Activist Likely to Gain Third Seat on Exxon Board -- 3rd Update
03 June 2021 - 08:39AM
Dow Jones News
By Christopher M. Matthews
An activist investor is likely to pick up a third seat on the
board of Exxon Mobil Corp., giving it additional leverage to press
the oil giant to address investor discontent about diminished
profits and its fossil-fuel focused strategy amid concerns about
climate change.
Exxon said Wednesday that an updated vote count showed
shareholders backed a third nominee of Engine No. 1, an upstart
hedge fund that had already won two board seats at Exxon's annual
shareholder meeting last week. The final vote hasn't been
certified, Exxon said, and could take days or weeks to be
finalized, according to people familiar with the matter.
Engine No. 1, which owns a tiny fraction of Exxon's stock, had
sought four seats on the board and argued the Texas oil giant
should commit to carbon neutrality, effectively bringing its
emissions to zero -- both from the company and its products -- by
2050, as some peers have. If the preliminary voting results hold,
it will control a quarter of Exxon's 12-person board.
The vote culminated one of the most expensive proxy fights ever.
It puts new pressure on Exxon Chief Executive Darren Woods, who
personally campaigned against Engine No. 1 and could complicate his
plans to maintain Exxon as the largest Western oil producer. Mr.
Woods was re-elected to the board along with eight of Exxon's
candidates.
"We look forward to working with all of our directors to build
on the progress we've made to grow long-term shareholder value and
succeed in a lower-carbon future," Mr. Woods said in a statement.
"We thank all shareholders for their engagement and participation,
and their ongoing support for our company."
Though Engine No. 1 only owned 0.02% of Exxon's stock, it was
able to capitalize on investors' concerns about Exxon's recent
performance and climate change strategy. Exxon posted a $22 billion
loss last year, its largest on record, after the pandemic crushed
fuel demand and upended what turned out to be an ill-timed plan by
Mr. Woods to substantially increase spending to boost oil and gas
production.
Many of the world's biggest investment firms helped elect the
fund's directors, including BlackRock Inc., State Street Corp. and
Vanguard Group, who said publicly they wielded votes for investors
in favor of at least two dissident directors.
BlackRock voted for three directors proposed by Engine No. 1 and
said last week it believes Exxon and its board need to further
assess the possibility that demand for fossil fuels may decline
rapidly in the coming decades.
Vanguard voted for two directors proposed by the activist and
said it had expressed concerns to Exxon for years about the
independence of Exxon's board and its directors' lack of energy
sector expertise.
"And for years, we did not witness sufficient progress on either
front," Vanguard said last week.
Engine No. 1 has called for Exxon to gradually diversify its
investments to be ready for a world that will need fewer fossil
fuels in coming decades. It criticized Exxon's board for presiding
over years of poor financial returns and for its unwillingness to
reconsider the company's long-held view that oil and gas demand
will remain robust for decades.
"We are grateful for shareholders' careful consideration of our
nominees and are excited that these three individuals will be
working with the full board to help better position ExxonMobil for
the long-term benefit of all shareholders," an Engine No. 1
spokeswoman said.
The hedge fund's third successful nominee is Alexander Karsner,
a former U.S. assistant secretary for energy efficiency and
renewable energy and a current senior strategist at X, formerly
known at Google X, a subsidiary of tech giant Alphabet Inc.
Mr. Karsner joins Engine No. 1's two other successful
candidates, Gregory Goff and Kaisa Hietala. Mr. Goff is the former
chief executive of Andeavor, which was one the largest U.S.
refiners before being purchased for more than $20 billion by
Marathon Petroleum Corp. in 2018, while Ms. Hietala is a former
executive vice president of renewable products at Finnish refiner
Neste Oyj.
Engine No. 1's fourth candidate, Anders Runevad, the former
chief executive of Vestas Wind Systems, appeared to come up short,
according to the preliminary vote count.
Exxon said in a regulatory filing Wednesday that about 67.1% of
the vote from its more than 4.2 million shares had been counted.
According to the preliminary count, Exxon also lost on two
shareholders proposals it had asked investors to vote against but
were supported by institutional investors.
Nearly 56% of shares that were eligible to vote supported a
proposal calling for Exxon to disclose more about direct and
indirect lobbying spending and policies, while roughly 64% voted
for Exxon to release a report on how its lobbying aligns with the
Paris climate accord. Exxon has expressed public support for the
Paris agreement and had pledged to further reduce emissions from
its operations.
Write to Christopher M. Matthews at
christopher.matthews@wsj.com
(END) Dow Jones Newswires
June 02, 2021 18:25 ET (22:25 GMT)
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