An Activist Is Going After Exxon Mobil. What You Need to Know. - Barron's

Exxon Mobil, once the largest company in the world, is facing a proxy battle.

Engine No. 1, a recently launched investment firm, said early Wednesday that it nominated four members to the energy behemoth’s board. Frustrated with the “incremental steps” Exxon Mobil (ticker: XOM) has taken to address shareholder concerns, Engine No. 1 said Exxon needs new voices to turn the company around.

“We believe that ExxonMobil’s Board needs new members who have proven success positioning energy companies for today as well as tomorrow, and who are sufficiently independent from the current Board to ensure a clean break from a strategy and mind-set that have led to years of value destruction and poorly positioned the Company for the future,” Engine No. 1 said in a statement Wednesday.

Engine No. 1’s nominees include former energy executives and policy makers that the firm believes will help guide Exxon into better strategic decision-making and long-term capital planning.

Exxon said Wednesday that it will evaluate Engine No. 1’s nominees and will update investors on its plans to address climate change in accordance with the Paris Agreement.

“Exxon Mobil remains committed to investing in the company’s industry-leading advantaged opportunities, significantly reducing costs and improving operational performance to deliver improved shareholder returns and maintain a strong and reliable dividend,” the company said in a statement.

Exxon shares are down 42% over the last five years, lagging behind the Energy Select Sector SPDR Fund (XLE), which is down 27%. It has been hampered by falling energy prices as well as its hefty debt load and sluggish embrace of renewable energy.

Engine No. 1’s campaign comes when big investors are increasingly looking how businesses serve the needs of a diverse set of stakeholders. Earlier this week, two New York City pension funds voted to divest their holdings in fossil fuel companies. On Tuesday, BlackRock (BLK), one of Exxon’s largest shareholders, said the firm would start pushing companies to share their plans for going “net-zero” and eliminating greenhouse gasses by 2050. Exxon has also recently faced criticism from hedge fund D.E. Shaw and the Church of England.

Exxon shares slid 1.7% in early trading Wednesday.

Write to Carleton English at carleton.english@dowjones.com

Let's block ads! (Why?)