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EXXON MOBIL CORPORATION

(XOM)
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Activist Likely to Gain Third Seat on Exxon Board -- 3rd Update

06/02/2021 | 04:25pm EDT

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 billion 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

Corrections & Amplifications

This item was corrected on June 4, 2021 to show that Exxon Mobil Corp. has about 4.2 billion shares outstanding, not about 4.2 million shares outstanding.

(END) Dow Jones Newswires

06-02-21 1825ET

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. -0.77% 2694.53 Delayed Quote.54.94%
DJ INDUSTRIAL -0.42% 34935.47 Delayed Quote.14.63%
EXXON MOBIL CORPORATION -2.31% 57.57 Delayed Quote.42.96%
LONDON BRENT OIL -0.82% 75.16 Delayed Quote.46.69%
MARATHON PETROLEUM CORPORATION -1.27% 55.22 Delayed Quote.33.51%
NESTE OYJ -0.38% 51.82 Delayed Quote.-12.41%
STATE STREET CORPORATION -0.93% 87.14 Delayed Quote.20.86%
UPSTART HOLDINGS, INC. -2.51% 120.76 Delayed Quote.196.34%
VESTAS WIND SYSTEMS A/S 0.48% 231.2 Delayed Quote.-19.69%
WTI 0.53% 73.659 Delayed Quote.52.09%
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Financials (USD)
Sales 2021 275 B - -
Net income 2021 18 046 M - -
Net Debt 2021 54 021 M - -
P/E ratio 2021 13,7x
Yield 2021 6,04%
Capitalization 244 B 244 B -
EV / Sales 2021 1,08x
EV / Sales 2022 1,06x
Nbr of Employees 72 000
Free-Float 52,7%
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Technical analysis trends EXXON MOBIL CORPORATION
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Mean consensus HOLD
Number of Analysts 29
Last Close Price 57,57 $
Average target price 66,56 $
Spread / Average Target 15,6%
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Managers and Directors
Darren W. Woods Chairman & Chief Executive Officer
Andrew P. Swiger Chief Financial Officer & Senior VP
Vijay Swarup Vice President-Research & Engineering
Kenneth C. Frazier Lead Independent Director
Ursula M. Burns Independent Director
Sector and Competitors
1st jan.Capi. (M$)
EXXON MOBIL CORPORATION42.96%243 725
CHEVRON CORPORATION20.56%196 296
RELIANCE INDUSTRIES LTD2.52%173 882
BP PLC13.50%81 063
CHINA PETROLEUM & CHEMICAL CORPORATION2.59%70 692
NESTE OYJ-12.41%47 208