rights as well as the costs and benefits to shareholders and the company from the move.

Institutional Investor Voting Policies on Reincorporation
BlackRock	We evaluate the economic and strategic rationale behind the company’s proposal to reincorporate on a case-by-case basis. In all instances, we evaluate the changes to shareholder protections under the new charter/articles/bylaws to assess whether the move increases or decreases shareholder protections. Where we find that shareholder protections are diminished, we may support reincorporation if we determine that the overall benefits outweigh the diminished rights.
Vanguard	Management proposals to reincorporate to another domicile will be evaluated case by case based on the relative costs and benefits to both the company and shareholders. Considerations include the reasons for the relocation and the differences in regulation, governance, shareholder rights, and potential benefits.
State Street	The reorganization of the structure of a company or mergers often involve proposals relating to reincorporation, restructurings, liquidations, and other major changes to the corporation. We expect proposals to be in the best interests of shareholders, demonstrated by enhancing share value or improving the effectiveness of the company’s operations.

Some may attribute Exxon’s successful reincorporation vote to its novel retail voter program, which allowed retail shareholders to automatically vote in line with the Exxon Board of Directors’ recommendations—but the numbers tell a different story. Shares participating in the program represented just over three percent of Exxon’s outstanding shares, while Exxon’s three largest institutional shareholders—Vanguard, BlackRock, and State Street—collectively held more than 20 percent.[7]

Boards of Delaware corporations should also note that Exxon’s New Jersey domicile meant it faced a lower voting threshold than a Delaware corporation for a corporate conversion. New Jersey law requires a majority of votes cast—meaning more “for” than “against” votes—which Exxon cleared comfortably at 71 percent. A Delaware corporation converting under Section 266 of the DGCL by contrast would need a majority of all outstanding shares to vote in favor of the reincorporation. Exxon ultimately satisfied this higher threshold, with approximately 53 percent of its approximately 4.1 billion outstanding shares voting for reincorporation, but this is a much tighter outcome and one where the retail voting program previously described may have proven decisive.

Conclusion

Any board contemplating reincorporation must weigh the costs and benefits and act in the best interests of the company and its shareholders. These decisions are highly fact specific, but Exxon’s path to Texas illuminates important lessons for other companies, especially non-controlled companies, considering a move.

These companies should meaningfully engage with shareholders before soliciting a vote and tailor their reincorporation proposals to meet shareholder expectations (including with respect to Texas’s various opt-in provisions). Delaware corporations should also assess shareholder voting patterns, including typical proxy returns, broker non-votes, and voter reliance on ISS and Glass Lewis recommendations. It may be prudent to enlist the help of a proxy solicitor early in the reincorporation process. Finally, conversations with shareholders should include a clear explanation of how the proposed reincorporation aligns with company strategy and can enhance shareholder value.

Once solicitation begins, additional get-out-the-vote measures will likely be necessary given proxy advisors’ expected opposition. A tailored approach takes time: Exxon began its process in October 2025, ArcBest worked through a seven-month board process, and Texas Capital Bancshares began addressing potential reincorporation during its regular 2025 shareholder outreach. Companies considering a 2027 reincorporation proposal should begin their groundwork now.

1 Press Release, ExxonMobil Corporation, ExxonMobil Board unanimously recommends redomiciling the company from New Jersey to Texas (Mar. 10, 2026), https://corporate.exxonmobil.com/news/news-releases/2026/0310-redomiciling-the-company-from-new-jersey-to-texas.(go back)

2 Texas now has three stock exchanges expected to qualify for this provision: the Texas Stock Exchange, the NYSE Texas, and the Nasdaq Texas.(go back)

3 Paul S. Atkins, Chairman, U.S. Sec. & Exch. Comm’n, Keynote Address at the John L. Weinberg Center for Corporate Governance’s 25th Anniversary Gala (Oct. 9, 2025), https://www.sec.gov/newsroom/speeches-statements/atkins-10092025-keynote-address-john-l-weinberg-center-corporate-governances-25th-anniversary-gala.(go back)

4 Office of the Texas Governor, Governor Abbott Signs Pro-Growth Business Legislation Into Law, May 14, 2025, https://gov.texas.gov/news/post/governor-abbott-signs-pro-growth-business-legislation-into-law (accessed June 7, 2026).(go back)

5 The proxy advisors are currently litigating over Texas Senate Bill 2337, which requires significant disclosure obligations for proxy advisor voting recommendations for Texas-based corporate issuers. Additionally, the Texas Attorney General, joined by Attorney Generals from three other states, recently sued ISS alleging that the firm violated state consumer protection and deceptive practices laws.(go back)

6 Factors reviewed include: (1) Does the company have anti-takeover protections such as a poison pill or classified board in place? (2) Does the company have a significant shareholder or is the company otherwise considered controlled? (3) Has the board been previously unresponsive to shareholders (such as failing to implement a shareholder proposal that received majority shareholder support)? (4) Does the company have an independent chair and is the board sufficiently independent? (5) Are there other material governance issues of concern at the company? Has the company’s performance matched or exceeded its peers in the past one and three years? (6) How has the company ranked in Glass Lewis’ pay-for-performance analysis during the last three years?(go back)

7 As of their respective record dates, approximately 26 percent of ArcBest’s common stock was owned by BlackRock and Vanguard, and approximately 31 percent of Texas Capital Bancshares’ common stock was owned by BlackRock, Vanguard, and State Street.(go back)

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