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Exxon loses board seats to activist hedge fund in blow to oil giant’s strategy By Reuters

© Reuters. FILE PHOTO: An Exxon gasoline station is seen in Houston, Texas, U.S., April 30, 2019. REUTERS/Loren Elliott

By Jennifer Hiller and Svea Herbst-Bayliss

(Reuters) – A tiny hedge fund gained a seismic victory over Exxon Mobil Corp (NYSE:) on Wednesday as shareholders elected no less than two of the fund’s nominated administrators to the oil giant’s board after a months-long battle over the corporate’s enterprise strategy and development plans.

The success by activist hedge fund Engine No. 1 in getting no less than two candidates on Exxon’s board marks a giant loss for the most important U.S. oil firm, which incurred a $20 billion-plus loss in 2020 and has been slower to embrace lower-carbon investments than its world rivals. Exxon had sought to stave off traders aiming to reshape the board to higher align the corporate with world strikes to fight local weather change.

Two of Engine No. 1’s board nominees, Gregory Goff and Kaisa Hietala, have been elected to Exxon’s board, with counting persevering with.

The dissident shareholder group led by Engine No. 1 put up a slate of 4 nominees to the 12-member Exxon board of administrators on the shareholder assembly in the primary massive boardroom contest at an oil main that makes local weather change the central challenge.

Exxon has lagged different oil majors in its response to local weather change considerations, forecasting many extra years of oil and gasoline demand development and doubling down on investments to enhance its output – in distinction to world rivals which have scaled again fossil gasoline investments.

That strategy boosted the corporate’s debt load by billions of {dollars} in current years, main to a report $22 billion loss in 2020 after years of underperformance.

Governments and firms have moved to cut back emissions from fossil fuels which are warming the planet, and traders led by Engine No. 1 have mentioned the altering world meant that CEO Darren Woods wanted to make massive modifications to guarantee Exxon’s future worth to traders.

“It’s a huge deal. It shows not just that there is more seriousness apparent in the thinking among investors about climate change, it’s a rebuff of the whole attitude of the Exxon board,” mentioned Ric Marshall, government director of ESG Research at MSCI.

Woods had argued that Exxon’s board understood the corporate’s complexity and that Exxon helps a path towards carbon reductions in the Paris accord, referring to the worldwide settlement aimed toward combating local weather change.

However, in one other sign of investor dissatisfaction with the corporate’s strategy to local weather change, shareholders additionally accredited measures calling on Exxon to present extra data on its local weather and grassroots lobbying efforts.

Engine No. 1 efficiently rallied assist from institutional traders and shareholder advisory corporations upset with Irving, Texas-based Exxon for its weak monetary efficiency in current years. It has only a $50 million stake in Exxon, which carries a market worth of almost $250 billion.

BlackRock Inc (NYSE:), Exxon’s second-largest shareholder, joined the dissidents, as it is going to assist three of Engine No. 1’s nominees, Reuters reported on Tuesday.

Exxon had fought to maintain local weather activists at bay, spending tens of tens of millions of {dollars} on a high-profile PR marketing campaign, agreeing to publish extra particulars of its emissions and popping out in assist of carbon discount. Activists have mentioned it’s too little, too late, and that Exxon wants a much less reactive strategy.

“This proxy fight reflects this broad change in how our political leaders, our business leaders and our fellow shareholders are stepping up and taking these immense risks seriously,” New York State Comptroller Thomas DiNapoli mentioned.

The state’s pension fund in April mentioned it backed Engine No. 1’s slate.

Exxon shares have been up 0.9% in Wednesday buying and selling, rising modestly after the announcement. The inventory has lagged its friends during the last 5 years.

Graphic: Exxon returns lag world friends, https://fingfx.thomsonreuters.com/gfx/ce/xegpbddwxpq/Pasted%20image%201621953583853.png




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