Bloomberg

Exxon CEO is hit by a new activist

(Bloomberg) – Darren Woods, CEO of Exxon Mobil Corp., was met with a staggering defeat by shareholders when a tiny activist investment firm took at least two directorships and promised to get the crude oil drill to diversify beyond oil and the Fight climate change. Those who spoke out aggressively against the insurgents were just the latest setback in a rocky 4 1/2 year tenure that saw what was once the world’s most valuable company lost a market value of more than $ 125 billion in The Diluted World of Big Oil highlights how vulnerable the industry has suddenly become as governments around the world call for an accelerated move away from fossil fuels. This is also a sign that institutional investors are increasingly willing to force companies to actively participate in this transition. Tiny activist investor Engine No. 1, with a stake of just 0.02% and no history of oil and gas activism, secured two seats on Exxon’s board of directors in Wednesday’s vote. A third seat may still fall into the hands of the company when the final results are determined. That would put Woods in the difficult position of leading a board that is 25% under outside control. Last-minute efforts by Woods and his team to appease climate-conscious investors and reject the engine # 1 attack have been unsuccessful. “Darren Woods comes from a long line of CEOs who have been very straightforward: it’s our ball, it’s our bat, and we’ll do what we want,” said Mark Stoeckle, managing director of Adams Express Co., who made a fortune $ 2.8 billion under management. “If you’re the biggest and the baddest, you can get away with it. But you have to change over time. The messaging was terrible. “Click here to view Bloomberg Intelligence’s ESG data. BlackRock Inc., the second largest owner of Exxon with a 6.6% stake, voted for three of the Engine No. 1 nominated new directors bulletin published on Wednesday. The company said it was “concerned about Exxon’s strategic direction” and that the oil giant could benefit from the addition of new directors who would bring “new perspectives” to the board. However, the investment giant also voted for Frazier and Woods, according to the bulletin – a move that upset environmental groups asking the company to vote against them. The result is one of the biggest activist disturbances in recent years and an embarrassment for Exxon. For Woods, who was listed as 56 years old in the company’s March proxy filing, the defeat is just the last black mark since his appointment as CEO in 2017. Exxon has underperformed for years, and in 2020 it crumbled its stocks 41% worst performance in 40 years. Under his leadership, the company also posted its first annual loss in decades, seeing its oil production decline to its lowest level since the Mobil Corp. merger. in 1999. Meanwhile, Exxon’s debt load soared from borrowing to pay dividends and drilling in the face of shrinking cash flow Wednesday’s vote was also notable for the force with which Exxon fought the activist, as was the criticized the company’s financial performance. Exxon refused to meet with the nominees, and Woods announced earlier this month that voting for them would “affect our progress and jeopardize your dividend.” The company even pledged 48 hours before the meeting to add two new directors, including one with “climate experience”. READ: Exxon Activist Struggle Turns Climate Fear Into CEO Referendum “This historic vote represents a turning point for companies unprepared for the global energy transition,” said the California State Teachers’ Retirement System, also known as CalSTRS, the # 1 engine in a statement after the meeting. “The election of ExxonMobil’s board of directors is the first of a major US company focused on the global energy transition, but it will not be the last.” What Bloomberg Intelligence SaysThe election of at least two Engine 1 nominees to the board of Exxon Mobil could be lead to change How the oil major allocates capital and permanently changes its investment offer. – Fernando Valle and Brett Gibbs, BI analysts. Read the full report here. In other corners of the extractive sector, shareholders this year were already frustrated by the reluctance of executives to embark on tough times with environmental goals. On the same day that Exxon investors met, the management of Chevron Corp. rebuked by their shareholders who voted in favor of a proposal to reduce emissions from the company’s customers. DuPont de Nemours Inc. recently received an 81% dissenting vote against management on plastic pollution disclosure, while ConocoPhillips lost a competition to pass more stringent emissions targets. Royal Dutch Shell Plc has been ordered by a Dutch court to cut its emissions harder and faster than planned. This decision could have ramifications for the rest of the fossil fuel industry. long proxy fight. Exxon suspended the process at one point to allow more time to count the votes. The San Francisco-based No. 1 Motor accused the company of “making a last-ditch effort to prevent much-needed changes to the circuit board.” The successful nominees for the # 1 engine were Gregory Goff, former CEO of Refiner Andeavor, and environmental scientist Kaisa Hietala. Earlier this month, Exxon described all four dissident candidates as “unqualified”. Eight Exxon nominees have been elected and two directorships remain undecided. Either or both could potentially go to the activist. Sacrosanct dividend The result shows clear dissatisfaction with Woods’ strategy, despite this year’s rally in the stock, which rose 43% due to the rising oil price. The stock rose more than 1% after the vote was announced. Woodings, who retained his seat on the board of directors, should be able to further improve Exxon’s financial performance as cash flows recover, secure the S&P 500’s third-largest dividend, and post the record loss of 2020. The bigger question, however, concerns Exxon’s energy transition strategy, which is seen by many shareholders to be way behind that of its European counterparts. How Exxon turns, if at all, remains to be seen, but the message from shareholders is clear: The status quo can’t Exxon’s environmental footprint and unwillingness to take on the fulcrum of fossil fuels fast enough was a Main criticism in the proxy campaign. Engine # 1 was devastating in its assessment of Exxon’s long-term financial performance, calling it “a decade of ruin.” (Updates with BlackRock voting in the sixth and seventh paragraphs.) More stories like this one are available on bloomberg.com. Subscribe now to stay ahead of the curve with the most trusted business news source. © 2021 Bloomberg LP