Engine No. 1's Win Over Exxon Mobil Gets Even Better With Third Board Seat - Barron's

Exxon Mobil is facing pressure from investors to move toward a lower-carbon business.

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Engine No.1’s victory over Exxon Mobil just got a little sweeter.

Last week the upstart hedge fund won two seats on the oil giant’s board, according to a preliminary tally from Exxon’s (ticker: XOM) annual shareholder meeting. But two other seats on the 12-person board remained too close to call last Wednesday—although many thought Engine No.1 had a shot at securing one of the remaining seats.

Now, a week later, it appears Engine No. 1 has prevailed. Alexander Karsner, one of four nominees Engine No. 1 submitted, will be joining the board, Exxon said late Wednesday. He will be joining fellow co-nominees Gregory Goff and Kaisa Hietala.

“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,” Darren Woods, chairman and chief executive officer of Exxon, said in Wednesday’s statement.

Engine No. 1, which officially launched in December and promptly announced its intention to nominate four candidates to Exxon’s board, celebrated the news.

“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 Exxon Mobil for the long-term benefit of all shareholders,” Engine No. 1 said in a statement.

Engine No. 1’s win likely wouldn’t have been possible a few years ago. As recently as 2013, Exxon was the largest company in the world. Even today, it boasts a market cap of roughly $250 billion, meaning that it is difficult for any one investor to amass enough shares to push for change at the oil giant.

But over the past few years, Exxon’s fortune waned. It continued to fund oil and gas production even as energy prices fell. Debt ballooned, and during the depths of the pandemic, there were fears that Exxon’s storied dividend—which had already been under pressure—would have to be slashed. At the same time, the investing community—including pension funds and large institutional investors like BlackRock (BLK) and State Street (STT)—was becoming more vocal about pushing the companies they invest in to do their part to combat climate change.

Enter Engine No. 1. Although it had amassed only 0.02% of Exxon’s shares, it quickly won the support of pensions and investors like BlackRock. In February, it said Exxon needed a “more disciplined capital allocation strategy, improved long-term strategic planning, more shareholder-aligned management compensation, and a board of directors with the skills, experience, and independence to make these goals a reality.” Specifically, it said the board needed independent voices with the skills to manage the energy transformation.

It looks like shareholders agreed. Exxon shares climbed 0.8% Wednesday and were down 0.1% in after-hours trading. 

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

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https://www.barrons.com/articles/exxon-mobil-stock-board-engine-no-1-51622667391

2021-06-02 20:57:00Z
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