Exxon loses board seats to activist hedge fund in landmark climate vote
By Jennifer Hiller, Svea Herbst-bayliss
May 27,2021
May 26 (Reuters) – A tiny hedge fund dealt a major blow to Exxon Mobil Corp on Wednesday,
unseating at least two board members in a bid to force the company’s leadership to reckon with the
risk of failing to adjust its business strategy to match global efforts to combat climate change.
The success by hedge fund Engine NoA tiny hedge fund dealt a major blow to Exxon Mobil Corp on Wednesday,
unseating at least two board members in a bid to force the company’s leadership to reckon with the
risk of failing to adjust its business strategy to match global efforts to combat climate change.
The success by hedge fund Engine No. 1 in its showdown with Exxon shocked an energy industry
struggling to address growing investor concerns about global warming. It happened on the same day
activists scored a big win against another oil major, Royal Dutch Shell – a Dutch court ordered the
company to drastically deepen pledged cuts to greenhouse gas emissions. read more
Eight of Exxon’s nominees including CEO Darren Woods were re-elected to its 12-member board of
directors, along with two of Engine No. 1’s nominees, the company said. The counting is not finished,
so Engine No. 1 could potentially see three of its four nominees join the Exxon board.
The result will add to pressure on Woods, who campaigned to convince shareholders to shoot down
the board challenge and argued the company was already advancing low carbon projects and
improving profits.
“Today, we heard shareholders communicate a desire for ExxonMobil to further these efforts,”
Woods said in a statement. “We’re well positioned to do that.”
Under Woods, Exxon incurred a $22 billion loss last year as COVID-19 pandemic destroyed fuel
demand worldwide. Exxon has lagged other oil majors in its response to climate change concerns,
forecasting many more years of oil and gas demand growth and doubling down on spending to boost
its output – in contrast to global rivals that have scaled back fossil fuel investments.
“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,” said Ric
Marshall, executive director of ESG Research at MSCI.
The dissident shareholder group led by Engine No. 1 put up a slate of four nominees in the first big
boardroom contest at an oil major that makes climate change the central issue. The fund’s stake in
Exxon – an energy behemoth with a market value of close to $250 billion – is worth just $50 million.
The two Engine No. 1 nominees elected were Gregory Goff, a 64-year-old former top executive at
Marathon Petroleum (MPC.N) and Andeavor, and former Neste Oyj (NESTE.HE) executive Kaisa
Hietala. read more
“We welcome the new directors, Gregory Goff and Kaisa Hietala, to the board and look forward to
working with them constructively and collectively on behalf of all shareholders,” CEO Woods said at
the end of Exxon’s shareholder meeting.
Vote counting to determine the final two seats was continuing. That left the re-election of directors
Steven Kandarian, Douglas Oberhelman, Samuel Palmisano and Wan Zulkiflee up in the air.
Alexander Karsner, one of Engine No. 1’s nominees, was still in the running, Exxon said.
Governments and companies have moved to reduce emissions from fossil fuels that are warming the
planet by investing in wind and solar energy. Investors led by Engine No. 1 have said Woods needed
to make big changes to ensure Exxon’s future value to investors.
The fund successfully rallied support from institutional investors and shareholder advisory firms
upset with Irving, Texas-based Exxon for its weak financial performance in recent years. Among
those were BlackRock Inc (BLK.N), Exxon’s second-largest shareholder, who agreed to vote for three
members of Engine No. 1’s slate. read more
BlackRock said the three bring “fresh perspectives and relevant transformative energy experience”
that would help Exxon evaluate “the risks and opportunities presented by the energy transition,”
according to a note posted on its website.
Exxon shares rose 1.2% to $58.94 on the day. The stock has lagged its peers over the last five years.
Woods had argued that Exxon’s board understood the company’s complexity and that Exxon
supports a path toward carbon reductions in the Paris accord, the international agreement aimed at
combating climate change.
However, in another signal of investor dissatisfaction with the company’s approach to climate
change, shareholders also approved measures calling on Exxon to provide more information on its
climate and grassroots lobbying efforts.
“Exxon Mobil shareholders chose real action to address the climate crisis over business as usual in
the fossil fuel industry,” said New York State Comptroller Thomas DiNapoli, who in April said the
state’s pension fund backed Engine No. 1.
DiNapoli said that for years, investors have “received platitudes and gaslighting in response” from
Exxon in response to concerns about the climate crisis.
Exxon had fought to keep climate activists at bay, spending tens of millions of dollars on a highprofile PR campaign, agreeing to publish more details of its emissions and coming out in support of
carbon reduction. Activists said it was too little, too late, and that Exxon needs a less reactive
“We are sending new board members, seasoned in managing change in the fossil fuel industry, to
help put the company back on track,” DiNapoli said.
Reporting by Jennifer Hiller in Houston and Svea Herbst-Bayliss in Boston; editing by Gary
McWilliams and Michael Perry
The full article can be found here: https://www.reuters.com/business/sustainablebusiness/shareholder-activism-reaches-milestone-exxon-board-vote-nears-end-2021-05-26/
Share price development of Exxon Mobil retrieved from Refinitiv Thomson Reuters.